From the Desk of Chairman (June 2023)

The Indian currency notes are in the news once again.  The government has decided to withdraw the circulation of the two-thousand-rupee notes from circulation.  That is no news worth writing about. This step, having come about after the much-maligned demonetisation of high value notes of ₹1000 and ₹500, has the trappings of a political issue rather than as an economic exercise. But with a difference.  The Prime Minister did not come on the national TV to announce the demonetisation of these currency notes. On the contrary, the government and its agencies were at pains to emphasise the fact that it was not demonetisation by any measure. In order to buttress this point,  the government spokesmen took pains to point out that the number of ₹2000 notes in circulation as calculated by the RBI is fewer than the ₹500 and ₹1000 notes in circulation during the earlier demonetisation. Another important difference this time around is that the ₹2000 notes continue to be legal tender – a lesson well learnt from the last exercise.  That brings us to the elementary point.  Last time around, one of the objectives in demonetising the high value notes was to discourage or punish hoarding of these notes. If that be so, notes of high denomination notes like the ₹2000 notes had no business to be in circulation in the first place whereas it got introduced closer to demonetisation of other high value notes. Besides, the ₹2000 notes being withdrawn from circulation people are allowed to exchange these notes till the end of September 23. Exchanges are permitted without having to answer any questions up to ten notes of ₹2000 each time. However, deposits of ₹2000 notes, on the other hand, may invite attention and scrutiny if past experience is any indication. One may be certain that questions could be expected  calling for additional information. That brings us to the final question.  The government or the RBI for that matter, may be well within their right to demonetise any note of their choice based on their assessment of the macroeconomic situation, the question remains as to what such a measure does to your currency. After all currency is no ordinary commodity. It carries with it a solemn pledge as regards its value, both intrinsic and apparent. There are ethical considerations to be considered when you try to use currency this way as an instrument of monetary policy. In ethical philosophy, utilitarianism is a family of normative ethical theories that prescribe actions that maximize happiness and well-being for all. Utilitarianism is an ethical theory that determines right from wrong by focusing on outcomes. It is a form of consequentialism. Utilitarianism holds that the most ethical choice is the one that will produce the greatest good for the greatest number. In a utilitarian approach it is possible for a positive outcome to be accepted even if an action is taken with a bad motive. In India with such extreme disparities in society, it would always be a challenge to the RBI to meet the obligations to the society. These ethical considerations should be considered during the planning, implementation, and evaluation stages of demonetisation to ensure that the policy is fair, transparent, and serves the best interests of society as a whole. In the light of the above, the tendency to frequently demonetise the currencies leaves much to be desired. The Opposition was quick to condemn this decision for the reason that it has been done because the elections are around the corner.  They fear that the moneys stashed away for election funding by the Opposition parties would not even be worth the paper they are printed on.  Obviously such steps give an unfair advantage to the ruling party at the Centre.

Kiran Rijiju is a three-time MP from Arunachal Pradesh.  His tenure as the law minister came to an abrupt end recently.  He has now been entrusted with the charge of ministry of Earth Sciences. In the process he walked into the Law ministry with a swagger but went out limping. That need not have to be so.  Rijiju has been quite vocal about his views about the judiciary, particularly those associated with the Collegium.  Rijiju, many felt, went too far; but to my mind did not go far enough to warrant the marching orders that he got. Cordial relationship between the Executive and the Judiciary is, no doubt, welcome.  But too cozy a relationship between the two is far from an ideal state considering the job profiles of the two that could be in conflict, more often than not. I personally feel that the tension between the two branches could have been resolved with a little bit of sagacious intervention from the PM himself.  Moreover, someone like Rijiju coming from the Northeast with little or no connection with the judiciary could have been an asset to the government. It was generally felt that his not being close to lawyers and judges made him a perfect choice for the law minister who would carry the brief to reform the system of judicial appointments. Rijiju is relatively young, intelligent, efficient and articulate, and an outsider in Delhi’s incestuous networks of power.  In one sense that actually made  him a perfect fit for the job.

When you say Manipur is burning, you expect a counter question – Why? Instead, you would normally get a counter question – Where is Manipur? That, unfortunately, is the tragedy of this tiny state in the North-East.  Manipur is governed by the BJP after a prolonged rule by the Congress. The escalation in violence in Manipur has its roots in an over ten year-old demand by the Meitei community for a Scheduled Tribe tag. There are two predominant tribes in Manipur, viz., the Kukis and the Meiteis.  The immediate reason for this violence, however, is a Manipur High Court order directing the state government to recommend to the Union Tribal Affairs Ministry by May 29, an ST tag for the community. The Meiteis are arguing that they had once enjoyed the ST tag prior to the merger of Manipur with the Indian Union and have sought the restoration of this status.
Manipur is a state abutting three countries, viz., Bangladesh, China and Myanmar making it an extremely vulnerable geographical piece of land calling for immediate attention of the powers that be.  The proposal to grant the majority Meitei community the status of a scheduled tribe which would give them access to quotas in government jobs and colleges. The fertile Imphal valley makes up for about a tenth of the total land mass of the state while the surrounding hills, ideal for militant hide-outs and home to a long-running insurgency, account for 90 per cent of the state’s lands.  Tribal leaders say the Meiteis are already better off and dominate the government, police, and civil service. Granting them more privileges would be unfair as per the Kukis that would allow the Meiteis access to the forest lands which have been occupied by the Kuki tribes for centuries. Violence erupted in the Kuki-dominated Churachandpur district of the state, where members of the Kuki tribe were protesting against the Meitei community’s demands to be designated as a Scheduled Tribe.  The tribes believe granting Scheduled Tribe status to the Meiteis would be an infringement of their rights as they claim to be the marginalised part of the population, and not the Meiteis. BJP is between a rock and a hard place. The Party  finds that it does not have the much-needed moral authority to persuade the warring factions to come to the table for a compromise.  Being the Party in government at Delhi the Central Government has to take up the issue on priority and find a solution – this issue is strategically important from an international perspective and politically critical from a national point of view.  Earlier it is done, the better it is for the State and the Centre.

Open Network for Digital Commerce (ONDC for short) is a government initiative which is designed to make the e-commerce sector more inclusive. After the unprecedented success of the UPI network, no one will dismiss the claim made by ONDC that it is sure to be another landmark initiative in digital commerce. Small retailers in India have faced challenges in dealing with dominant e-commerce giants who charge huge fees. This has led to higher purchase costs for small retailers, who get limited options to choose from. ONDC intends to address this issue by providing an alternative platform that charges significantly lower fees, thereby enabling micro, small, and medium enterprises, as well as small traders, to participate in online marketplaces.  According to T Koshy, MD and CEO of ONDC, India is well-positioned to emerge as a global pioneer in reinventing the digital commerce landscape, thanks to the government’s ambitious Open Network for Digital Commerce (ONDC) project which seeks to democratise ecommerce for India and provide a level-playing field for small and medium businesses.  This new generation network is reinventing and democratising the online marketplace for millions of small businesses according to him.  Koshy further claims that “when it comes to digital commerce, India has reached a level where we have embarked on a journey where we are the pioneers in this planet, not just in this country. And that’s why there’s global attention on how we will succeed and when we will succeed”.  The open network provides equal opportunity to everybody, but everybody is not equally capable. So, there are some sections who are predisposed to existing barriers. While in a strict sense, ONDC’s job is to create a protocol and let everybody take advantage of it, we believe we could look at scale with the support of a variety of policymakers, government officials, philanthropic agencies, developmental agencies, and banks, etc., in finding solutions to help the small and medium enterprises, who may not be equally digitally capable to take advantage in the fastest way.  When we started UPI, we were trying to solve a developing country problem. Although the solutions which we developed far outstripped the problems of any developed country, it was originally a developing country problem. With ONDC, we have embarked on a journey where we are the pioneers on this planet, not in this country alone.

Strong leaders irrespective of their performance seem to hold sway with voters all over the world.  So, it is with Tayyip Erdogan, the President of Turkey.  Erdogan emerged victorious in the presidential runoff against his opponent, the one that has been left in the fray after the former had cleared the road to the presidential palace for himself. Erdogan, who first came to power in 2003 would now is expected to be in power for another five-year term.  This election for Erdogan was not an ordinary one. After his poor handling of the aftermath of the earthquake which left more than fifty thousand people dead, it was generally believed that Erdogan would not come back to power again.  Moreover, his handling of the economy has made more enemies for him with runaway inflation and a directionless economy.  International observers have already downgraded Turkey from the status of “partly free” to “not free”. Yet Erdogan endeared himself to the people of his country much against the expectations of many observers.  His having jailed his primary opponent on alleged trumped-up charges also made thing easy for him. It is generally believed that he could bow to pressure to return to more orthodox economic policies in order to restore financial stability in the country after the elections.  According to experts, however, Erdogan is unlikely to relent when it comes to restoring the country’s democratic credibility. Turkey is the gatekeeper to Europe, in manner of speaking.  Erdogan, therefore, commands unusual clout in NATO which in turn gives him further leverage in international affairs. He has kept his feet in multiple boats. He is in a position to influence Putin which gives him an opportunity to be a power broker and a peacenik between the West and Russia. Erdogan’s victory in the election is a seminal moment for the international powers in the battle between democracy and authoritarianism. It remains to be seen how the West treats Erdogan’s victory. It also remains to be seen how he sees his victory and the unprecedented power that he would acquire because of that.  He could treat this victory in the elections as a firm endorsement of his leadership by his countryman or a chance victory that gives him an opportunity to leave lasting legacy.  Watch this space.

Once again Kerala is making news. This time for its governance model.  It has now claimed the status of being the first e-governed State in India. It looks as if such sobriquets come naturally to it. Being the most literate state in the country this should come in as no surprise. The latest claim to fame for the state is that it has become a fully e-literate state; no less. This declaration made by the Government of Kerala is seen as a major step in the southern state’s journey towards a knowledge-based society and economy besides achieving cent percent digital literacy.  The state claims that it is leveraging technology for the state’s development and in turn for the empowerment of its people.  The state has ambitious plans now to roll out a network of fibre optic cables across the state to provide internet services at affordable rates or even free.

Thank you.

Venkat R Venkitachalam

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