Tagged: Economy

A negative vote today in French Elections


Will France follow Donald Trump’s unexpected victory in the U.S. Presidential Elections and the Brexit philosophy endorsed by millions of British voters to get Britain out of the European Union (EU)? Will the French voters elect an untested nationalist, against a well-established urbanite with a global outlook?

How France decides today in its Presidential Elections (7th May Sunday) will have far-reaching ramifications around Europe and the world. It will determine if the EU survives as a political and economic entity.

While I have no personal views on the French Elections, I am debating if  young, disillusioned French voters will swing in favour of Marine Le Pen, against Emmanuel Macron. If that swing happens in a wild fashion, it is not inconceivable for Le Pen to claim the French Presidency and that would turn Europe upside down. Le Pen is against all established norms in French and European society – against trade, against immigration, against globalization.

In the U.S. Presidential Elections, I bet against Hillary Clinton and won my bet. I thought that she did not really appeal vigorously to the male, white, Christian, rural base of the middle America – and she didn’t, apart from all the other issues which plagued her campaign (like the email server problem, et al). I was not entirely in favour of Donald Trump, but then there was no other credible alternative, and he easily won the elections against Hillary Clinton, though he missed out on the popular vote count.

Can something like that happen in the French Elections?

Why not? A negative vote is entirely possible.

France is in a crisis. Its political and societal divides have engulfed its core to such an extent that radical outcomes cannot be thrown out of the door. France is under attack by immigrant extremism, or terrorism. Economy is in a turmoil and youth unemployment is rising. France has so many problems today that a traditional, globalized, suave and urban President will not get far into his presidency. Macron could prove himself otherwise, but it is highly unlikely he can fix France’s problems, as he does not have enough political and economic management experience. If he fails in his first year as President, it is almost a given that Le Pen’s supporters will revolt and her base will increase dramatically. And, let us not forget that Macron does not even have any party’s support – in fact, he has no party! Yes, he is coming on the strength of a people movement, not a political party!!

Can Le Pen fix the problems of France?

Even less likely than Macron. Her party has always been on the fringes, and most people are shocked she made it to the final leg of the Presidential Elections. She has no experience managing a large country or economy. She would need a lot of management help if she ever gets close to the seat at the Elysee Palace.

So, in a nutshell, it is going to be a huge challenge for France. May be Macron will win as he has a 25 point lead over Le Pen, but then one never knows. But France has to blame itself for any fiasco, as both candidates have never held elected posts and have hardly got any experience, and may not win parliamentary elections scheduled for June this year. How can this happen? How will a President govern without the support of the French Parliament?

All this points to a hugely challenging time for the French people.

The implications for Europe and the larger world community are huge.

Watch the news today and tomorrow closely to see how France votes for its President.

Cheers,

Vijay Srinivasan

7th May 2017

Anti-Elitism and De-globalization


The world is rising against elitism, which is just another word for “learned segmentation”. It means that elitists are rather segmented folks – like a specific group of well-to-do people, a set of people who do certain things with a unique taste, a group of alumni from prestigeous institutions, a bunch of guys who drive Ferraris, a group of ultra-orthodox religious folks, a caste group (in the Indian context), and generally a bunch of well off folks who do similar things and think almost in the same manner, to the exclusion of almost all other people.

Personally, I have tried to stay away from any group with a label stuck on it. I exited the IIM-B Alumni activities as my socialist leanings are not compatible with an entrepreneurial or corporate money bags kind of people, though they may be my class mates. I have rarely seen any one of them doing charity, or engaging in philanthropic work for the downtrodden. They may well wish to do so, but evidence is limited. I even avoid brands – I don’t want to be seen driving a Mercedes or BMW or Audi; I do not wish to have a Rolex watch; and so on and so forth. I was without a Mont Blanc pen for a long, long time and could not say no when my children decided to gift one for my last birthday. When I am seen on the road, I just want to be a normal guy with no accessories which could define me in some way or the other.

The reason why young people are rising against elitism is the strong perception that they have about the relationship which exists between elitism and wealth, almost in an unholy manner, which in turn leads to inequalities in income. Wealth generates more wealth and income for the elitists or the rich folks. Others are excluded, and the exclusion is almost surreal. Things go on as though nothing has changed, everything is hunky dory. People who make obscene money on Wall Street continue to make that money year after year. Similar groupism and exclusions can be cited in almost every scenario. The insidious reach of money and networking power has to be seen to be believed.

One can argue about the merits of meritocracy in this context. I refute strongly the link and the necessity for any society or government to promote meritocracy at the cost of the rest of the society at large. What about the 95% of the people who cannot make it into that “special” list of people who will keep getting promotions and scholarships? In a nutshell, why would the special people be any different from their predecessors? They belong to a particular school, university, way of thinking, family, et al. That does not mean the rest of the people are stupid, or below average, or even average. There is this argument that societies and institutions prosper because a set of meritocrats has been handpicked to manage them and deliver results that are expected. While in a limited set of circumstances this may be true, in the larger context a social mix would provide better stability and sustainability with deeper understanding of societal issues and challenges.

I have not seen a huge difference between people with prestigeous MBAs and non-MBAs in the corporate context. There is only one difference – there is more structured thinking when you have some MBAs around you, and less of that when you have staff without MBAs. Apart from that, outcomes are not particularly impacted because MBAs are driving the businesses or even governments.

So, let us come now to the issue of “de-globalization”. Is there a relationship between “anti-elitism” and “de-globalization”? What do you think?

I believe that the movement against globalization has to be seen in the context of social elitism which predicates that globalization is the way to go for the world as a whole, since societies, countries and organizations can work together to produce better than average results for their combined economies. As a social theory, it is fantastic with an altruistic bent to it, no doubt. However, as a practical application of an interesting theory, it comes short as the results have been less than spectacular. The idea is not “win-win” but rather “win-some win for some time-lose-lose ultimately”. This means that not all sides are winners in a globalization effort. In the outsourcing example, India and the Philippines can be winners to a large extent, the U.S. and the U.K. are initially winners from a corporate cost-slashing perspective, but later become losers when the enhanced business competitiveness cannot continue at the cost of increasing job losses for locals.

The argument that outsourcers make the U.S. businesses more competitive does not hold water for the long term (it is fine in the medium term), as competitiveness in this context refers just to increased business profits. Competitiveness in terms of enhanced proficiency can also be obtained by training the locals to a large extent. Let us not forget the increased business profits come because of lower wages paid to foreigners as compared to the locals.

The liberal thinking is that globalization is great for increasing the volume of trade, and as more nations trade goods and service, eventually the world will become one homogeneous market. Great idea, no doubt. But it is naive and misses out on key economic fundamentals – that average per capita income across supplying and consuming countries need to be similar in order to enjoy true globalization. When India has a per capita income of USD 3,000 (on a PPP basis), and China has USD 8,000, the difference is huge between these two nations and the developed countries which have upwards of USD 40,000 per capita. So, a job loss in a developed country is going to have a major impact in its society.

For the elitists, it is okay – as they are perched on the top anyway. Armchair theorists won’t do anymore given the disarray in the developed countries. Fresh thinking is needed. The answer is not coming from anti-elitists only, but governments and economists have to think harder in terms of sustainable solutions.

Is it any wonder that social democrats such as Bernie Sanders enjoy rock star status? It is easy to jump into a movement and start shouting at the top of your voice, but harder to derive economic solutions which will stand the scrutiny of society. Anti-elitism and de-globalization are not new fads or book topics, but social forces which would make policy makers think deep and in a totally new way.

Cheers,

Vijay Srinivasan

19th February 2017

 

 

Why is Capitalism losing out?


For the past more than five decades, the philosophy of Capitalism has become well entrenched around the world. The Western world developed the concept of Capitalism, where the free allocation of capital and labour to the most demanding production jobs in the right proportion generated products required by the market, while also generating more than adequate returns to the investors (in most cases). The wealth created from the productive use of Capital led to more investments, and so on and so forth. The opposing ideology of Communism which is state-assisted labour deployment only had partial success in the predominantly Communist countries (though Israel followed the state-farming approach which yielded positive results).

In every ideology, there is cause for mistakes to happen – in the case of Capitalism, the owner of the capital becomes greedy and squeezes the labour for higher returns on employed capital – so the term “greedy capitalists”. In later years, this term was used for people who tried to grab whole companies by throwing money – if you recall “Barbarians at the Gate”, who then tried to fire the employees, make the company lean and mean, and then re-list the company on the stock exchange for fat profits, or sell off the company. These are developments of the capitalist theme and nothing wrong (except on moral grounds) from a business perspective as the purpose of a capitalist is to make money at the end of the day, and that concept is not going to change.

In the meanwhile, several large countries such as India, experimented with Socialism in a democratic context (unlike Communism which always had dictatorial undertones). While the world appreciated the new ideology of India such as removal of poverty, the results from the experimentation were not pleasant, as the social investments made by the government did not reach the intended recipients in most situations, and corruption became a bugbear with insidious politicians siphoning off money meant for productive deployment. A corrupt bureaucracy was the downfall of socialist initiatives pioneered by the government. Over the past 50 years or so, socialism gained only one moniker – which is non-interference in the affairs of other nations in the Non-Aligned Movement – and no concrete economic results or benefits which could upend the surge of Capitalism around the world. Hence, socialism was largely considered as a failure, though most political parties will never acknowledge the fact.

But now, we see an upsurge of socialist movements starting with the most capitalistic countries of all – the U.S. The youngsters who I categorize as late teenagers and early twenty somethings, have become tired of the greedy excesses of the Capitalist era, which concentrates wealth in the hands of few people. A case in point is that the top 82 wealthiest people in the world have more wealth compared to 3.7B people of this world, which is just ridiculous. This scenario of excessive wealth within the top 0.01% (or even less %) of the people reduces the possibility of wealth creation for the remaining people, and the resulting gross and obscene income and wealth inequality has caused the youngsters of the world to question the status quo system which favours the rich folks. There is nothing wrong in questioning the status quo and asking governments and political parties to explain the rationale for continued patronage that they extend to the wealthiest people.

There is only one reason why a government (prime example would be the U.K. Government) would want to support the wealthiest folks from anywhere in the world – one is that they bring most of their wealth. The other primary reason is that the wealth could be deployed to create industries which would then require employment – so you would then achieve more than two critical objectives for any government – you create lots and lots of jobs via productive capital investments, the money would be in your country’s banking system, and the resulting employment and business operations would generate additional tax revenues for the government.

Looks absolutely logical, isn’t it? The flaw in the above logic is that most people who move their money do not deploy the same to generate employment and taxes. These greedy folks are looking for ease of a sanctuary location (with no questions asked) and ease of moving the capital in and out, and of course, ease of living. Several countries are greedy enough to provide all of the above facilitators and more.

More and more insight reveals that the government directly does not gain any new net revenues. This is one major reason that social agendas do not receive budgets necessary to sustain the operation. Healthcare is ignored, while defence gets huge investments to support the defence industries. Education is ignored. All put together, people do not see justice and equality in the way things have panned out over the years, and it is no secret.

Socialism is therefore coming back, not with the same mantle but in a different avatar. The key expectation now is reduction of income and wealth inequality (not exactly “redistribution of wealth”), more opportunities for job creation, fairer treatment in the hands of the government, freer and fairer elections which would allow people to better elect their representatives, elimination of corruption and lobbyism, et al. These are all noble objectives, and we all tend to appreciate the new logic which is inherent in this new socialistic approach.

While Capitalism is not going to go away, it should be fearing that the attacks on it would not subside anytime soon. It would lose substantial power in the coming years as more socialists get elected around the globe. It would be rather interesting to witness this transformation in the coming decade, when socialism would be pitted against capitalism and conservatives, as we have seen in the U.S. Elections within the Democratic Party nomination fights.

Have a good weekend,

Cheers,

Vijay Srinivasan

12th February 2017

Welcome 2017


2017 promises to offer non-stop entertainment from a geo-political perspective. I believe it will be a great year with new surprises being sprung upon a rather unsuspecting (is that correct anymore?) proletariat almost every other week. Fabulous, to say the least. All over the world, people are probably gearing up for revolutionary thinking and changes in political and social ideologies, don’t you think so?

Unless you have lived in Mars for the past few months, you will tend to believe what I am saying now – the world is being turned topsy turvy and most people who matter (meaning those who are less than 30 years of age) are cheering, they may not have assessed the outcomes carefully however!!!

2017 brings along a variety of new topics to the table – whether that table is at whichever country around the world, these topics are going to matter. The foremost topic will be the demeanour and behaviour of the new President of the United States, arguably the most important country in the world (China begs to differ, however!). President Donald Trump is already shaking up (though he is only a “President-Elect” as of now) established norms of diplomacy and economic fundamentals, and as usual, is using his Twitter account to deliver policy prescriptions and comments on world affairs and the people that he either likes or dislikes.

The other major thing in world politics and economics is Britain’s Brexit phenomenon, which is shaking up the European Union (EU). British Citizens voted to get out of the EU, but still would like to retain some major benefits of staying in the Union. The British Government is going around saying that it would win major concessions from the EU, which are not going to be granted given the dismay that the other major countries have over Britain’s exit from the EU.

Of course, European coverage will be deficit if we do not mention the aspirations of Vladimir Putin, the President of Russia, who retained his title as the “mover and shaker” of geo-politics. He grabbed Crimea, ensured the defeat of the rebels opposed to President Assad of Syria, and allegedly helped Donald Trump win the U.S. Presidential Elections (according to the CIA and the FBI, as well as President Obama) by hacking and leaking out thousands of emails and documents detrimental to the Democratic Party of the U.S. Who can beat that record?

On the Asian side of world affairs, we would be remiss if we do not mention the North Korean exploits with launching missiles and threatening to explode yet another atomic device very soon. Kim Jong Un is excellent in annoying even his best supporter, which happens to be China. Since he is totally unpredictable, one can only wonder what he has in store for the New Year (should we send him an e-greeting at least?). He does not like any other country in the world, especially the U.S., South Korea and Japan, and is going to continue pushing the limit of intolerable behaviour.

That brings us finally to China, which has proved to be a conundrum as it is struggling to emerge as a well-accepted global military and economic power, much like the U.S. But, China is failing miserably in its efforts to do so. It is doing all the wrong things on its way to super power and market economy status. China needs to understand that people around the world do not care about hard power anymore. The U.S. and Russia have been the world’s super powers for the past six decades, and that is not going to change much in the coming decade. China needs to work on developing its soft power and project its influence in a positive manner around the world, instead of threatening every nation around the South China Sea, moving military equipment and missiles to disputed reefs, and illegally enter the exclusive economic zones of the maritime countries around in the guise of its claim over the sovereignty of the South China Sea. It is losing its image on the world scene.

Nevertheless, the global citizens can enjoy the antics ot the President of the Philippines, who has kept the global media entertained over the past six months or so. He is no friend of the U.S. or the UN. His people seem to like him, and that’s all he cares about – a very unique character who appears to have no respect for justice or rule of law. But then, what can ASEAN countries do? Nothing whatsoever.

Given the situation around the world, the one country which seems to be going about doing its business purposefully is India, right? The Prime Minister of India has gone after black money and corruption in a big way what with his demonetization of large currency notes which was a very brave move. The rural population have suffered heavily over the past seven weeks due to lack of cash, as rural India is largely a cash-based economy. Corruption is still prevalent in most places in India (can you register a property in India without such help?), and it will now shift to the new currency notes. It has been a tough time for over a billion Indian citizens in India, but the Prime Minister thinks that this could be a great way to move India to a digital economy with cashless transactions driving it. Great idea but infrastructure is simply not there to ensure a cashless economy does indeed come into operation in short order – it is going to take at least two to three years before things work out in the way the Prime Minister has envisioned.

No shortage of entertainment, right? There are many other things happening around the world, and one has to just keep in touch with the fast moving media coverage. I hope you are all doing that.

In the meanwhile, here’s Wishing all of you and your families a Wonderful New Year ahead in 2017.

Take care,

Cheers,

Vijay Srinivasan

1st January 2017

 

The “Magical” Kingdom


I was taking a walk along the MacRitchie reservoir this evening along with my wife, as part of my weekend walking exercise regimen.

While discussing about the global economy in general and Singapore economic situation in particular, my wife mentioned that it is highly likely that the U.S. Federal Reserve would increase its interest rates 2 to 3 times next year. Given the recent increase of 0.25%, this might lead to somewhere around 1.0% in total over the next 12 months or so. The stock markets have taken a hit around the world as a result of the U.S. Fed rate increase earlier this week.

Given the growing strength of the U.S. Dollar, the drop in the price of Gold, the increase in the price of Oil, etc., it is apparent that the global economy is headed for more shakeups than ever in the coming 12 months. Combined with the uncertainty of the Trump Presidency, all this adds to the growing concern in Asia of the future of the world economy. Currencies in Asia are taking a major hit, the SGD has dropped to 1.44 to the USD already and is projected to hit 1.50 by the end of calendar 2017.

I made a remark to my wife that the Singapore economy is going to face major headwinds as a result of these developments, and the real estate will be a big loser. There will be auctions and loan foreclosures looming in the coming months and a drop in real estate values which will be a boon to folks waiting to buy an apartment (Singapore real estate is one of the priciest in all of Asia, second only to Hong Kong). Interest rates are set to climb up after a long sojourn of very low rates. Rental values have already been dropping over the past couple of years and recently took a further downturn. Given that the Government has been quite tight on employment passes, the demand is dropping from foreign population.

So, my conclusion was that the “magical” economic kingdom of Singapore is all set to take economic knocks in the next 12 months after significant performances over the past several years. The real estate had doubled between 2009 and 2013 and remained more or less at those inflated prices over the past 3 years (with minor drops of 5 to 10%). This obviously cannot continue for ever and finally the situation is all set to change for the worse for home owners who are planning to sell. The buyers are going to sit tight, despite some annual increases in the takeup rate of apartments.

However, Singapore has always found a way out of economic challenges due to the firm guidance provided by the Government. While real estate market prices are  something that the Government does not directly control, it has put in place some innovative policy mechanisms to curtail speculation and these seem to have, at least partially, worked.

So, if I were a home buyer, I am rather inclined to wait out for the next 6 to 9 months, see some interest rate increase, some significant price drops, some wait and watch games, before actually seeking out bargains. On the national economic fronts, there are going to be some big pains for the next couple of years before recovery can be made. The U.S. economy is bound to make gains, while the China economy is expected to decelerate. Singapore economy is highly vulnerable to external shocks due to its openness.

See – how much a walk around a reservoir (lake) can generate in terms of economic and real estate discussions! I enjoy such “active” walks which help to accomplish some brisk physical walking combined with energetic discussions with the most important person in one’s life – your spouse!!

Enjoy your walks with your spouse and talk economics, health, household matters, and what not. These are very important for relationships as well.

Cheers,

Vijay Srinivasan

17th December 2016

 

The new Protectionism


With the impending arrival of Donald Trump as President of the U.S. at the White House, the major trading nations of the world are worried. First of all, they never expected him to win, and apparently had not drawn up contingency plans. They probably thought they could manage a Hillary Clinton presidency, as she was a supporter of the status quo, though she turned against the Trans Pacific Partnership (TPP) trade deal propounded aggressively by President Obama during later part of her election campaign.

Trade is like immigration – it evokes passionate arguments for and against trade globalization. The WTO (World Trade Organization) looms large on any global trade issue, but it has had a variety of ups and downs while trying to conclude a global trade deal, with stringent opposition from developing countries. Those arguments against globalization have now died down, but a new President at the White House could resurrect th ghosts of global trade agreements, by walking out of multilateral trade agreements. President-Elect Trump has clearly stated that he will revoke the NAFTA trade deal of the Nineties, or at least re-examine it vigorously. The TPP trade deal is surely dead by now, as Trump will not let that agreement even go to the U.S. Congress. And, a Congress dominated by Republicans is in no mood for new trade deals, which it thinks are against the interest of middle class Americans.

While we can recite the virtues of globalization ad infinitum, it is critical to understand the rise of anti-trade, anti-globalization sentiments both in the U.S. and the U.K. (and increasingly, in most of Western Europe). Why did we not predict this phenomenon ahead of current times?

Well, the sentiments were always there, but increasing job losses in the U.S. specifically and stagnant wages have incited Middle Class America to revolt in a democratic manner – they simply decided to reject the status quo politics of Washington, and bring a stark outsider to run the country. Trump is no politician, he was not even in the running. He is a businessman focused on making profits for himself and his family. How will he now carry out his campaign commitments to Americans that he made in the heat of the election campaign, while trying to understand the intricacies of running the Presidency?

My assessment: he will implement what he said he will do (with some tweaks of course). Why will he do that? Just think – in corporate management, we commit to do something and we will have to do it, come what may. Trump is a corporate businessman, running many businesses. When he commits something, he will have to do it, and he will do it – unlike the career politician who is afraid of political backlash. Trump has nothing to fear, he is not from Washington, he is least bothered with back room dealings at the Congress.

This would just mean that he will actually go and do what he said he will do – and, he said those things many times over and over again, and he was consistent, and that is one of the main reasons why he won the election. There is no sugar-coating, there is no “being nice and gentlemanly”, no diplomacy, no niceties with Trump. And, Middle Class America liked what it saw in him – he repeatedly demonstrated it in all his campaign speeches and messages.

Dangerous, right?

Not really.

The U.S. economy is huge and resilient and depends on a global network of buyers and suppliers for its success, and continued growth. President Trump will soon realize it. While he may not sign any new trade agreements, and threaten to walk out of existing agreements, he will be told by the Congress that international obligations cannot be violated. Trump might give some headaches and nightmares, but at the end he is not stupid. He will adjust himself while the world will struggle to adjust itself for a wild run with President Trump over the next four years. But he will push for retaining American jobs in America, and no country will be immune to that pursuit. And, I believe nothing is wrong with the jobs focus, as eventually a well-paid American in the U.S. is going to want to buy things from all over the world. Unless, I am missing something. Disclosure: I am not an economist by training!

I plan to write a separate piece on immigration matters, but on trade matters I think the world should expect a roller coaster ride for most of 2017. And, contingency plans will have to be ready. Currencies will be hurt seriously (see what happened to the Mexican Peso after the Trump win). Immigration will also be hurt.

Wiser counsel will eventually prevail, and there might have to be some serious compromises stuck.

In the meanwhile, brace yourself for a wild, wild ride. This is the world of “new protectionism”.

Cheers,

Vijay Srinivasan

20th November 2016

Surgical Strike Demonetization


The Indian Government carried out a rapid surgical strike last week by demonetizing the 500 and 1,000 Rupee Notes, with the aim of curbing “black” money and eliminating terrorist financing from across the border.

People were obviously shocked as the Prime Minister announced it late on 8th November evening, with almost immediate effect. There was no time left for anyone to “spend” their money denominated in the above two Rupee notes, and since the notes became illegal tender almost right away, people were stuck with millions of such currency notes. While the idea was to eliminate black money, and various ideas have been on the table for a long while, the way it was executed was typical of the style developed by the Indian Prime Minister, Mr Modi. He has been on a mission against black money from the time he assumed office but has been stymied by gridlocks in the system, and even by non-cooperation witnessed in overseas jurisdictions where Indians stash their illicit monies (such as Switzerland). But it appears that he is not a man who would give up easily. The black money hoarders have been hit hard by the new executive order (which has been challenged in Court by the way) as most of them stored the higher denomination notes.

The other group of people who have been hit below the belt are the terrorists from across the Pakistani border, who have always brought in fake Indian currency of higher denominations, and used the same for their terror-making purposes in the Kashmir Valley and elsewhere. Now that would be stopped forthwith by a determined Prime Minister, who is hell bent on stopping them from crossing the border as well.

Of course, in any such well-intentioned measure taken by the government, there will always be collateral damage. Millions of poor people have been affected because they do not have access to bank accounts which are mandatory for crediting of the currency notes (only INR 4,000 will be paid out in smaller denominations, or in the new INR 2,000 currency note, and the balance of the money that you bring in has to be credited to your own bank account). India is a cash economy, and also has a parallel economy which is run entirely with cash. Given the predominance of cash, it is no wonder most people try to keep less number of currency notes by adopting the 500 and 1,000 currency denominations. I always keep 500 Rupee notes when I travel as these are convenient for transacting, and a 500 Rupee note is just the equivalent of SGD 10.50 – in India the 500 Rupee note now delivers what 2 x 100 Rupee notes used to deliver in 2008, given the serious inflation which has occurred over the past 8 years. Hence, it is no wonder people step out of their homes with at least 4 or 5 x 500 Rupee notes when they go shopping. Credit and Debit Cards are not popular. Recent stories of how ATMs have been compromised and Debit Cards have been copied do not generate confidence. Cheques are not accepted in shops. That leaves most people with plentiful cash.

Mr Modi’s action is not a political initiative. I think it is a specific action plan put together with the collaboration of the Reserve Bank of India and other leading banks, with the main aim of curbing the growth of black money. From that perspective, I believe it is a very good initiative with aggressive execution. Such an action sends a strong message to all in the country, including politicians, industrialists, lobbyists, commoners, et al, as well as terrorists. It also sends a powerful message to overseas Indians.

Of course, I think it is not correct to let millions of “small” people with urgent requirement to convert 500 Rupee currency notes suffer, when the government-owned banks have run “dry” of the required change of small denomination notes. It is also not correct to hand over the new 2,000 Rupee notes to these folks, as their primary need is to spend small money, and this new note (most of the country is yet to see these new notes) is difficult to convert to smaller 100 or 50 Rupee notes which are in huge demand today. India always has problems in the planning and quality of execution, though the Prime Minister is teaching India on the speed of execution and its logical necessity. This situation is no different, and the government will do well to have a more detailed planning for the implementation of future such initiatives – the Prime Minister has promised more steps targeting black money in the coming months.

The country has to get ready, and should start to think “small” – I mean, spend money in small currency notes from now on. Hoarding of the new 2,000 currency notes will not be a good idea, as it is supposed to be traceable with some unique characteristics.

The other collateral damage was caused to millions of tourists who visit India during the current season of cool weather, who have been left holding 500 Rupee notes with no possibility of exchanging at their airports of departure. May be they will remember their India visit during this particular occasion of demonetization and frame these notes when they are back home in their respective countries. One day, these invalid currency notes might fetch a premium in the market, who knows?

Obviously, the politicians are the most affected as they stash huge amounts of cash all over the place for their illicit activities such as vote buying, and buying of members of state assemblies/parliament, influencing ministers, etc., They will be cursing the super human efforts of Mr Modi in obliterating their ill-gotten wealth.

There have been numerous WhatsApp messages about the demonetization topic, and some of these show the now invalid notes being used to hold peanuts, as a joke of course. I have several of these notes and have to find a way to convert; there are millions of people overseas who have the same problem. May be we will sacrifice these notes for the benefit of India and endorse the attempt to convert black money to white eventually, though it is going to be a long, long time before that is accomplished even to the extent of 90% of the currency notes in circulation in India.

I would like to complement the Indian Prime Minister for this initiative, but at the same time would like him to pay more intense attention to the execution process and elimination of inconvenience to the poor and downtrodden folks who need to lead their lives in a routine manner instead of queueing up for the entire day at the ATMs (which are not working) or at the bank branches.

Let us hope this initiative will produce the planned and desired effects for the Indian economy,

Cheers,

Vijay Srinivasan

13th November 2016