"Do the best you can, and don't take life too serious."
— Will Rogers (American, 1879-1935)
Word
for the day
Syncretism (n)
The attempted reconciliation or union of different or opposing
principles, practices, or parties, as in philosophy or religion.
Malice
towards none
People who found 45% tax
under IDS prohibitive, are now pleading with government to take 50% and let
them account for their hitherto unaccounted cash!
First random thought this
morning
The opposition parties, especially Congress and CPI-M are making
the most puerile comments on the step to demonetize high denomination notes
(HDNs). The argument of inconvenience to daily wage earners coming from Rahul
Gandhi & Prakash Karat's mouth is most preposterous.
They are the people who organized maximum bandhs in the country.
It is only in the past one decade that people have understood their game and
stopped responding to their bandh calls.
The Congress and SP are perhaps responsible for most curfews in
the country. The arguments made by P. Chidambaram, who is most responsible for
complicating the tax compliance procedures, are clearly pervert.
Be careful in what you wish for
"May you get what you wish
for", is one of the three popular Chinese curses. It cautions people to be
careful in what they wish for; because they might just get what they wished for
and realize that the thing they desired is not what they actually wanted.
Persistently chiding PM Modi to
fulfill his election promise of recovering black money from the rich and
putting them in the account of poor, the opposition leaders would have never
imagined that their this wish may actually come true - that too so soon.
One is hearing numerous stories
about how the cash rich people are distributing their unaccounted money to the
poor. A builder in Varanasi reportedly has given away 2.5cr worth of 500-1000
notes to street dwellers over night.
Many people are renting the Jan
Dhan bank account of their servants & their family members, by promising to
share as much as 20% of the cash deposited in such accounts. There are many
reports suggesting that people have approached poor farmers to help them in
converting the color of their black money. Taking advantage of good monsoon, a farmer
can show higher than usual income this year and deposit the money in their bank
account.
Redistribution of wealth on such
a massive scale is unprecedented. The steps like abolition of privy purse,
nationalization of banks, insurance companies and coal miners, etc. all
resulted in transfer of money from select rich to the government. Education
cess might have enabled the government to fund the education of poor kids. But
this is as direct a transfer as it could be - Rich people eager to share their wealth
with poor directly and apologetically!
Assuming that the government may
have sounded BJP and NDA allies to go light on cash, the opposition parties are
the biggest victims of this masterstroke. PM Modi has made them pay for his
promise of wealth transfer.
The equity market is worried
about the impact of demonetization on consumption. I find the fear somewhat
misplaced. Though consumption may indeed suffer for few months, it would be
much higher next year as the propensity to consume is much higher at the lower
quartile of the pyramid where the redistributed wealth will find shelter. A
lighter balance sheet of RBI (assuming 20% reduction in currency stock), may
provide space for larger public sector spending and lower rates.
Moreover, those arguing for a
midterm decline in consumption may be mistaking washing machines, motorcycles,
smart phones, TV, etc. for discretionary items. Trust me these are no longer
discretionary items in most cases. Those who are not able to buy in cash will
buy on credit.
At last, in my view, the
government should make this demonetization process constitutional. All HDNs
should be mandatorily demonetized every 10years to effectively control of
menace of black money without any inconvenience to the common man.
No comments:
Post a Comment