With a stock price surge of 13% after Amazon’s most recent quarterly filing, Wall Street analysts were reportedly “shocked” by the company’s rapid growth. The e-commerce juggernaut beat both quarterly revenue and earnings forecasts, and continues to trailblaze with a 34% revenue growth rate.
This boded well for the net worth of Amazon founder Jeff Bezos, which fluctuates wildly based on Amazon stock price movements. In fact, as Visual Capitalist"s Jeff Desjardins notes, the recent jump in price on October 27 helped catapult him past Bill Gates (again) to become the richest person in North America, as well as the entire world.
As of publication time, according to Forbes’ real-time wealth tracker, his wealth stands at $92.6 billion.
NET WORTH LEADERS BY CONTINENT
Today’s graphic comes to us from HowMuch.net and it shows the richest person on each continent.
Net worth figures from HowMuch.net as of November 3, 2017
To be thorough, HowMuch.net also “nominated” a person to represent the continent of Antarctica, even though it has no permanent residents.
Chosen for this title? It’s none other than Arnold W. Donald, the CEO of Carnival, the world’s largest cruise company, which monetizes the icy continent for its Antarctic cruises on a regular basis.
* * *
This graphic has been amended since initial publication. Just yesterday, Mukesh Ambani climbed up the list to become the richest person in Asia, and it now reflects that. Thanks to everyone who pointed this out.
Since the announcement of demonetization of Indian currency on 8th November 2016, I have written a large number of articles. The issue is not so much that the Indian Prime Minister, Narendra Modi, is a tyrant and extremely simplistic in his thinking (which he is), or that demonetization and the new sales tax system were horribly ill-conceived (which they were). Time erases all tyrants from the map, and eventually from people’s memory.
According to the Global Slavery Index, an estimated 18 million Indians, equivalent to half the total population of Canada, are bonded, modern slaves.
My interest has been mostly to use these events to document the underlying causes of such utter missteps, which technically must be called stupid, and to explain how the real disease runs much deeper and much wider, and that no solutions for this can be found in the next elections.
My interest has been to explore the socio-cultural foundations of India that keep it perennially poor, wretched, and diseased, a state from which it never seems able to escape. I have attempted to dissect the unwitting tendency of Indians to destroy any material or civilizational advantages, which in the last 300 years have all accrued as products of extraneous events: Free gifts of Western experience and civilization, management skills, and technology, all offered on a platter.
Vegetables being washed in sewage water. This gives shine and color to vegetables. But do you really want to eat vegetables washed in human excreta? Even for such basic commodities, one must look for a trustworthy seller. In a tribal society, big institutions simply do not work.
I have attempted to show that now that since the British left 70 years ago, Indian institutions have continued to fray, degenerate, degrade, and fall apart. The British left a robust judiciary, a university system, and parliament in place. Except for their facades, all these institutions are now soulless shells, something that politically correct intellectuals at the IMF, the World Bank, etc., completely fail to see.
The math is very simple: If Western institutions are to be imposed on India, such institutions must be run by Westerners as well. The corollary is also very simple: Without the British running India, India cannot continue to exist the way the British left it.
A minister in the government watering plants in heavy rain. This would be a joke, but knowing that these people rule India I consider it a tragedy. The photo shows C. P. Singh at a tree planting event on 17th July 2017 [your editor needs to chime in here: Indian politicians cannot claim sole ownership of the proud tradition of watering plants in the middle of a rainstorm. As we have reported in Drowning the Fir , the presidents of Turkmenistan and Belorussia have also not shirked their baby tree soaking duties just because there was a downpour. The plant in question was solemnly victimized near the Palace of Independence in Minsk last year [PT].
India’s institutions must over a period of time realign themselves to reflect the underlying character of India’s society. That character, alas, is tribal and irrational, which the British, missionaries and Western education were only able to affect positively to a marginal extent over the 200-300 years of their influence. India must revert back to its medieval, tribal institutions, its violent, irrational way to “communicate” and deal with its problems, and never-ending internecine conflicts.
The future of India looks extremely grim, Modi and the recent events are nothing but passing symptoms of this. The British also left a certain way of thinking and social behavior among the middle class in India. One important aspect of this was the pride a minority in the middle class felt about freedom of speech. This is the last but rapidly crumbling pillar of the British heritage, which I want to address in this last article of this series.
Madhya Pradesh, a province with a population of 81 million, introduced compulsory flag hoisting in schools in January. From November 2017, when teachers take roll-calls in class rooms, students will be required to shout, “Jai Hind” (Victory to India, a battle cry, but also carrying strong Hindu religious connotations). All Western institutions implanted in India are mutating to cater to the underlying tribalism. “Nationalism” is not underpinned by any values in the Indian mind, but relates merely to an arrogant, geographical concept. Western-style schools are mere indoctrination centers. What India needs is critical thinking, not the mindless recitation of slogans and sound-bites. Such slogans and religious indoctrination numb the minds of these kids, making them worse than the uneducated masses. The weight of indoctrinated beliefs is such that after a certain age they are totally incapable of any individuality or capacity to think. They merely parrot what they are told. Adults incapacitated to think react with anger when reasoned with, and become tools of demagogues. Indian demography is a major liability, and very likely cause of the next international humanitarian crisis.
Demonetization: Now Officially a Failure
On 8th November 2016, India’s prime minister Modi appeared on TV to announce that a few hours later 86% of the monetary value of currency in circulation (Rs 1,000 and Rs 500 bills, about US$15 and US$7.50 respectively) would no longer be legal tender. This sent hundreds of millions lining up upside the banks to convert their unusable cash into legal tender. The government had made absolutely no preparation. The replacement currency bills had not been printed yet, in a country where 95% of consumer transactions happened in cash.
The knee-jerk move was a rather childish decision taken by a few senior politicians with little consultation with banks or economists. The problem was not just that they took a wrong decision it was also that they thought they could take such a decision without appropriate checks and balances. These are the same people who control the nuclear button and rule a population of 1.35 billion people.
Without a “monetary” system, the economy rapidly went into a state of trauma. Tens of millions were rendered jobless, as neither employers had the cash to pay salaries and input costs, nor did buyers have the cash to buy their products. Scared of the turmoil, even those who had cash avoided all unnecessary expenses.
A memorable “don’t panic” moment on the road to fully digitized Nirvana… [PT]
Factory and shop workers preferred to line up outside the banks to convert other people’s money for a lucrative commission. Wealth-creating activities came to a standstill. Vegetable prices crashed by as much as 50% as poor people who had lost their jobs were buying less. Farmers had to destroy their produce. Factories closed. A vicious cycle was set into motion.
People were given until the end of December 2016 to deposit their banknotes. They were required to use the banking system, which was clogged by then. The banks were also acting as extended arms of the tax office. Digital payment systems were run very unprofessionally and banks suddenly started to charge unapproved commissions and fees.
While the government wanted its largely illiterate population to go digital, it took the central bank another eight months to report how much of the demonetized currency had been deposited. While this number will be updated and increase in the next report, they have admitted that more than 99% of the currency has been returned. This figure is quite ironical, as a lot of people — in tribal and rural areas with no access to banks and those holding cash outside of India — failed to deposit their cash.
It is easy to conclude that effectively more than 100% of the extant cash was deposited with banks. On 9th November 2016, when I went to convert a part of my cash into legal tender, the person in front of me was found to have counterfeit cash. He managed to get his cash back by applying his influence on the manager. He very likely deposited his cash later in a rural bank where machines to check counterfeit currency do not exist.
In short, demonetization failed, it caught no black money, and quite hilariously, it actually helped to launder counterfeit currency by transforming it into legal tender. This was on top of the massive assault that the economy had to bear.
A sad moment: holders of “black” and counterfeit money receive the terrible news of imminent demonetization… [PT]
None of the Objectives Achieved
Despite the fact that government expenses - largely unproductive and often counter-productive - are up hugely, and statistics are being manipulated, India’s official GDP growth rate has fallen significantly, to 5.7%. In due time this will worsen significantly, for India is stagnating and very likely regressing.
Absolutely none of the claimed objectives behind demonetization have been achieved. As soon as people got hold of cash, they went back to their old ways of transacting. People are now storing more cash under the carpet than they did ever before. Corruption has increased hugely. The situation in Kashmir is extremely unstable. Terrorism is up; and India narrowly avoided a war with China.
Goons destroying shops with Chinese (or what they think to be Chinese) products as the tension builds up at the border. Ironically, as in the West, Chinese products are everywhere in India — the tools used by goons are likely made in China as well. For almost a month, Indian and Chinese troops stood face to face, and in at least one case fought with bare arms and rocks. China’s GDP is more than five times that of India. Both countries have nuclear capabilities. I am not in a position to know which side was in error, but Modi desperately needs to distract Indians and the international media from economic stagnation. Was he looking for a scapegoat?
One must revisit the fundamentals of Indian culture. Indian society is tribal and irrational. It simply cannot plan and undertake big projects, unless they are heavily subsidized. There is a reason why more than 50% of Indians still use open spaces as toilets. There is a reason why in virtually all of India, sidewalks, ambulances, fire-brigades, and roadside garbage cans — things that are considered elementary services in any society — are conspicuous by their absence.
Tribal and irrational people also lack moral instincts, empathy and compassion. Members of the so-called educated Indian middle class have no interest in the suffering of poor people. Even after they have emigrated, they soon forget how desperately they wanted to leave India. They strive to make India look good in the eyes of foreigners, not for the sake of India, but in the hope of vicariously making themselves look good.
Those who have gravely suffered due to demonetization still — and ironically, increasingly — support Modi. India lacks the history of revolting against tyranny, as people merely adjust themselves to the new ecology. India’s kind of drudgery and wretched poverty, which makes it worse than some of the poorest countries on the planet, does not come easy in this modern age of technology.
Nothing fazes the common man in India… a R.K. Laxman cartoon (see also further below) [PT]
As any person with a basic understanding of probability, data security and the realities of India would have seen, India’s centralized ID system, Aadhaar, was going to turn into a disaster. About eight million fake ID cards are known to have been issued. They cloned fingerprints, etc. There simply isn’t such a thing as “fraud-proof” in the real world. The card is used for all kinds of tyrannical intrusions, although the benefits are yet to be discovered, for the poorest are still running from post to pillar to get a few rupees promised to them.
The new GST system has been an unmitigated disaster. There is a plethora of rates. There is a minimum of two filing requirements per month, and a requirement to upload invoice details to a server, which keeps crashing. Two months after GST was imposed in an unplanned way, no one — not even those in the government — knows what the rules really are, which keep changing to boot [ed. note: India’s GST rules are simply impossible to interpret in some cases; the chaos businesses are faced with is described in this Reuters article – for instance, the different parts making up a personal computer are taxed at different rates. What to charge for a laptop, which is a single unit? No-one seems to know. In the meantime the government has been forced to cut its planned infrastructure spending, as tax revenues have come in almost 50 percent (!) below plan. [PT].
The Genie of Violence is Out
What terrorism and corruption mean in the Indian context requires one to dig deeper. India’s governing principle is fear, delivered by irrational representatives, who are elected by an uneducated and superstitious populace, all driven by their tribal affiliations, unanchored to reason or morals. In this predicament, no solution to what looks like terrorism and violence to the rational eye can work.
Corruption is another curious issue. What looks like corruption to the West can hardly be called corruption in the Indian context. India’s society is not based on moral calculations, but on expediency. What is good for the tribe is what is considered right. Western institutions based on the rule of law simply do not work under such conditions.
People support “anti-corruption” drives as long as they are beneficiaries of them, but will refuse to honor them when they can be “corrupt” for their own gains. It is virtually impossible to find an Indian— both in the public and the private sector —who will forgo gains from corruption when he can get away with it.
Anyone who thinks that violence and “corruption” can end in India lives in a fool’s paradise. As the institutions the British left behind continue to fray in India, corruption and violence will actually get much worse over time, regardless of short-term noise.
According to Indian laws this is illegal. But so what? Constitutions and laws are mere ink on parchment. For a culturally tribal society, there is no escape from such a medieval existence, and in India’s case, regression towards it. Stricter laws will not help. Democracy certainly does not help, for this case is indeed a case of democracy in action.
Violence is an inherent part of the Indian psyche and social arrangement. In an irrational society, violence and might is the deciding factor. Honor killings, misogyny, misandry, the caste system, and incest have forever been a part and parcel of Indian life. These things happen mainly because the perpetrator does not even know that what he is doing is wrong. His perceptions are based on his tribalism, not any concept of morality.
Gauri Lankesh, a journalist, was shot dead on September 5, 2017. While no motive is known, Hindu nationalists have increasingly targeted journalists and writers for voicing their views. Even anti-superstition activists have been murdered. Fanatics have created convenient sound-bites, which are now well-accepted by the irrational populace (particularly the so-called educated): “pseudo-secular” (read, pro-Islamic terrorism), “presstitude” (read, prostituting press), “anti-national” (read, does not go along with Hindu-fanaticism), “libturds” (read, leftists; in the Indian context right-wing is about religious fanaticism or ultra-nationalism), etc. Contrary to the popular perception in the West, India is a violent society. Reporters Without Borders ranks India among the three most dangerous countries for journalists in the world, below Pakistan and Afghanistan.
Freedom of Speech
When the British left India, it was assumed to be a democracy. What people hardly noticed was that those left in political positions had been mostly selected by the British. Those the British left in power, their children, and now even their grandchildren, are gone by now. Modi represents a complete break from the British legacy.
India’s tribalism is now in full force. The concepts of individual liberty and freedom of speech were completely alien to the societies of South Asia. They still are.Might is right was and is the ruling principle.
During colonial times, elite Indians were trained and educated in the UK. English rapidly became the language of those who wanted to be seen as sophisticated. British mannerisms were rapidly accepted by the who’s who crowd.
Even the most uneducated tried their best to drop as many English words into their local languages as possible. Today, local languages spoken in India are heavily larded with English words. Close relatives talk to each other in English, even if their mother-tongue is a local language. Even when their English is rather weak, they still use it as much as they can.
Indian dresses have mostly gone out of fashion, particularly in urban areas. Every middle class Indian aspires to go to least one foreign country if he wants a place in his social circle. He must have English music blasting away in his car. He must watch English movies. And he should never ever be seen reading a non-English book — although reading habits are virtually non-existent in India. If you speak your local language without larding it with English words, you are seen as a backward slob.
Apposite cartoons by the late R.K. Laxman, a famous Indian cartoonist (the unperturbed “common man” on his bed of nails further above was also drawn by him; he invented the “common man” cartoon figure in 1957, which became a highly popular staple of his work). [PT]
Indians never understood that it was not the form, the facade or the clothing that gave massive success and superiority to the British. It was the British frame of mind, which was anchored to reason, which allowed them to navigate the world, optimize their position, and benefit from it. Indians have adopted the packaging, but they have not only forgotten the substance, but lacking the concept of reason, they could not even see the substance.
One very important aspect of British social behaviorism that was accepted as a sign of sophistication in India was freedom of speech. At least among the formally educated, even if they had no comprehension why freedom of speech was important, some learned to approve of it. You could find flaws in a person’s religion and not have to worry about giving voice to your finding.
Contrary to Pakistan, Sri Lanka or Bangladesh, freedom of speech managed to survive much longer in India. India wasn’t much better in other human indicators, but its massive ethnic, lingual, regional, etc. diversity meant that there were far too many inner conflicts for the any single dogma to become powerful enough to take a position against a small minority that held on to its views.
India’s respect for freedom of speech — as was the case in Pakistan and Bangladesh — lacked the foundations of reason, respect for the individual, or craving for liberty. With time, as the distance from British rule has grown, this once deeply inculcated social behavior has slowly but surely begun to dissipate.
Over the last few years, suppression of freedom of speech has picked up pace. Western media portray India as the place of Gandhi and yoga. This is quite erroneous, particularly when the last classical liberties are now waning in India.
Conclusion
In this series of articles that started with my expose on what was happening on the ground during the demonetization of 86% of monetary value of Indian currency, my key interest has not only been to show what was happening but most importantly to explain why it was happening.
My interest has been to show that without the British to run them, Indian institutions are now rapidly regressing to their pre-colonial, quasi-medieval, tribal past. Indian culture is tribal and irrational. It simply cannot maintain, let alone create, institutions of the type the British left behind.
Freedom of speech is one of the last surviving major pillars of the British legacy, but it has weakened significantly and is rapidly crumbling further, with Modi as a major catalyst.
R.K. Laxman gets the final word – the Indian space program decided to take advantage of the common man’s resilience… [PT]
India"s embattled Prime Minister Narendra Modi faced a double whammy of abuse this week as his nation"s economic growth collapsed to its weakest since Q1 2014 and India"s Central Bank released a report on Modi"s extraordinary "demonitization" plan last year showing that 99 per cent of the high denomination banknotes cancelled last year were deposited or exchanged for new currency, crushing Modi"s lie that his contentious "war on cash" would wipe out huge amounts of so-called "black money".
When Modi announced in November that Rs1,000 ($16) and Rs500 notes would no longer be legal tender, he suggested that corrupt officials, businessmen and criminals — popularly believed to hoard large amounts of illicit cash — would be stuck with “worthless pieces of paper”. At the time, government officials had suggested that as much as one-third of India’s outstanding currency would be purged from the economy - as the wealthy abandoned or destroyed it, rather than admit to their hoardings - reducing central bank liabilities and creating a government windfall.
Since he unleashed his cunning plan, India"s GDP growth has slowed dramatically.
After India"s Composite PMI collapsed, India"s Q2 GDP growth slowed to 5.7% - its weakest since Q2 2014...
And now, as The FT reports, the Reserve Bank of India’s annual report on Wednesday suggested that most holders of the old currency managed to dispose of it, estimating that banned notes worth Rs15.28tn ($239bn) were returned to the bank. That amounts to 99 per cent of the Rs15.44tn of the old high-value notes that were in circulation when Mr Modi made his announcement, according to the finance ministry.
The government’s critics were quick to seize on the RBI’s announcement as evidence of the policy’s failure.
“99 per cent notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” former finance minister P Chidambaram tweeted.
Rahul Gandhi, de facto leader of the opposition Congress party, tweeted: “A colossal failure which cost innocent lives and ruined the economy. Will the PM own up?”
The bank’s figures are a political embarrassment to Mr Modi, who had appealed to the nation to endure the disruption and hardship to punish the rich and corrupt, and deprive them of their ill-gotten gains.
Many lower income Indians hard hit hard by cash shortages supported the demonetisation policy because they believed the rich were suffering more.
India Reverts to its Irrational, Tribal Normal (Part XIII)
Over the three years in which Narendra Modi has been in power, his support base has continued to increase. Indian institutions — including the courts and the media — now toe his line.
The President, otherwise a ceremonial rubber-stamp post, but the last obstacle keeping Modi from implementing a police state, comes up for re-election by a vote of the legislative houses in July 2017. No one should be surprised if a Hindu fanatic is made the next President. India is rapidly entering a new phase.
Indian Prime Minister, Narendra Modi on the cover of an Indian magazine in 2002, when he was the Chief Minister of the Indian province of Gujarat. During his reign in Gujarat, a civil-war like situation erupted, which seriously segregated the province’s society. It brought Hindus into a state of trance and excitement and provided them with the fake-security of the collective. Alas, wealth and civilization are created by an intense focus on value-addition, not from the short-term escapist excitement of mobs expressed through riots and rape. Destructive endeavors are a major vulnerability of poor societies, given their irrationality and lack of foresight and planning, and their short-sighted focus on high time-preference, pleasure-centered activities.
Modi, a major world-traveler, who has run around quite a bit to please foreign governments and win the support of identity-lacking non-resident Indians, is no longer going abroad with the same abandon. Historically and even today, whatever gained approval in the West is what Indians have looked up to.
But Modi has matured. Modi has directed the attention of Indians to nationalism, Hindutava (fanatic Hinduism), the army, the flag, the anthem, and other superficial collective “causes” not underpinned any values or wealth-creating, civilization-producing objectives. Behind this is an empty arrogance pumped up by having grown relatively richer (still with GDP at a mere $1,718 per capita) over the last several decades due of the free gift of western technology.
If all this reminds you of the early days of the Arab Spring, you are right on track with respect to understanding what is happening in India. India is an extremely irrational, superstitious and tribal society, which I have discussed in great detail in earlier articles, the last one of which is linked here.
War of Attrition
Modi has infused so-called educated Indians with a sense of confidence and identity. It does not matter that this is all fake. To a man with a tribal, irrational mind incapable of thinking about tomorrow, throwing furniture onto the bonfire is not a problem, for today’s excitement is all that matters. Lacking empathy and compassion — another tribal “quality” — he pays no heed to the suffering of his fellow man.
It seems possible that Modi is focused on the wrong statistics [PT]
In the deeply irrational society of India, the institutions of liberty that the British left behind were slowly but surely hollowed out. That had to happen, as the glue and the foundations of reason needed to sustain these institutions do not exist in Indian society. The tribal instincts of Indians are diametrically opposed to the concept of liberty. The concept of free speech, a remnant of the intellectual climate fostered by the British, survives for a small fraction of society – but even that is receding rapidly.
Compared to what happened elsewhere in South Asia, the Middle East and Africa, India was — on a relative basis — a beneficiary of its ethnic diversity. This diversity ensured that a collective approach to destroying institutions of liberty and the rule of law worked only slowly, due to infighting.
Isn’t it racist to call Indians irrational? Political correctness has indeed made people come to believe that we are all blank slates, which merely need to be reprogrammed through training. The reality has been quite different, as our everyday experience in this globalized world shows. Cultures are so resilient that even after people from these poor societies have migrated to the West, they not only fail to assimilate but more importantly, often regress.
Modi’s focus is on centralizing Indian society, increase the State’s control over the individual, increase taxes and compliance, and force people’s attention on collective goals. The tribal instincts of Indians are finally getting the upper hand, as the institutions left by the British come to the end of their lives. India’s chaos means that its totalitarianism will not be like that of Nazi Germany, but similar to that of Zimbabwe.
Modi’s totalitarian agenda also finds support among the IMF, the World Bank and the similar globalist institutions, which appear to be rather simplistic in their thinking. There is a strong belief among these institutions — as they lack understanding of the differences between cultures — that what works in the West must also work in India and other wretched societies.
That may have been possible as long as the British ran India. Without them, fragmentation of the unnatural nation-state of India, or at least aggressive decentralization is the only practical option.
In India where an organization of two people has one person too many, the forced centralization that Modi is undertaking is bound to lead to massive chaos, civil war, turmoil, and the eventual disintegration of India into its tribal constituents. India has chosen a painful path to revert to its tribal normal.
Colonization by the British was the best thing that happened to what came to be known as India. Without the sanity provided by British supervision or the institutions left by them, Indian tribes will forever be engaged in a war of attrition against each other.
Yogi Adityanath, a Hindu fanatic and the new Chief Minister of Uttar Pradesh, the most populous province of India, distributing goodies, while security personnel restrain citizens from throwing themselves at his feet – a favor citizens gratefully bestow, and those in any kind of power expect. Does anyone really think India is “independent” or “democratic”?
Will digital technology alleviate their pain and drudgery? Or will it actually make it worse? (Photo credit: P. Sainath, whose work exposes the suffering of the otherwise invisible poor people of India)
Dysfunctional Organizations Have Become Worse
On 8th November 2016, Modi declared 86% of the monetary value of India’s outstanding currency illegal. Even today, ATMs remain cashless. The banks are clogged with throngs of people. Small businesses — the backbone of India’s economy — keep failing, because people continue to avoid discretionary spending.
People have suffered economically as the smooth flow of the economy was disrupted, and transaction costs for businesses have increased. Food prices have recovered a bit recently, but are still at about half their previous levels. Unfortunately, this is not because production has increased, but because demand has collapsed, with many of the poorest people likely unable to buy food.
A sign adorning the entrances of banks in India with depressing regularity.
Photo credit: Ajay Verma / Reuters
India is one of the countries with the highest traffic-related deaths in the world. This happens despite its slow-moving traffic. India has been an utter failure in providing basic government services. Ambulances are often not available at all, or if they exist they are used for the private purposes of those in authority.
In the rare cases when they do arrive, it takes them forever and even then they almost never have paramedics. They often refuse to take the injured to a hospital unless a close relative goes along. The hospitals are either ill-equipped or disinterested in taking such patients if they are not accompanied by a relative.
If one is incapacitated in an accident for any reason, the chances of getting emergency aid are extremely low. One is quite likely to simply die on the roadside. The situation is similar with the police and other emergency service providers.
The Indian government completely fails at its most important job. Indians simply do not have the capacity (given their irrationality) to build and maintain such basic organizations. This happens even when they spend massive amounts in order to maintain such organizations.
India has almost never undertaken a big project and completed it. None of this has discouraged the dreamer Modi. The demonetization effort, in which the government merely had to replace old notes with new ones, has been an utter failure. It is an ongoing pain which has left the economy in shambles, despite the rosy growth figures reported by the government.
Asian bureaucracies compared: a score of 10 is the worst possible (it means your country is drowning in red tape and corruption). India has a score of 9.21 – making it a world leader in red tape. [PT]
The Realities of Going Digital in India
Over a billion people in India have no access to internet. When it is available, it is often very slow. Electricity is unreliable. Bank websites are extremely unwieldy. To make an online transaction, the login process is usually very complicated, often requiring several steps and verification codes sent as text messages.
More than a month ago, I paid online for a flight ticket from Delhi to London. The money left my account, but I never got the ticket. It was virtually impossible to get in touch with the Indian company I had bought the ticket from. When I did finally manage to contact them, they told me that they had refunded the money. The bank says it never got the refund. Of course, I have had to personally visit the bank every time and spend a long time waiting to talk to someone. In this electronic day and age, more than a month after the event, no-one knows where my money is.
It is hard to pinpoint who deserves the blame. Indians are extremely unskilled, uneducated (despite paper certificates aiming to prove otherwise), and lack work ethics. They almost never have passion for their jobs or an interest in providing good services to their clients. This is the main feature characterizing many Indian companies. Management and owners lack professionalism and are singularly focused on the bottom-line, by hook or by crook, eschewing true value-addition.
And then a discovery was made amid the rubble and the ruins – let’s focus on that… [PT]
I know many people who refuse to use an ATM card. People refuse to make credit or debit card transactions, as they cannot trust the system. Many years ago my Indian credit card company refused to reverse an unauthorized charge. When I asked them to cancel my card, they upgraded my card and imposed a yearly fee. I had no choice but to stop making payments to end a never-ending cycle of problems.
Given the risks involved, many people simply walk down to the bank branch to make an online transaction, which obviously defeats the whole purpose of going digital. When Indians buy something online, they tend to use the “cash on delivery” option, a unique option for buyers in India, where people have no work ethics or trust in each other.
Both the lack of trust and the lack of digital infrastructure are reflected by the fact that 98% of all consumer transactions in India are carried out in cash. Yes, banning most outstanding cash currency was probably a tad disruptive… [PT] – click to enlarge.
Virtually anyone one meets in India is perplexed about the charges banks impose on accounts these days. There are non-agreed fees and commissions that appear regularly, and on top of those, service taxes are charged. There are tens of charges which no one knows the reason for or is able to explain.
Bank employees favor you with a blank stare when you ask them for an explanation. Even Modi fans finds themselves boiling in anger when their bank statements arrive.
India’s attempt to go cashless will fail. India’s e-commerce companies will fail. The skills and ethics required to run big organizations simply do not exist in India. In the meantime, the forceful imposition of cashless transactions will only succeed in imposing massive costs on society.
Other Forced Digitalization Will Fail
There has been much talk about the newly imposed national ID system, Aadhaar, and the GST system that is expected to be rolled out in a few months.
Errors are an all too common feature of digital India. Aadhaar is used for purposes it was allegedly not intended for.
Aadhaar will fortunately not lead to a Nazi-style police state. India is too chaotic and undisciplined for that. India will be a Zimbabwe-style police state. The stated purpose of Aadhaar was to provide assistance to the poorest people in society. You often see them sitting outside bank branches, begging to get the equivalent of a few dollars that are due to them, for the money often isn’t in their accounts or simply untraceable.
Mistakes and disappeared money that should be highly unlikely happen all the time in India, as the kind reader by now surely understands, given India’s cultural underpinnings. Data breaches and leakages from the Aadhaar system are becoming everyday news.
Even in a perfect system, which is anyway not possible, Indians will still engage in data breaches for bribes, etc., as they simply do not have respect for their own professions or pride in what they do. Despite the fact that it is unconstitutional, India’s government is making Aadhaar compulsory for filing tax returns, using government services, salary payments, etc.
A rather perceptive cartoon about the Aadhaar card. In the meantime India’s Supreme Court has ruled that Aadhaar cannot be made mandatory. The government seems set on ignoring this ruling and is pressing ahead with the scheme anyway. [PT]
India’s much talked about GST system is to roll out in July. GST will impose a massive need to create audit trails. The simple movement of a good by a transporter to someone’s house will require an electronic document to be produced. Couriers who have so far not had any involvement in this process will be entrapped. Similar e-way bills will have to be created as goods moves from couriers to trucks or change hands in any other way.
These documents will have limited validity, so if a person has a possession of a good for more than a certain time while it is in transit, a new e-way bill will need to be created. Any movement of inventory within the same company will have to be documented and filed. Even very small companies will have to file three documents every month and another document every year.
No one knows for sure how GST will be implemented. I doubt that the government itself actually knows it — in fact, of course they don’t. It will definitely create a new wave of chaos and many aspects will likely need to be reversed.
India has a serious skills shortage. Indian companies can e.g. not find skilled accountants. Most will find the costs associated with implementing such a rigorous system far too high anyway. Increased demand for tax officers and accountants will reduce the pool of workers available for productive activities.
Anxiety is a Way of Life in India
India’s attempt to go digital will fail. Digital cash will fail. E-commerce companies will fail. In India, the national ID-card system, Aadhaar, will fail. The GST system will likely fail, or it will at least create massive problems in implementation. All these programs will impose huge costs on the economy and the well-being of entrepreneurs, including the wretched poor in the large informal economy.
India is looking for totalitarian solutions to deal with problems created by totalitarianism and tribalism. India is trying to use the the facade of the technologically advanced West hoping that the packaging will automatically deal with the lack of inner substance. Fail even with respect to superficial issues seems preordained
India’s government cannot provide basic services to its people. Ambulances are conspicuous by their absence. But Modi wants to move on to doing bigger things. In the last 70 years of independence, Indians have systemically destroyed the institutions of the rule of law that the British had bestowed on the country.
Cash is king in India, in every respect – click to enlarge.
There is a lot of pain and no gain facing India. If they had any sense they should be begging the British to return and rule the country. That is the only option apart from chaos, disintegration, and eventual never-ending tribal infighting among the fragments.
Everything Gets Worse (Part XII) – Pakistan vs. India
After 70 years of so-called independence, one has to be a professional victim not to look within oneself for the reasons for starvation, unnatural deaths, utter backwardness, drudgery, disease, and misery in India.
Intellectual capital accumulated in the West over the last 2,500 years — available for free in real-time via the internet — can be downloaded by a passionate learner. In the age of modern technology, another mostly free gift from the West which has significantly leveled the playing field, societies that wanted economic convergence with the West, such as Japan, Korea, Singapore, HK, China, etc., have either achieved it rapidly, or have strongly trended toward it.
More than 28,000 children less than six years of age have died in just one province, Madhya Pradesh, over the past year. Because these deaths were due to diseases resulting from malnourishment, the government attributed every single death to disease rather than malnourishment.
Given that Indian prime minister Narendra Modi has been at the helm for only three years, it is hard to blame him in general for any of the above mentioned monstrosities marring daily life in India. The best the head of the executive of an extremely diverse and complicated country can achieve is to nudge the Titanic in the right direction.
The problem is that Modi has actively sped the Titanic toward collision with an iceberg, from which he himself will not emerge unharmed. He must be blamed for his naiveté, his upside-down understanding of economics and a complete lack of awareness of the realities of life, his narcissism and obsession of making a hero out of himself, and an utter lack of self-respect that drives him to seek solace in Hindu fanaticism. He and his party have been a catalyst fanning the flames of nationalism and fanaticism among Indians.
Farmers demonstrating in Delhi to point out their plight. More than 12,600 farmers and agricultural laborers committed suicide in 2015 in what is one of the world’s poorest countries. On average, life is worse for Indians than it is for Africans.
However, sociopaths exist in every society. If you get rid of one, another one enters the scene. In the end, it is Indians who deserve to be blamed for elevating Modi and his BJP to their positions. In the end, it is Indians who deserve to be blamed for hollowing out and destroying institutions the British left behind over the past 70 years.
In the irrational and tribal society of India, Modi perfectly symbolizes and unconsciously exploits the thinking process of the common man, who tends to deal with problems by doing even more of what created the problems in the first place.
A rational person (particularly one whose perception is otherwise skewed by political correctness) faces a huge uphill task and high levels of frustration, when trying to comprehend the actions of irrational people and societies. He won’t be able to understand that the irrationality of some people is so pronounced it can keep them from connecting two simple dots right in front of them.
Some 3,000 children die every day from illnesses related to poor diets. Of those who survive, 44% of the children under the age of 5 are stunted. 72% of infants and 52% of married women have anemia. With respect to this India is ranked on the same level as North Korea and Sudan.
It is difficult or me to judge whether Pakistan is better or worse off by comparison, but I received many complaints in response to an earlier article in this series (in which I had presumed Pakistan to be somewhat worse off than India), mostly based on tribalism. But let’s try to bring some balance to the issue anyway.
On the World Happiness Report, India is ranked in 122nd position. Pakistan is ranked much higher, in 80th position. Pakistan’s per capita GDP is US$1,550, India’s is US$1,719. The difference is very small. Moreover, Pakistan has to spend a fortune to cater to refugees, to defend itself against problems from Afghanistan, as well as a much bigger foe, namely India. Pakistan also suffers from instability spilling over from Afghanistan and Iran.
As a result Pakistan is spending a much higher proportion of its government revenue on the military than India. If the external conditions of the two countries were similar, Pakistan would presumably be richer than India.
I also received several introspective messages from Pakistanis, who averred that Pakistan was descending into chaos, and similar statements were made by Indians as well. Most Pakistanis asked me to keep their names confidential, as speaking out against the Pakistani army or Islam could easily lead to unwelcome consequences such as beheading. A small minority in India is less concerned about speaking out, but this is changing quite rapidly.
A silly, well-orchestrated routine that is conducted every day at Indo-Pak border. Ironically, both Indian and Pakistani forces work and practice this routine together, to keep it well-synchronized. The bravado and bravery is all superficial theater.
Demonetization Pain Continues Unabated
When Narendra Modi announced on 8th November 2016 that he was demonetizing 86% of the monetary value of all currency in circulation, he gave three major reasons for doing so: to end corruption, to end terrorism and to eliminate counterfeit currency. Ironically, all three are now in far worse condition than they were previously, and even worse than the predictions I made in this series of essays (Part XI is linked here).
Many ATMs in India still dispense no cash. The economy is in shatters. This had to happen, as any new cash is rapidly moving under the carpets of the financial powerful that hoard currency. Small businesses are traumatized by the lack of access to cash – many are closing for good. People continue to avoid making non-essential purchases. Even food demand has failed to recover. Poor people very likely are still forced to go to bed half-hungry.
No-one knows whether there are famines in parts of India, as none of the mainstream media are covering the issue. Not unlike North Koreans or the Chinese during the times of Mao, Indians today, particularly members of the so-called educated class, simply cannot see what Modi or their nationalistic paradigm does not want them to see.
Indian banks and other financial institutions are extremely unethical. Since privatization was implemented in the 1990s, they have charged fees and commissions for accounts that were never agreed upon. Indians never fight, so this continues. After the demonetization exercise, these mysterious charges have started to appear more often.
Then they deduct certain services and financial taxes, and most people don’t make the effort to try to understand them. Indians are getting very tired of the banks – not for moral, but simply for financial reasons. Bank websites are extremely unwieldy. They require a sequence of passwords and OTPs (one time pad codes), which have an automatic expiry date.
Getting the whole sequence right to make an online payment without having these websites freeze during the procedure leaves one with a sense of accomplishment. Most people prefer to walk down to their banks to get bank officials to perform such online transactions. India is simply not ready for the digital age. This experiment in going cashless will end in a disaster.
Similar to every tyrant, Modi likes to think that tax collection should be at the heart of society. He imagines a society in which subjects dance around the state. The problem is, one can perfect the tax system or minimize corruption, but with a per capita GDP of $1,718, India simply does not have the required productivity.
Bank charges, rapacious tax authorities and massive amounts of time lost in dealing with the lack of cash have hurt whatever little productivity the Indian economy may have had. And by forcing digitalization, Modi has merely shifted liquidity from the informal to the formal sector.
Even in the western world, most big corporations are in bed with governments. In India, romping in bed with the State is all they ever do. For the moment, these corporations are huge beneficiaries of shift of resources to the banking system.
But without the spine that is the informal sector, the formal sector cannot benefit for very long. Eventually even the formal economy will succumb and take a massive hit.
Bank credit growth in India plummets to 60 year lows.
Corruption is bigger today, with most people complaining that they have to pay almost twice as much as usual in bribes, as bureaucrats and politicians try to make up for any real or assumed loses they faced as a result of the demonetization process. Counterfeiting of banknotes is a bigger problem today than it likely ever was.
Kashmir – Where India’s Disintegration Is Set to Begin
The last professed reason for Modi’s demonetization decree was to end terrorism and to solve the problems in Kashmir. The situation in Kashmir has deteriorated rapidly, while the law and order situation is generally worsening around the country, as vigilantes are given free reign.
An African student in India being thrashed merely for being African. Racism against Africans is rampant in India, and the hostility is growing.
Sacred cow enforcement squad: Cow vigilantes have become a regular feature of the Indian landscape, with Muslims and lower-caste people being killed and thrashed on a regular basis (one of the five men beaten up in this video later died). The Muslim community is increasingly isolated. This cannot end well in a country with the world’s second biggest Muslim population.
Hindu Yuva Vahini, a group of fanatics, founded by none other than the current Chief Minister of Uttar Pradesh, Yogi Adityanath, roaming freely, with swords drawn (UP is India’s most populous state with nearly 200 million inhabitants). Once the genie of lawlessness is out of the bottle in this irrational society, it will be centuries before it can be put back in again. This is a disaster waiting to happen.
Immediately after his appointment, Yogi Adityanath created “Anti-Romeo” squads, whose job is to harass any couples deemed to be unmarried. In spite of the fact that the police has no such constitutional authority, the courts have been silent spectators. Vigilante Hindu fanatics have even dragged couples from private properties to the police station. Instead of police charging these fanatics, they end up interrogating the couples dragged to the station. As I have said repeatedly, only hollowed out structures remain of the institutions the British left behind.
There has been an unprecedented increase in human rights violations by the Indian army in recent days in Kashmir
Another short video showing the Indian army in action in Kashmir
The Indian army recently used a man as a human shield in Kashmir. Not only celebrities and journalists voiced their approval, India’s Attorney General, one of the main guardians of the law, justified it by saying: “peculiar situations require peculiar measures”.
One must reflect on what it means if the country’s Attorney General has no clue what the rule of the law actually means. Voting was almost non-existent in recent elections. The army is stressed out and desperate. Those not in Kashmir and with no skin in the game happily pass judgment from their couches.
There is no political mechanism in place for Kashmir to secede. Secession through violence – which looks increasingly inevitable, particularly in view of Modi’s heavy-handedness – will be extremely chaotic. Its reverberations will be heard across the world, and might start the fragmentation of India as a political entity.
Over 50 days after Indian Prime Minister Narenda Modi stunned India"s population when he announced on November 8 he would unexpectedly eliminate 86% of the existing currency in circulation in what was supposed to be a crackdown on the shadow economy, but instead has resulted in a significant hit to the broader, cash-based economy, overnight we noted the first official confirmation of how substantial the impact of Modi"s demonetization has been, when the Nikkei India Manufacturing Purchasing Managers Index printed at 49.6 in December, the first contraction reading since December 2015, as the war on cash crippled demand.
According to the report, output and new orders fall for first time in one year; companies reduced buying levels and payroll numbers; Input cost inflation accelerated, while charges rose at softer rate.
Commenting on the report, IHS Markit economist Pollyanna De Lima said that “having held its ground in November following the unexpected withdrawal of 500 and 1,000 bank notes from circulation, India’s manufacturing industry slid into contraction at the end of 2016. Shortages of money in the economy steered output and new orders in the wrong direction, thereby interrupting a continuous sequence of growth that had been seen throughout 2016. Cash flow issues among firms also led to reductions in purchasing activity and employment.
Looking at the upcoming timeline of cash exchanges, she noted that "with the window for exchanging notes having closed at the end of December, January data will be key in showing whether the sector will see a quick rebound.”
As Bloomberg added, other recent data also mirror the stress. Motorcycle maker Bajaj Auto Ltd.’s total sales slipped 22 percent in December, the steepest fall in at least 21 months. Motorcycle sales, a key indicator of rural demand, declined 18%. India’s biggest automaker by volume, Maruti Suzuki Ltd., reported a 4.4 percent drop in domestic December sales, the first decline in six months, while overall sales fell 1 percent from a year earlier.
A continued slowdown will strip India of its position as one of the world’s fastest-growing big economies and risk a political backlash against Modi. On Wednesday another key economic report is due, when the Service PMI data is due before focus shifts to the government’s first official growth estimate for the year through March.
India’s economy, which until recently was expected to be the world"s fastest growing, large economy, outpacing China...
... is now expected to grow 6.9% in the year through March, according to a consensus estimate. That’s well below the 7.3% predicted by a survey in November and the previous year’s 7.6% actual expansion. At this rate of deterioration, China, and its "goalseeked" 6.5% annual growth rate may soon regain the top spot among world economies.
Meanwhile, in an attempt to offset the slowing economy as a result of the Prime Minister"s unprecedented demonetization gamble, overnight Indian banks, led by market leader State Bank of India, announced sharp cuts to their lending rates after the recent surge in deposits as ordinary Indians brought their cash to the bank for "safekeeping", raising hopes that lower borrowing costs will help spark credit growth in Asia"s third-largest economy.
On Sunday, State Bank of India, India country"s biggest lender by assets, said it had cut its so-called marginal cost of funds-based lending rates (MCLR) by 90 bps, while unveiling new products for mortgage loans, one of the fastest-growing areas. Other lenders including Punjab National Bank, Union Bank of India, Kotak Mahindra Bank and Dena Bank followed suit and also cut their lending rates by 45-90 basis points across tenures. Analysts expect more lenders to follow suit.
Banks have received 14.9 trillion rupees ($219.30 billion) in old 500, and 1,000 rupees notes from depositors since Modi"s cash overhaul. That had raised expectations banks would have room to cut lending rates, which is seen as vital to increase credit growth and spark a revival in private investments.
Cited by Reuters, Arundhati Bhattacharya, chairman of SBI, said at a news briefing on Monday, the rate cuts were intended to "jump start" credit growth and could raise it by 100-200 bps in the year ending in March. Even if accurate, it remains to be seen if such credit growth will have an offsetting impact on economic growth.
SBI now expects credit growth for 2016/17 fiscal year to be 8-9%, Bhattacharya said, still lower than the lender"s previous formal guidance of 10-12% growth. Any signs of a revival in credit could ease some of the worries from Modi"s move, which has sparked a severe cash shortage that has paralyzed parts of the economy.
The rate cuts also come after Modi on Saturday warned banks to "keep the poor, the lower middle class, and the middle class at the focus of their activities," and to act with the "public interest" in mind.
Modi"s comments were made in a special New Year"s eve speech in which he defended his ban on higher-value cash notes and announced a slew of incentives including channeling more credit to the poor and the middle class.
Some have expressed optimism that the combined impact of banks cutting lending rates and subvention provided by the government to small businesses is likely to help turn around growth faster than expected in the next fiscal year," said Saugata Bhattacharya, chief economist at Axis Bank, the third-biggest Indian lender. Many others remain skeptical.
For now, however, the immediate impact was on Indian Bonds, which rose after SBI"s interest cutting announcement, pushing the yield on the sovereign note due September 2026 to 6.4% from 6.51%. If anything, this is the latest sign that in a world drowning in leverage, and whose economy is priced to perfection, any ongoing "tightness" and rising rates, will only lead to adverse consequences not only in Emerging Markets, but developed ones as well.
