Darwin’s theory wrong, nobody saw ape turning into man: Minister Satyapal Singh 01-22

Darwin’s theory wrong, nobody saw ape turning into man......... Minister Satyapal Singh.

Union minister Satyapal Singh said Darwin’s theory needs to change in school and college curriculum.
This great statement is coming from a person who is Minister of State in HRD ministry.
Thank god, he did not say, no one alive has ever seen Darwin, so, even he is a fiction of imagination. Darwin faced a lot of opposition from the Christian church and clergy, and One of them most probably has reincarnated as our #MoSHRD.

Sometime back we had a statement from the health minister of Assam belonging to the same party telling us that Cancer is caused by the sins of previous birth by the person.

The medical world found this statement so amusing, it was shared by the leading health association magazines the world over..

It did not cure cancer anywhere, but certainly did provide some comic relief to the overworked medical professionals.

This is in line with the statements we had in the past like. Peacocks don't mate, earth is flat and others.

Yes peacock's don't mate ..

Most probably, the peacocks and peahens have a spiritual intercourse to reproduce offspring..

Darwin probably missed out on this important aspect. What Darwin missed out on is being made good by this minister.#FatalisingEducation.
Probably, this is also part of Modi's "Make In India" programme with the objective of making India a laughing stock in the eyes the people of the world.

This government is probably planning to export the ignorance of these people Which is available in huge measure, to all the parts of the world..

ARE THERE ANY BUYERS, BEST PRICE ASSURED...

I am a very possessive and fanatic student of Genetics and Evolution and hold Darwin and Darwinism in high regard.

Still wondering, how such people become ministers in education ministry.. As if one Smriti Irani wasn't enough.....One more to create laughs among people.

Finally Charles Darwin quote...

"We must, however, acknowledge, as it seems to me, that man with all his noble qualities... still bears in his bodily frame the indelible stamp of his lowly origin."

Now the news item....

Darwin’s theory wrong, nobody saw ape turning into man: Minister Satyapal Singh

Union minister Satyapal Singh said Darwin’s theory needs to change in school and college curriculum.
Union minister Satyapal Singh has claimed that Charles Darwin’s theory of evolution of man was “scientifically wrong” and it needs to be changed in school and college curriculum.

Singh, minister of state for human resource development, said our ancestors have nowhere mentioned that they saw an ape turning into a man.

“Darwin’s theory (of evolution of humans) is scientifically wrong. It needs to change in school and college curriculum. Since the man is seen on Earth he has always been a man,” he said while speaking to reporters on Friday in Aurangabad.

The IPS officer-turned-politician was in this central Maharashtra city to attend the ‘All India Vaidik Sammelan.’

“Nobody, including our ancestors, in written or oral, have said they saw an ape turning into a man,” he said.
“No books we have read or the tales told to us by our grandparents had such a mention,” the minister added.

Darwinism is a theory of biological evolution that states that all species of organisms arise and develop through the natural selection of small, inherited variations that increase the individual’s ability to compete, survive, and reproduce.

It was developed by Darwin, a 19th century English naturalist, and others.

View the news item at the original source

India's first bullet train isn't 'free of cost' as Modi claims 09-18

Prime Minister Narendra Modi has claimed the bullet train offered to India by Japan is virtually free of cost. A 50-year yen loan amounting to Rs 88,000 crore at 0.1 % interest is being described by the prime minister as free of cost. This is patently absurd.

India can have as many bullet trains as it wants on these terms from the Japanese, but nobody should be misled into believing they are free. For one, India may have to repay much more than Rs 88,000 crore over a 50-year period because the rupee will most likely depreciate against the Japanese yen over a long period.

Why is this? Simply put, it’s because the exchange rate between the currencies of two countries is determined by their inflation differential. If India’s inflation rate is average 3% over the next two decades and Japan’s inflation rate is zero, as is widely anticipated, then it stands to reason that the rupee must depreciate 3% every year because the rupee’s value is eroding by 3% as against no erosion in the yen. So, the rupee is bound to weaken by over 60% in two decades. This means that on a loan of Rs 88,000 crore, the repayment, in rupee terms, goes up to more than Rs 1,50,000 crore at the end of 20 years.

Over 50 years, the repayment value will be much higher based on the inflation differential, which is bound to persist between Japan and India because the latter is a rising economy with a sizeable poor population and is striving to become a middle to high income country over the next few decades. India, therefore, could end up paying a much higher value of rupee debt over 50 years. If this happens then we are not being fair to the successive generations, which will be saddled with this high debt component. Inter-generational equity is an important aspect of national debt accumulation even if it is a yen loan coming at 0.1% interest rate.

Therefore, Modi must be careful while describing the 50-year yen loan as “in a way, free”. I remember some Indian corporate houses had shown similar enthusiasm two decades ago by raising international debt via 50-year dollar bonds using the same logic that such money need not be repaid over a long period. Subsequently when the rupee weakened against the dollar – by 50% – over 15 years, the same family-owned business houses got wise and prepaid large portions of the money. Perhaps they did not want to saddle their next generations with such risky loans. This logic holds even truer for countries.

This loan is just for a short route – Ahmedabad to Mumbai. As is being anticipated, if the Japanese build three more such projects connecting other cities in the south, north or east, one can well imagine the total foreign debt burden that will arise. After all, the loans will have to be paid back with the exchange risk built into it. The yen is considered the most volatile currency among all the hard currencies today.

Another factor to be considered is that while an interest rate of 0.1% may appear free from an Indian perspective, it is not so in Japan. Japanese short term interest rates (Tokyo Inter Bank Offer Rate) is 0.06%. The interest rate offered by ten-year Japanese government bonds is 0.04%. India’s ten-year government bond offers 6.5%. The gap between Japan’s 0.04% and India’s 6.5% is explained by the inflation expectations in the two countries. This perspective cannot be lost sight of. So what you pay back to Japan in rupee terms will be way higher than what you borrow. There is no free lunch, as the saying goes.

One last point that needs to be emphasised is the bullet train project covering just Ahmedabad and Mumbai will cost Rs 1,10,000 crore. Just compare this with former rail minister Suresh Prabhu’s first Budget which projected a five year expenditure of a similar amount for network expansion in the entire country. Or a similar amount for strengthening safety over five years.

What would be your priority? After all, there should be something called sequencing of expenditure in a nation as poor as ours.

View at the original source

99% of banned notes returned after demonetisation: RBI annual report 09-10

The Reserve Bank of India (RBI) on Wednesday said it estimated that people had returned almost 99 per cent of the scrapped Rs 1,000 and Rs 500 notes after demonetisation, effectively putting a question mark over the government gaining handsomely by the unreturned money turning into a special dividend by the central bank.

In its annual report, the RBI also said the face value of fake high-value notes was minuscule at Rs 41 crore.

The central bank said people had returned Rs 15.28 lakh crore of the Rs 15.44 lakh crore banned currency, or 98.96 per cent of the scrapped Rs 500 and Rs 1,000 notes, to the banking system.

“Subject to future corrections based on the verification process when completed, the estimated value of Specified Bank Notes received as on June 30, 2017, is Rs 15.28 lakh crore,” the annual report said. 

The old notes came to the RBI either directly or from bank branches and post offices through the currency chest mechanism.

Some of these notes were still lying in currency chests, the RBI said, adding it could only estimate the value of the notes and could not provide an accurate figure.

The RBI data showed the unreturned Rs 1,000 notes in March 2017 amounted to Rs 8,900 crore. The segregation of old and new Rs 500 notes were not that clear. The RBI incurred a cost of Rs 7,965 crore in printing notes in 2016-17, against Rs 3,421 crore incurred in the previous year. The central bank also increased its provisions by over Rs 13,000 crore in order to boost its contingency reserves, a practice it was adopting after three financial years.

The net effect was that the dividend paid to the government was halved to Rs 30,659 crore in the July-June financial year 2016-17. Prime Minister Narendra Modi had on November 8, 2016, announced demonetisation in a televised address, rendering 86 per cent of the currency in circulation invalid. The nation subsequently queued up at bank branches and automated teller machines as the central bank struggled to supply new notes. About Rs 15.3 lakh crore of notes are in circulation in June, against the pre-demonetisation level of Rs 17.9 lakh crore. Economists said the government may have overestimated the extent of black money in the system, but increased tax collection should be counted as a long-term gain.

“Data analytics of deposits have thrown up unusual patterns. Previously we did not know who held black money. Now we do, and this is a clear gain,” said the chief economist with a private bank. The number of suspicious transaction reports by banking system increased by 345 per cent, which could possibly lead to an increase in future tax revenues. Coupled with the goods and services tax, this will help in improving tax realisation,” said Soumya Kanti Ghosh, group chief economist, State Bank of India.

The total number of suspicious transactions detected in 2016-17 was 473,003, up from 106,273 in 2015-16 across banks, other financial institutions and intermediaries . In banks alone, the number of suspicious transactions detected was 361,214, against 61,361 a year ago.

This is the first time since 1952-53 that reserve money for the whole year contracted, by 13 per cent. The RBI incurred a loss in seigniorage, the profit made by the central bank on account of currency issuance.A committee headed by the RBI board member Y H Malegam had suggested the central bank did not need to build additional reserves for three years starting 2012-13.

This being the fourth financial year, the RBI increased its provisions to Rs 13,190 crore and allocated them in various reserves. “In value terms, the share of Rs 500 and above banknotes, which had together accounted for 86.4 per cent of the total value of banknotes in circulation at end-March 2016, stood at 73.4 per cent at end-March 2017. The share of newly introduced Rs 2,000 banknotes in the total value of banknotes in circulation was 50.2 per cent at end-March 2017,” the RBI said. 

In volume terms, Rs 10 and Rs 100 banknotes constituted 62 per cent of the total banknotes in circulation at end-March 2017, against 53.0 per cent at end-March 2016.

The RBI said  processing and destruction of old Rs 500 and Rs 1,000 notes kept in various currency chests and regional offices of the RBI “pose a challenge.”

“In this regard, the agenda for 2017-18 includes the procurement of Currency Verification and Processing System/Shredding and Briquetting Systems.”  The RBI’s agenda also include introduction of new series banknotes in other denominations; procurement of security features; and “introduction of varnished banknotes.”

View at the original source

Raghuram Rajan breaks silence, says RBI had warned Modi govt against demonetisation 09-03

Raghuram Rajan makes the disclosure in his latest book -- I do what I do – which is a compilation of speeches he delivered on a wide range of issues as the RBI governor.

Former RBI governor Raghuram Rajan has revealed that he did not favour demonetisation as he felt the short term economic costs associated with such a disruptive decision would outweigh any longer term benefits from it.

Rajan makes the disclosure in his latest book – I do what I do – which is a compilation of speeches he delivered on wide range of issues as the RBI governor. Although he maintains the book is not a tell-all, the short introductions and postscripts accompanying the pieces offer fascinating insights into his uneasy relationship and differences with the present government.

“At no point during my term was the RBI asked to make a decision on demonetisation,” Rajan has said, putting to rest speculation that preparations for scrapping high-value banknotes got underway many months before Prime Minister Narendra Modi made the surprise announcement on November 8.

This is the first time the former RBI governor has spoken on demonetisation since demitting office on September 3 last year. Rajan, who now teaches economics at University of Chicago, said he chose not to speak on India for a year because he didn’t want to “intrude on his successor’s initial engagement with the public”.

“I was asked by the government in February 2016 for my view on demonetisation, which I gave orally. Although there might be long-term benefits, I felt the likely short-term economic costs would outweigh them,” Rajan wrote.

“I made these views known in no uncertain terms.”

He didn’t elaborate on the short-term costs or the possible long-term benefits, but as the RBI governor he “felt there were alternatives to achieve the main goals.”

Latest government data showed the November 8 decision to scrap Rs 1,000 and Rs 500 notes, sucking out 86% of cash circulating in the system, has had a lingering impact on the economy.
The growth of GDP slowed sharply from 7% in October-December quarter to 6.1% in January-March and 5.7% in April-June, primarily because of the cash squeeze that weakened consumer spending and discouraged businesses from making new investments.

The government, however, maintains that the economic slowdown has not been entirely because of demonetisation. In an interview to Times of India, published Sunday, Rajan described the deceleration in GDP as “the costs of demonetisation upfront.” 

“Let us not mince words about it – GDP suffered. The estimates I have seen range from 1 to 2 percentage points, and that’s a lot of money – over Rs 2 lakh crore and may be approaching Rs 2.5 lakh crore,” he said in the interview.

Advertisement: Replay Ad

Ads by ZINC

“I think the people who mooted this must have thought some of it would be compensated if money didn’t come back into the system,” he said referring to illegal wealth held in cash.

The government’s expectation was that at least Rs 3 lakh crore worth black money held in cash won’t return, significantly reducing the liability of the central bank and boosting its profits, which could be used for new investments and developmental work.

But RBI data, available now, shows 99% of the high-value notes have returned to the banking system, meaning hoarders of black money found a way to legitimise most of their dodgy cash.
“The fact that 99% has been deposited certainly does suggest that aim (of curbing black money) has not been met,” Rajan said in the interview.

Despite his reservations, Rajan wrote in his book, the RBI was asked to prepare a note, which it did and handed to the government.

The RBI note, he said, “outlined potential costs and benefits of demonetisation, as well as alternatives that could achieve similar aims. If the government, on weighing the pros and cons, still decided to go ahead with demonetisation, the note outlined the preparation that would be needed, and the time that preparation would take.”

“The RBI flagged what would happen if preparation was inadequate,” he wrote.

The government subsequently set up a committee to consider the issue. The central bank was represented on the committee by its deputy governor in charge of currency, Rajan wrote, possibly implying he did not attend these meetings.

The current leadership of the central bank could not be reached for comments on Rajan’s account. Phone calls to the RBI spokesperson went unanswered.

Rajan did not detail the contents of the note RBI had submitted to the government. Modi’s radical move was slammed by the opposition as ill-conceived and poorly executed. It took banks much longer than the government had expected to tide over the cash crisis. Frequent changes in cash withdrawal rules added to chaos and inconvenience that lasted far longer than the 50 days the PM had sought to restore normalcy.

Still, Modi won popular support for his move, winning a landslide victory in crucial elections in Uttar Pradesh. Most people, especially the poor, backed his decision as a frontal attack on black money.

Please also view the video of Dr. Raghuram Rajan's interview with Rajdeep Sardesai. HERE





View at the original source

RBI's dividend to govt halves to Rs 30,659 crore 08-11

The Reserve Bank of India (RBI) will transfer Rs 30,659 crore of its surplus to the government for the financial year 2016-17, less than half of the Rs 65,876 crore it transferred a year earlier.

The RBI did not provide any reason for the decline in dividend but economists said this indicated the cost incurred by the central bank in printing new notes as well as in sterilising liquidity after old Rs 500 and Rs 1,000 currency notes were scrapped in November and subsequently returned to the banking system.

The dividend paid is the lowest since 2011-12, when the RBI had transferred Rs 16,010 crore of its surplus to the government. In 2012-13, the central bank paid Rs 33,010 crore. The RBI’s financial year runs from July to June. The central bank is expected to publish its annual reports next week after its board met on Thursday to clear the accounts. 

In 2012-13, the YH Malegam Committee recommended the central bank transfer its entire surplus to the government. The RBI has been transferring its entire surplus to the government since then. It paid Rs 52,679 crore in 2013-14 and Rs 65,896 crore in 2014-15.

In the Union Budget for 2017-18, the government had accounted for a dividend of Rs 74,901 crore from the RBI and other nationalised banks. An official later said the RBI’s share would be Rs 58,000 crore. 

RBI Governor Urjit Patel told a parliamentary panel in July that the central bank had not finished counting the old returned notes. 

He has also said notes not returned remain the RBI’s liability and cannot be passed on to the government as dividend. 

The Union Budget had not accounted for any special dividend from the RBI against demonetisation, which some economists had estimated would be in the lakhs of crores of rupees.

The low actual dividends, meanwhile, will exert pressure on the government to meet its fiscal deficit. Care Ratings Chief Economist Madan Sabnavis said the fiscal deficit could increase from 3.2 per cent of the GDP to 3.4 per cent this year. At its peak, the excess liquidity parked by banks neared Rs 5 lakh crore, on which the central bank had to pay them 6 per cent interest. The average daily liquidity absorption continued to remain above Rs 2 lakh crore after demonetisation was announced.

According to Devendra Pant, chief economist of India Ratings & Research, the appreciation of the rupee against the dollar depressed returns, in rupee terms, on the RBI’s foreign holdings. The rupee has appreciated by more than 6 per cent against the dollar since January.

View at the original source

Is Demonetisation Illegal? 02-27

Probably the tail end article on Demonetisation in my collection..

Everyone has a right to say and speak his/her mind. And 'every say' needs to be heard.  Agreements. Disagreements not with standing....

Image credit : Shyam's Imagination Library

Upadate: The Lok Sabha on February 8, 2017, passed the Specified Bank Notes (Cessation of
Liabilities) Bill, 2017. Under the new law, holding, transfer and receiving of old 500 and 1000 currency notes is a criminal offence. The bill has thus ended the liability of the RBI and the government on the demonetised currency notes.

At eight O'clock on November 8, 2016 evening, India was wide awake. Reason: In his televised special address, Prime Minister Narendra Modi had unveiled an economic tsunami where 86 per cent of the currency in Rs 500 and Rs 1,000 denominations ceased to be legal tender.

Since that day, the Reserve Bank of India and the Centre have taken many steps to lessen the problems of the common man faced due to demonetisation. At the same time, the Supreme Court has been flooded with public interest litigations (PILs) challenging the constitutional validity of the move. But the million-dollar question is: Is demonetisation legal?

While the matter has been referred to the five-judge constitutional bench, Propguide studies the legal aspects of the order which has hit the country’s booming economy.

Violates the constitutional right to property under Article 300A: The only right ever to be erased from the list of fundamental rights was the Right to Property. It was demoted to a mere constitutional right. So, is cash-rationing a valid restriction on the constitutional right to property? Yes, because cash and bank accounts are property.

In Jayantilal vs RBI, in the context of the 1978 demonetisation, the top court had held that demonetisation is not merely a regulation of property, as the government is presently arguing, but constitutes compulsory acquisition of a "public debt' owed to the bearer of the notes declared illegal. Article 300A states that the state may deprive an individual of property only through 'law', and not by executive notification as the government has done.

Excessive delegation: Section 26(2) of the Reserve Bank of India Act, 1934, says that on the recommendation of the central bank, the central government may pass a notification in the Gazette of India that any series of bank notes cease to be legal tender. Fixing the date from which the demonetisation would come into force is the foundation of section 26(2) and constitutes an "essential law-making function" which cannot be fixed by the central government on behalf of the central bank

Abridgement of fundamental rights: The currency ban had caused a lot of hardships to the common man as many of them could not carry out their business and trade (19(1)(g) and violated the Right of Life (Article 21) of those 100-odd people who died while standing in the long bank queues. While the government is within its right to curtail fundamental rights in the larger public good, it needs to prove that the curbs were 'reasonable'.

Act of Parliament needed: The precedent is that on the last two occasions of demonetisation (1956 and 1978), the law was effected through an ordinance. But, this time the law was effected through a government notification. The rationale is that to have a rule which would have a draconian effect on the lives of people, a notification can't suffice.

Article 19(6) has no significance: The Centre would want to hide behind Article 19(6) of the Constitution but it has no relevance here. Article 19(6) says that nothing in Article 19(1)(g) shall affect the operation of any existing law in so far as it prevents the state from making any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the rights conferred by the sub-clause. But the exception of Article 19(6) is not available to the central government as the notification is beyond "police powers".

View  at the original source

IMF says demonetisation a big dampener, cuts India's growth to 6.6% from 7.6% 01-18

The IMF today cut India's growth rate for the current fiscal year to 6.6 per cent from its previous estimate of 7.6 per cent due to the "temporary negative consumption shock" of demonetisation, days after the World Bank also decelerated India's growth estimates.

"In India, the growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative," the International Monetary Fund (IMF) said in its latest World Economic Outlook (WEO) update released today.

The IMF said that after a lacklustre outturn in 2016, economic activity is projected to pick up pace in 2017 and 2018, especially in emerging market and developing economies.

The global growth for 2016 is now estimated at 3.1 per cent, in line with the October 2016 forecast.
Economic activity in both advanced economies and emerging market and developing economies (EMDEs) is forecast to accelerate in 2017-18, with global growth projected to be 3.4 per cent and 3.6 per cent, respectively, again unchanged from the October forecasts, it said.

As per new IMF projections, India's growth in 2016 is now estimated to be 6.6 per cent as against 7.6 per cent earlier forecast.

In 2017, IMF has projected a growth rate of 7.2 per cent as against its previous forecast of 7.6 per cent.

The Indian economy is likely to revive to go back to its previously estimated growth rate of 7.7 per cent in 2018, according to the WEO update.

The cut in India's growth rates comes days after the World Bank decelerated India's GDP growth for 2016-17 fiscal to 7 per cent from its previous estimate of 7.6 per cent citing the impact of demonetisation. But forecast issued on January 11 said that India would regain momentum in the following years with a growth of 7.6 per cent and 7.8 per cent due to a reform initiatives.
Despite IMF's downward revision of India's growth rate and a slight upward revision of China's growth projections, India continues to be the fastest growing countries among emerging economies.
But in 2016, China with 6.7 per cent has edged past India (6.6) with 0.1 percentage point.
The growth forecast for 2017 was revised up for China (to 6.5 per cent, 0.3 percentage point above the October forecast) on expectations of continued policy support, the IMF said. India's growth rate in 2017 as per the latest IMG projections is 7.2 per cent.

In 2018, China's growth rate is projected to be 6 per cent against India's 7.7 per cent.
IMF said, in China, continued reliance on policy stimulus measures, with rapid expansion of credit and slow progress in addressing corporate debt, especially in hardening the budget constraints of state-owned enterprises, raises the risk of a sharper slowdown or a disruptive adjustment.

These risks can be exacerbated by capital outflow pressures especially in a more unsettled external environment, the IMF said.

IMF said global activity could accelerate more strongly if policy stimulus turns out to be larger than currently projected in the US or China.

Notable negative risks to activity include a possible shift toward inward-looking policy platforms and protectionism, a sharper than expected tightening in global financial conditions that could interact with balance sheet weaknesses in parts of the euro area and in some emerging market economies, increased geopolitical tensions, and a more severe slowdown in China, it said.

Maurice Obstfeld, Economic Counsellor and IMF Research Department Director, at a news conference here, said among emerging economies, China remains a major driver of world economic developments.

"Our China growth upgrade for 2017 is a key factor underpinning the coming year's expected faster global recovery. This change reflects an expectation of continuing policy support; but a sharp or disruptive slowdown in the future remains a risk given continuing rapid credit expansion, impaired corporate debts, and persistent government support for inefficient state-owned firms," he said.

In light of the US economy's momentum coming into 2017 and the likely shift in policy mix, IMF has moderately raised its two-year projections for US growth.

"At this early stage, however, the specifics of future fiscal legislation remain unclear, as do the degree of net increase in government spending and the resulting impacts on aggregate demand, potential output, the Federal deficit, and the dollar," Obstfeld said.



View at the original source

"Humiliated" by post-note ban events, RBI staff write to Urjit Patel 01-14

Feeling "humiliated" by events since demonetisation, RBI employees today wrote to Governor Urjit Patel protesting against operational "mismanagement" in the exercise and Government impinging its autonomy by appointing an official for currency coordination.

In a letter, they said autonomy and image of RBI has been "dented beyond repair" due to mismanagement and termed appointment of a senior Finance Ministry official as a "blatant encroachment" of its exclusive turf of currency management.

"An image of efficiency and independence that RBI assiduously built up over decades by the strenuous efforts of its staff and judicious policy making has gone into smithereens in no time. We feel extremely pained," the United Forum of Reserve Bank Officers and Employees said in the letter addressed to Patel.

Commenting on "mismanagement" since November 8, when note ban was announced, and the criticism from different quarters, the letter said, "It's (RBI's) autonomy and image have been dented beyond repair."

At least two of the four signatories --- Samir Ghosh of All India Reserve Bank Employees Association and Suryakant Mahadik of All India Reserve Bank Workers Federation --- confirmed the letter. The other signatories are C M Paulsil of All India Reserve Bank Officers Association and R N Vatsa of RBI Officers Association.

The forum represents over 18,000 employees of the RBI across the ranks, Ghosh said.

The letter said appointment of an officer to coordinate currency management is a "blatant encroachment" on the exclusive jurisdiction of the RBI on currency and accused the Government of "impinging on RBI autonomy".

"May we request that as the Governor of RBI, its highest functionary and protector of its autonomy and prestige, you will please do the needful urgently to do away with this unwarranted interference from the Ministry of Finance, and assure the staff accordingly, as the staff feel humiliated," it said, soliciting "urgent action".

The RBI has been discharging the role of currency management for over eight decades since 1935, it said, adding the central bank does not need "any assistance" and the interference from FinMin is "absolutely unacceptable and deplorable".

The letter comes days after concerns about RBI's functioning being raised by at least three former Governors -- Manmohan Singh (former PM), Y V Reddy and Bimal Jalan. Former Deputy Governors, including Usha Thorat and K C Chakrabarty, have also voiced their concerns.

The letter said the RBI staff has carried out its job excellently following the move to ban 87 per cent of the outstanding currency by the government.

View at the original source

Note ban most disruptive policy innovation since 1991: Former RBI Governer D. subba Rao. 01-07

Image credit : Shyam's Imagination Library

Former Reserve Bank governor D Subbarao today termed demonetisation as "creative destruction and the most disruptive policy innovation since 1991 reforms" that has helped destroy blackmoney.
"On November 8, the Prime Minister (Narendra Modi) and the Reserve Bank have demonetised 86 per cent of currency in circulation overnight, which is what is arguably the most disruptive policy innovation in India since the 1991 reforms," he said.

"Demonetisation, in that sense, is creative destruction.

But it is a very special type of creative destruction. Because what it has destroyed is a destructive creation -- blackmoney.

So, you can understand that demonetisation is creative destruction of a destructive creation," Subbarao said.

He was addressing an international conference organised by the Institute for Development and Research in Banking Technologies (IDRBT) here.

He further said demonetisation is "arguably" leading to a flurry of innovations in Indian financial sector by way of digitisation of payments.

"There are two perspectives. Extension of a global trend of financial technology which is upending the finance industry and discontinuous change in a low-income country from cash incentive economy to a less-cash economy. Either way, we will have disruptive innovations in India's financial sector," he explained.

Subbarao said that though cost and benefit of this demonetisation exercise is a very contentious debate, the subject of policy innovation is not contentious.


According to him, the country witnesses a lot of disruptive innovations in finance in payment system.
The model of traditional banking has access to low-cost deposits and has an advantage over other financial institutions, including fintech companies, according to the former governor.

"That advantage is going to be neutralised by the business model of these fintech companies which will beat onefficiency, service and trust," Subbarao remarked. 

He suggested the traditional banks should look into otheravenues to compete by tying up with these companies orpayments banks that are coming up.

He urged regulators to promote innovation and protectconsumers and preserve financial stability.

"On the one hand, they have to make sure the stabilityis preserved and on the other hand, they should regulatetightly that innovation is not scorched. This balance is avery difficult judgement call," he added.

On microfinance, he said the model has benefited millionsof low-income families in India, particularly in AndhraPradesh (before the state bifurcation).

He recalled that RBI was in a dilemma at the time of 2010crisis on whether to regulate the interest rates of MFIs andif so, what figure would be justified.

View at the original source

Demonetisation Day 50: Black money kingdom has been shaken from its roots Sukumar Mukhopadhyay 01-01

I went about asking many people in bank queues and markets about what they had to say on demonetisation. They all agreed there was some inconvenience but they largely supported it. The logic behind this was that they were willing to suffer in order to get back at the hoarders of black money.

Writers and economists are all divided on party lines. The best and worst example being that of former Prime Minister and noted economist Dr Manmohan Singh calling demonetisation an "organised loot and a legalised plunder."

Opinions it seems depends also on personal dislike. Even Amartya Sen called demonetisation a despotic act. Sen also alleged that it is a breach of promise but little efforts did he take to clarify his position. P N Bhagwati has refuted Amartya Sen on this ground.

So we shall take a plunge into the matter and analyse each issue purely on the basis of its merit.

Rabi crop row- Some economists cried foul that the Rabi crop has been ruined. But actually when demonetisation started on Nov 8, this crop was already three inches high since the season starts from October.

Woes of the rural folk- Again, some critics are shedding tears for the village folk, saying that 80 % of the country's villages do not have banks. The percentage is possibly correct. But the conclusion that 80% of the nation's people do not have access to banking facilities is wrong. Look at what the Prime Minister said in his speech during Independence Day in 2012. Manmohan Singh, who was then the Prime Minister of India, had said that 50% of households have bank accounts.

Four years since then and after Jan Dhan Yojana, the percentage of households having bank accounts is likely to be much higher than 50%. It may be 70%. Economists trying to deride Modi do not realise that banks in small towns serve all villages around the small town. If the villagers can come to the town to go to school, college, market and see cinema, can they not go to the banks as well?

Black money and black economy- Black economy is different from black money, which is just a part of the larger economy. The total value of 500 and 1000 rupee notes is Rs 15.5 lakh crore.There is no reliable estimate of black economy which consists of land, real estate, jewellery and cash. Only the cash portion is black money.  Demonetisation is only against black money and not black economy. The criticism that demonetisation will not tackle black economy is, therefore, misplaced.

Unexplained cash deposits- This is the crux of the issue. Government had expected that Rs 4-5 lakh crore of cash in circulation would not come back. But this amount may not be more than Rs 1 lakh crore. How much of it will come back is not definite. Even if most of it comes, all of that will not become white. Income tax department will investigate and if the depositors are not able to explain, they can impose high tax and penalty which will, in turn, yield a high revenue. Apart from this, the department will get higher income tax on higher interest. So benefits from these will definitely accrue from next year onwards. The economy too will have more white money than black money. That itself is a transformation.

Fake money- An estimated amount of Rs 400 crore of fake money will be eliminated.

Property prices- Real estate prices have fallen and so the middle class has benefited. Mispricing of real estate had earlier stood on the way to entrepreneurship, global competitiveness and job creation.

Recession- Some economic activity which depended on payment by black money may slow down but soon they will resume momentum with white money.

Gold rush- Assumption that people will buy more gold is wrong as the gold or ornament merchants will not accept old Rs 500 and Rs 1,000 notes.

GST– Kaushik Basu's remark that GST is a better alternative than demonetisation is based on a complete misunderstanding of what the Goods and Service Tax is. GST deals with indirect tax. Most black money is generated in direct tax. And even in the developed countries like UK, Germany or Canada where GST exists, there is substantial evasion. 

Digitisation- A higher level of digitisation has taken place following demonetisation and it will improve the ease of business.

Therefore, the impact of demonetisation cannot be judged by merely how much black money has been rendered useless. We have also to take into account how much amount the income tax department can recover in raids, tax returns, penalties and other channels.

Even if black has got converted into white, there has been a transformation from black economy to white economy to that extent. The prosecution of the money launderers will send shivers in the spine of the black prospective operators. The corrupt operators will now be dreading. Corruption has been brought to the centre-stage for launching an attack aginst it, while all along black money and corruption had been taken for granted.  Demonetisation has had a transformational value on the psyche of people.

It is a fundamental reform in India. After decades of rhetoric, some real action has been taken. Demonetisation along with all other policies such as the Jan Dhan Yojana, Aadhar-linked payments, mobile banking, GST, the Income Declaration Scheme and the Benami Property Act will have a real impact on black money.

The kingdom of black money will be shaken from its roots.

View at the original source