(Talk delivered by N. Vittal, Former Central Vigilance Commissioner on 7th December 2016 – Centenarian Trust Public Lecture, Chennai)

            I feel greatly honoured to have been called upon to deliver this year’s Centenarian Trust Lecture on a very exciting and important subject which is not only dominating the headlines, but is likely to be remembered as an important landmark in the history of the good governance in our  country. The Centenarian Trust was set up in honour of the great Paramacharya Chandrasekar Saraswati of the Kanchi Peetam when he reached his centenary.

            Paramacharya was also a living example throughout his presence in this world of the great tradition of our holy land of Bharatavarsha, Bharatakhanda, Jumbudwipa. Bharatiar has celebrated the greatness of this country in his unique fashion in ‘parukkulle nalla nadu’, where he talks about how this was a land of holy men. He also lovingly pays an affectionate tribute to the greatness and antiquity of our Bharat mata,motherland  India.  Celebrating of the ancient and holy heritage of India, Bharatiar observes,

தொன்றுநிகழ்ந்ததனைத்தும்உணர்ந்திடு 
     
சூழ்கலைவாணர்களும்-இவள் 
என்றுபிறந்தவள்என்றுணராத 
     
இயல்பினளாம்எங்கள்தாய்.

முப்பதுகோடிமுகமுடையாள்உயிர் 
     
மொய்ம்புறவொன்றுடையாள்-இவள் 
செப்புமொழிபதினெட்டுடையாள், எனிற் 
     
சிந்தனைஒன்றுடையாள்.

In this vein, he goes on celebrating the great tradition of how this is a land sanctified by the presence of the tradition of Acharyas and Rishie who have repeatedly propagated the concept of Sanatana Dharma.  The essence of it is this concept of looking at the whole world as a single family, Vasudaiva Kutumbakam.  The basic approach is that all life should flourish

 Sarvejana sukhino bhavantu

 sarve pachyanthu bhadrani

sarve santhu nira maya.

 This great inclusive concept also gets distilled into the very essence of Vedanta which is [individually we should strive for liberation] Atmanam  mokshartham jagat hitaya cha.

 But while we are in this world, we should try to see that we contribute the best for the welfare of the society around us – Jagat ithaya cha.  This will be possible only if one keeps an open mind and he is not rigid or narrow minded in one’s approach.  As Rig Veda says Aano bhadra krtavo yantu vishwatah. [Let noble thoughts come to us from every side] 

As human beings are subject to the limitations and weakness of the flesh, there have been many occasions when the people in our society have strayed away from the path of sanatana dharma, and in all those occasions, from time to time, over generations Acharyas and saints like Paramacharya have appeared and guided the people back to the path of dharma.

  The unique perspective   of sanatana dharma is not to take a segmented view of the temporal life and spiritual life but adopt a holistic approach .The essence of sanatana dharma is that every person should perform his duty and discharge his dharma.

Demonetisation by the Modi Sarkar is the third such effort in the history of independent India .We   will have to take into account larger picture of the governing ideology and philosophy of the Modi sarkar which is the first government in post independent India, which has come to power at the centre believing in a political philosophy of right of the centre.  Even since independence, we have had  only governments which believed in the philosophy of left of centre and  labelled themselve sas ‘secular’.

 In other words, they viewed that matters of ethics and religion should have no impact at all so far as governance of the country was concerned.  The basic approach was to look at the purely economic self interest of people and ensure that there is no exploitation of by any group of others in the society. Weaker sections of the society, religious minorities and economicall backward classes must be protected specially.  This was achived by reservations in educational institutions and jobs I the government andpubicly finded organisations.

  The present government headed by Narendra Modi is the first one, which openly declared that they are right of centre and believe in the philosophy of integral humanism The BJP claims to be a nationalist party rooted in the cultural history and tradition of the country.   I feel that this aspect and especially   remembered when this Lecture is organized on behalf of the Centenarian Trust, inspired by the teachings of the Paramacharya. 

I will be failing in my duty, if I do not do the justice to the purely economic dimensions which have been highlighted in the topic chosen for the Lecture.  Therefore, I propose to deliver my talk in two parts.  The first part would be on the economic dimensions and the second part would be a look at the larger and long term implications and the non economic aspects of the historic initiatives and measures taken by Narendra Modi’s government on 8th November 2016.

PART 1

Players in cricket are greatly admired when they score hattricks-three consecutive centuries, three wicets in succesive balls, three stumpings or dismiss three batsmen by bringing about three catches in an innings. Modi Sarkar has been scoring political hattricks. 

NarendraModi formed his government in May2014. His sarkar   is just at  the mid point of its first term The political hat trick  it has scored in the month of October and November 2016 seems  to ensure that it is not only going to have a successful innings but may win the elections in 2019. 

The hat trick began on the turbulent and exciting Kashmir front with the surgical strike on 28th October 2016 carried out brilliantly by our armed forces.  In one stroke, it called the nuclear bluff of Pakistan   ably assisted   by its friends North Korea, China and others. 

This was followed by a totally unexpected surgical strike on the financial front by the Prime minister’s   announcement on 8th November 2016 of the demonetisation of 86% of the total currency in India in the form of currency notes of Rs.500 and Rs1000 denominations.

 All pervasive corruption and black money had become the bane of India and especially during the UPA regimes I and II, there was a continuous demonstration of  the  rot  in  every sector of public life resulting from the  cynical and unethical style of governance marked by the 2G scam, CWG scam, coalgate  and so on.

 The third  part of the hat trick trick incidentally was also carried out simultaneously with the headline grabbing events and this was the patient building up of the consensus for GST bill  which ultimately would ensure that we have ‘one nation and one tax’ regime.

In fact, the initiative taken by the Prime Minister must be examined not only in the context of the oncoming elections of 2019, but also from the view of post independence management of the Indian financial sector.  As Shankar Aiyar points out in his article in the New Indian Express, Chennai dated 14th November 2016, “The quest to curb black money and corruption is as old as the Republic of India.  For seven decades, the twin devils have haunted India.  There have been demonetisations, even disclosure schemes since the creation of institutions of vigilance and legislation of new laws to tackle corruption and black money.  Yet, as the Eagles sing in Hotel California, “They stab it with their steely knives, but they just can’t kill the beast””.

Modi sarkar’s attempt was the third attempt of demonetisation.  The first demonetisation of 1946 resulted in the demonetisation of 143 crores rupees, out of 1235 crores of rupees with the public. In 1978, the Morarji Desai regime demonitised about 235 crores out of 9152 crores rupees.

  In 2016, the Modi Sarkar has demonitised, 14.95 lakh crores rupees out of 16.38 lakh crores.Anyone can see immediately see how the amount of high denomination currency demonetised has explosively grown from  from 1.52% of currency in circulation to nearly 86% of the currency in circulation.  Naturally, the impact on the economy especially when it comes to cash transaction is certainly unprecedented in the third one, compared to the first two attempts.

 It is generally said that when people try, they may succeed in their third attempt.  The question is will the Modi sarkar prove to be third time lucky?  As an ardent admirer and well wisher of our eneretic PM who is a Karmayogi,I venture to sumit some ideas to ensure success in this great noble national effort.I strongly believe that   these measures will  result in a permanent longlasting change for the better  in the   political culture of our country.

1 .  In an emotionally charged speech, Prime Minister Modi on 13th November 2016, indicated what is his future strategy, when he said that the fight against black money will continue relentlessly. Action on the legislative side for the confiscation of benami property has already been initiated and the legislative measure is in the advanced stage.

2. The launching of the GST will go a long way in helping to curb the growth of black moneyby removing bottlenecks in red tape and the corruption breeding inspector raj.

3. One vital important measure which I would very strongly urge that PM should take is to ensure that this third attempt of demonetisation and tackling of black money in the economy does not fail like its predecessors.

The GOI must immediately enact  THE PROPOSAL OF THE LEGAL EAGLE  FALI NARIMAN  MADE IN THE RAJYA SABHA WHEN HE WAS A NOMINATED MEMBER OF THAT HOUSE TO NATIONALISE ALL THE ACCOUNTS OF INDIAN CITIZENS IN THE TAX HAVENSOF THE WORLD .This will ensure that a large loophole in our current financial architecture is plugged that in future the black money will not accumulate there. This will mean creating a new Nariman Point in Indian financial architecture.This will be clear from the following:

Even the worst critics of Modi Sarkar accept that as the government reaches the mid point of its five year term, it is remarkably free from any taint of major scams like its predecessors UPA I and UPA II.

 Fight against black money especially the trillions of dollars salted away by Indian citizens in tax havens abroad was an important issue on which Narendra Modi contested the elections and vaulted to power in 2014

Modi has definitely walked his talk. One of the very first decisions taken by his cabinet was to constitute the special team for tracing black money as directed by the Supreme Court, a direction on which  the UPA had not taken action for nearly two years.

The Tax Declaration Scheme (TDS) introduced by the Modi Sarkar and piloted by Arun Jaitley, the finance minister, was definitely different and honest in its intention,Certainly, it  avoided the major trap of a similar tax  amnesty  scheme [Voluntary Disclosre of income schemeVDIS] announced by P Chidambaram, as the finance minister of India in the nineties. That scheme in a way was a mockery on the honest tax payers. While an honest tax payer would have paid 40%, those who declared their black money under the Voluntary Disclosure  of income  Scheme got away with paying  just 30%.!  Modi Sarkar’s TDS avoided that trap and the black money holders paid a higher tax rate.

According to the press reports by the time the TDS is over on 31st October 2016, it would have brought about Rs 30,000 crores revenue to the government’s kitty. Compared to the hoopla made for the VDIS, the track record of TDS is not so bad after all.

Can the Government rest on its oars now and pat itself on its back that it had found an all time solution to the black money problem?  Oscar Wilde said that the thief is an artist and the policeman is only a critic.  Criminal minds will invent new methods of parkinfg black money in tax havens.

How to prevent this from happening?

In other words  the main challenge noe  is how do we ensure that black money does not get accumulated in tax havens once again and the effort of the Modi Sarkar becomes like that of Sisyphusin the Greek lend.

There is a simple way out. It has been suggested by the highly respected, eminent legal luminary Fali Nariman.

 Black money is the oxygen for corruption in all sectors of our public life. Corruption is oxygen for black money. In recent times a humungous amount of black money estimated to be around $1.4 trillion stashed by Indian citizens and especially the top layers of politics, bureaucracy, business and other professions had dramatically grabbed the attention of all genuine patrons of our country. Fali Nariman’s suggestion is disarming. It is simplicity in itself.

Government of India has sovereign powers. Subject to the provisions of the Constitution, the government can make laws affecting its citizens. Exercising this power Mr Nariman suggests that government can enact a law to the effect that all funds held in tax havens will vest in the Govt of India in an authority to be created called Custodian of Funds of Indian Citizens in Tax Havens, with immediate effect.

It is not a case of the government misusing its sovereign powers to become a sovereign robber. In the case of each citizen who can show to the custodian that the funds in tax havens were acquired by him lawfully on which he has also paid the tax dues, his funds will be released to him. Those who have got unaccounted and illegally earned wealth and cannoy convince the Custodian, will be trapped like a thief at night stung by a scorpion during his attempt to steal. Such people will be forced to keep quiet and the money will all vest in Govt of India.

This is a neat solution which does not call for any elaborate administrative arrangement or heavy expenses. As a layman who is no expert in law I respect the suggestion of Mr Nariman and if the government and the authorities are really interested in fighting corruption they will immediately implement it.

One possible legal challenge would be whether the foreign governments and the banks will honour the Govt of India’s order. There are precedents internationally like diplomatic immunity to ensure that the law suggested by Fali Nariman can be defended. Recently the Information Technology Act 2000 also provided under Section 78 the authority of the Govt of India to take actions against Indian citizens who commit cyber crimes which may originate outside India. Yet another law which can further empower the Govt of India is the Benami Transaction Provision Act 1989 under which the benami properties can be confiscated.

 I would suggest that the government should adopt Mr Nariman’s suggestion and enavt a law as suggested by him immediately.

 They will thus create a new Nariman Point in the Indian financial architecture to rival the Nariman Point in Mumbai.

 Mumbai’s Nariman Point was a landmark of the 20th century which through human ingenuity created out of a bunch of small islands off the coast, a solid land mass on which India’s financial capital was built. This hew  Nariman Point in Indian financial architecture will be a landmark for the 21st century ensuring that India maintains the highest standards of ethics in public finance.

4.  Well managed countries like USA and UK do not have very high denomination currency notesa .In the UK the highest denomination is fifty pounds and in theUs it is five hundred dollars.We must also within five years migrateb to a xsystem where the lagest denomination is 500 rupees

Our PM has already  created historyin the political history of Independent India by the tectonic shift to the right t he piloted in 2014.,With above four measures,along   with  the sixer he has already hit with thwe demonetisation of 8th November 2016, he will ensure his place as the greatest PM of this century!

PART 2

We may now lookat the non financial aspects of Modi sarkars attempt at demoetisation.

In a very perceptive article published in the Economic Times, Chennai edition dated 14th November 2016, under the title, ‘Modi harnessing sentiment of masses against the rich’, Neelanchal Mukhopadyay who has also been a biographer of Narendra Modi has brought out very significant and interesting aspects of the political risk undertaken by Narendra Modi, in his bold decision to demonetise Rs.500 and Rs.1000 notes with effect from  8th November 2016.

He begins by saying:

            “In the raging debate over the government’s decision to withdraw notes of Rs.500 and Rs.1000 from circulation, emphasis has been on listing the   pros and cons of the move and whether the temporary inconvenience caused to the people will be neutralized by long term gains. 

Consequently, the audacious crack   with which  PM Narendra Modi  has chosen  to  trash   the BJP ‘s core  constituency coupled with his decisive step towards leaving  an enviable stamp on the nation’s history has  been lost sight of.

 As of now, there is no substantive hope to prove that Modi’s gamble will be successful.  There is however, no doubt that politically this   explosive step will be possibly the biggest game changer so far in the Modi regime, though it cannot be said whether the game will alter in favour of the Prime Minister or against him.

            Mukhopadyaya then goes on to analyze how BJP evolved from the days of Jan Sangh and how Modi himself was able to build the BJP and its leadership into an effective national party to challenge the Indian National Congress.

He observes, ‘for long the BJP and its previous avatar, Jan Sangh was a political party of small traders.  By aggressively advocating the Hindutva idea from 1990s onwards, the party secured support of dominant Hindu castes   in different states.  As Chief Minister of Gujarat, Modi outreached select corporates.  This   tactic helped growth of crony capitalism but also widened the party ‘s economic constituency.  In the 2014 parliamentary elections, the BJP was backed by several social and economic groups, including in rural India, which previously had not trailed behind BJP.  They comprised even dalits and agricultural workers. It is this   socio economic coalition that propelled BJP to power.  It was cobbled together by mobilizing people on the emotional, cultural nationalistic plank fused with a development agenda.

This enormous contribution as a single individual was made by Modi in transforming the BJP as a part of the specific strategy of   deepening its appeal among the different sections of the society shows that Narendra Modi has understood   that the ultimate secret of building a political party that can be a national party of governance is to see that it enjoys the support and commitment of majority of the population of the nation..  This will mean that the party not only meets their aspiration, but also ensures that they can see their stake in the party being the party of governance and in the process ensure the relationship lasts s long and temporary political and electoral arithmetic calculations do not destroy the basic fact.

            In fact, the main phenomenon since independence has been that Indian National Congress which became the party leading the struggle for independence and thereby became an umbrella party representing all the sections of the society. After independence it became the party of governance, a gradually lost its appeal in different states in a couple of decades.  In fact, by 1957 itself, the appeal has started   waning with the emergence in 1956 of the democratically elected Communist government under E.M.S.Namboodri pad in Kerala.

The period from 1957 to 1967 saw the phenomenon of the birth of regional parties and this was encouraged thanks to the linguistic division of the States, the appeal of casteism and regionalism and by 1967 when the elections took place, Samyukta Vidhayaka Dal [S.V.D.] governments captured power in the Hindi belt. The dramatic change brought out by regional parties was such that practically in the whole of North India, from Punjab to Bengal, there was not a single state ruled by the Congress.

 It was only in the South that the Congress could retain its base.  But even this was further challenged with the growth of separatist and regional parties like the Dravida parties in Tamil Nadu and the parties clamoring for self respect like Telugu Desam, which can be directly traced to the insulting of Anjayyah, the dalit Chief Minister of Andhra by Rajiv Gandhi at the Airport in 1984.

            In other states, jingoistic and regional appeals based on language or caste identities became dominant, particularly in the BIMARU states.  Till the 2014 elections, the broad trend at the political level has been that while the National Congress started declining in influence, BJP and regional parties became stronger.  While anti-Congressism was a motivating factor for many of the so called secular non-Congress parties, the BJP appealing to the right and Hindu sentiments could never extend its footprint beyond the cow belt or the Hindi speaking belt. 

Modi’s contribution as a single individual leader in reengineering the social, political base of BJP to ensure that in 2014, it emerged as the party of governance with a majority in the Lok Sabha on its own is indeed incredible.

Neelanjan Mukhopadyay says, “despite the wave in 2014, the BJP’s vote share remained pegged at 31% and in the past 2 ½ years, change if any, is downward, though Modi bhaktas may will issue denials.  Support can increase only if BJP looks beyond the existing class base and forges a new socio economic coalition, more proletarian ‘character’. 

It is not surprising that in exclusive interview, Uma Bharatiji claimed recently that Modiji is talking the language of Marx!

Modi is trying to force a tectonic alternation in the traditional constituencies but has left the bulk of party anxious about the outcome or the return.  Midpoint of his regime, Modi has little option but to explore new avenues, because policies and programs he pursued since coming to power do not ensure political immortality.  Most of his predecessors have at least a decision or two that ensures permanence in history.  None of Modi’s initiative so far matches signatures like that of Jawaharlal Nehru, five year plan and PSUs, Lal Bhahadur Shastri’s push towards Green Revolution, Indira Gandhi – back nationalisation, 1971 war, Rajiv Gandhi – Communication and Revolution, PV Narasimha Rao – economic liberalization, Atal Bihari Vajpayee – Golden quadrilateral, Man Mohan Singh – RTI and rural employment guarantee scheme. 

            Decision to demonetise high denominations currency notes set the political agenda for the second half of the Modi’s tenure.  In fact, the BJP has attempted to alter the discourse with the ‘surgical strikes’, the move against black money is also the political policy reiteration by Modi, backed by party leaders that the proclaimed offence against the parallel economy will be the continuing strategy makes it prudent that the offensive does not have just an economic purpose.  Critics of the decision will be termed as anti-nationalists just as they were labeled several times over in the past.  Modi is trying to harness the national sentiments of masses against the rich.  He hopes to capitalize on behalf of all the sections that inconveniences or losses are more for those higher on the economic ladder, Modi still stirs more hope than everyone.  Up to a certain class , people, imagine themselves as have-nots and accept hardships because it spelt  trouble for the haves.  This form of egalitarianism is new to BJP in practice, though in theory, it has been propounded by the erstwhile Janasangh leader Deen Dayal Upadhyay.His centenary year is now being celebrated.  Modi and the BJP have declared his integral humanism   rooted in the cultural heritage of our Bharat is the governing philosophy of the BJP today.

            The concept of cultural nationalism and  integral humanism articulated by Deen Dayal Upadhyay, which is the current ideology adopted by BJP was done by Deen Dayal Upadhyay by mobilizing people on the motive cultural nationalistic plan infused with the development agenda. 

            This concept has been successfully implemented and executed by Narendra Modi as CM for more than a decade in Gujarat from 2002 to2014 and propelled him to become the Prime Minister of the country.  The question is whether as Mukopadhyay remarks in the article, ‘gambling like in the past, Prime Minister Modi has walked the black money talk in hope that it enables another term in 2019 and becomes his hallmark”.

Mokopadhyay   ponts out ‘months before the crucial Assembly elections, Modi has taken a huge risk.  But then Modi has gambled in the past also.  He walked the black money talk in the hope that it enables another term in 2019 and becomes his hallmark.  Time will tell if he made the right call or not. 

In fact, the initiative taken by the Prime Minister must be examined not only in the context of the oncoming elections of 2019, but also from the view of post independence management of the Indian financial sector.  As Shankar Aiyar points out in his article in the New Indian Express, Chennai dated 14th November 2016, “The quest to curb black money and corruption is as old as the Republic of India.  For seven decades, the twin devils have haunted India.  There have been demonetisations, even disclosure schemes since the creation of institutions of vigilance and legislation of new laws to tackle corruption and black money.  Yet, as the English sting in Hotel California, “They stab it with their steely knives, but they just can’t kill the beast”.

We may now examine the non financial dimensions of the demonitisation.  The most dramatic impact has been on the terrorist activity and the nuclear blackmail from Pakistan.  It may be recalled that the surgical strike on the military side on 28th October 2016 was followed by the financial surgical strike of 8th November 2016.  The fact is that demonitisation immediately had a shock effect on the terrorist because each one of them had to come with Rs.3 lakhs to 5 lakhs in counterfeit currency.  There were financial experts and former ministers who ridiculed by saying that out of the lakhs of crores of Rs.500 and Rs.1000 notes, only 400 crores were counterfeit currencies, but what these eminent men neglected to notice was that it was that small amount which was readily available with the ISI’s terrorists which played the havoc in easing their way and causing havoc particularly in Kashmir and other places where they attacked.  The second criticism is that the black money will continue to accumulate and again it will be repeated.  But this can be ensured by the measures I have mentioned above of that as in United States and Britain, we should move towards a regime in the next five years so that the largest denomination is only Rs.500 not more. 

With regards the issue of corruption, we have already seen how politics can become cleaner and good governance can become a reality because there will be transparency right across the system and the basic principle of having right people for the right job selected in the right manner is adopted, automatically good governance will become a matter of practice in reality.

The next thing arises about can our politics be run without black money.  After all, there are well developed countries like Britain, Germany, United States and Scandinavian countries, which are also having democracies and elections, where the type of massive cash transactions and bribing does not take place.  One sad effect of the seven decades of the type of governance we have had is that the voters themselves have become corrupted and absolutely cynical.  Particularly in places like Tamil Nadu, the voters have come to expect the elections as the period in which they get money, booze and biriyani.  All these will become hopefully a distant memory and the next generation can live a much better governed country than what we have today.

That brings us to the basic issue of individual integrity.  The people naturally are tempted.  The honest people has always been at demand as in every society, and practically in every time, such people have been rare and therefore, they are admired.  But in a country where the principles of good governance operate where the sanatana dharma prevails, good behavior will become more common and bad behavior will be an exception.  We are facing totally a different situation today and the demonitisation introduced by this government can be a gateway for moving into the better India.

Let us all remember the eternal words of Thiruvalluvar,

ஞாலங்கருதினுங்கைகூடுங்காலம்
கருதிஇடத்தாற்செயின்

You can conquer even the whole world, if you considered the timing, the right place and right action.  This is exactly what the Modi sarkar has done as I tried to  highlight in this in this Lecture.

 

We can therefore, hope that after all, Thiruvalluvar is considered as an author whose words are always true – Poyya mozhi pulavar.We can also be happy that pamacharya would have blessed as a trikala gyani the trishul of Narendra Modi!

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