Congress Party supporters protest against demonetisation in New Delhi last month. The BJP government crackdown on black market currency has hit the poor most. Sanjeev Sharma / Hindustan Times via Getty Images.
Congress Party supporters protest against demonetisation in New Delhi last month. The BJP government crackdown on black market currency has hit the poor most. Sanjeev Sharma / Hindustan Times via GettShow more

India polls: will Narendra Modi’s demonetisation gamble pay off?



Millions of Indians are preparing to vote in the biggest test of public opinion since prime minister Narendra Modi announced the demonetisation of 500 and 1,000-rupee notes three months ago – a move which has plunged the country into an unprecedented cash crisis and sent the economy into a tailspin. Over the next four weeks, starting today, a series of regional elections will be held across India amid a polarising debate on the merits of suddenly delegitimizing high-value currency that accounts for 86 per cent of the total cash in the economy.

“By withdrawing as much as 86 per cent of the currency in circulation while being able to replace the same only at a painfully slow place, the Modi government’s demonetisation experiment was a historically unprecedented expropriation of mass purchasing power.

“The result has been a collapse in demand and disruption in supply, that resulted in contraction and unemployment of a magnitude that was nowhere as visible as the large queues before empty ATMs and shuttered banks,” says C P Chandrasekhar, a professor at the Centre for Economic Studies and Planning at Jawaharlal Nehru University, New Delhi.

Up to an estimated 200 million people will vote in the elections in Uttar Pradesh (UP), Punjab, Goa, Uttarakhand and Manipur (an area stretching from the foothills of the Himalayas in the north to the mountains of north-east India and the coastlines of western India), in what is widely seen as a referendum on demonetisation. The issue has become a lightning rod for other public grievances against the Modi government. A poor showing by his Bharatiya Janata Party (BJP), especially in its strongholds of UP, Punjab, Uttarakhand and Goa, could jeopardize its prospects of returning to power in the 2019 general elections.

Sensing an opportunity, an otherwise divided opposition has come together to portray demonetisation as an “anti-poor” measure, arguing that millions of ordinary people employed in the cash-driven unorganized sector have been hit the hardest. But Modi says, on the contrary, it’s intended to benefit the poor by disabling the black market economy.

“After demonetisation, the poor are enjoying a sound sleep while rich are running from pillar to post to buy sleeping pills,” he said in a radio broadcast. Privately, however, BJP workers admit that people are asking tough questions on the doorstep. One BJP candidate in Punjab, Anil Joshi, is publicly appealing to voters by saying: “Don’t punish me. I was not involved in demonetisation.”

It all began when, in a dramatic late evening television broadcast on November 8, Modi told the nation: “Notes of 500 rupees and 1,000 rupees will not be legal tender from midnight tonight and these will be just worthless piece of paper.” He described the surprise move as “a decisive war against the menace of corruption, black money and terrorism”.

As the country plunged into chaos with long queues outside empty ATMs and shuttered banks, he assured people that the crisis would be over in 50 days. “I understand your pain. Give me 50 days. After that you can give me any punishment you like,” he said.

That deadline passed on December 30, but the “pain” continues. Three months on, questions are being raised over the success of the scheme, with the government refusing to say how much black money has been seized. It has also moved the focus from eradicating corruption to transforming India into a “cashless economy”. Critics see this as an admission that the government has failed in its original objective.

“The goalpost was changed from curbing black money to cashless economy… to justify the move which had caused so much disruption,” argues political scientist Zoya Hasan.

Simmering public unrest, meanwhile, is becoming more visible. A popular slogan in many places reads “Modi ji ki hawa nikal gayee” (Modi’s balloon has been punctured). For the first time since he came to power in 2014, Modi looks vulnerable, while the man he relishes mocking for his “immaturity”, Congress Party leader  Rahul Gandhi, has emerged as the opposition’s star campaigner. He has taken to appearing at public rallies dressed in a torn “kurta” (loose Indian-style shirt) to depict the plight of the cashless common man.

Famously tongue-tied former prime minister Manmohan Singh is proving to be another unlikely draw. His description of demonetisation as a “monumental mistake” for a country where nearly 90 per cent of people earn their wages in cash, has since been echoed by others, including a former colleague of Modi and the World Bank economist Arun Shourie, who called it “the biggest blunder in economic policy in 70 years”.

Unusually, the opposition is brimming with confidence.

“What nasbandi [forced sterilisation] did to the Congress in 1977, notebandi [note ban] will do to the BJP,” says Rasheed Ahmed of the Bahujan Samaj Party, referring to Indira Gandhi’s brutal family programme during the 1975 Emergency.  She lost the 1977 elections.

That comparison may be an exaggeration but so is the BJP’s claim that people are “solidly” behind it.

“I’ve been a BJP supporter all my life but this time I’m not going to vote for it. Demonetisation has ruined my business, I’ve suffered, my family has suffered... we’re still suffering,” says Rajesh Bansal, owner of a popular patisserie in Ghaziabad, UP’s biggest industrial town and one regarded as the bellwether of the state’s voting behaviour.

According to Kamal Sekhri, a well-informed political commentator and editor of Hint newspaper, the issue will "definitely hurt" the BJP.

“People feel they’ve been duped. They have lost faith in the government,” he says.

In Sherkot, known as India’s paint-brush capital, people are livid. The town’s mainly cash-dependent economy has come to a standstill with an estimated 60 per cent of brush manufacturing units forced to close down. In Punjab, opinion polls show the BJP trailing the Congress. The picture in the three remaining states is less clear as the campaign is yet to reach momentum.

The BJP strategy is to play down demonetisation as a campaign issue, highlight its long-term benefits and portray its critics as “anti-national” and “friends” of black money hoarders.

“We don’t see the elections as a referendum. It’s a media headline. But if it is we welcome it because we’ll win”, says finance minister Arun Jaitley, echoing party president Amit Shah’s claim that “people have faith in the Modi government”. Pro-demonetisation analysts say its success should not be judged by election results.

“It might fail politically but that doesn’t change the merit of the decision,” said Sadanand Dhume, a Washington-based analyst, in a recent television debate.

Lord Meghnad Desai, professor emeritus of economics at the London School of Economics, sees it as “a multi-pronged attack on corruption”, the benefits of which will unfold over a period of time.

Nevertheless, there remains surprise that Modi chose to take such a politically-risky decision so close to the elections. He is known to play for high stakes and mostly he pulls it off, but might he have overplayed his hand this time?

“I’m not an economist but you do wonder about the timing,” says C Raja Mohan, director of Carnegie India. “He’s not your usual politician and doesn’t mind taking risks when he believes strongly in something. We’ve seen this in his approach to foreign policy.”

Modi may survive the political scare but the damage to the economy is already done. The International Monetary Fund and World Bank have lowered their previous growth forecast for the Indian economy for this year because of “negative consumption shock” caused by abrupt demonetisation. Automobile sales had the largest fall in 16 years, with 300,000 fewer vehicles sold in December, compared with the previous year, according to the Society of Indian Automobile Manufacturers.

Other sectors hit include small businesses, real estate, construction and agriculture.

“It is becoming clear that none of the stated objectives, whether combating corruption and black economy or ending currency counterfeiting, can and will be realised,” says prof Chandrasekhar.

From where Modi sits that might sound like heresy and an “anti-national” sentiment. But it’s a sentiment that’s catching on. Over to the people.

Hasan Suroor is a writer and commentator who divides his time between London and India.

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%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
Common OCD symptoms and how they manifest

Checking: the obsession or thoughts focus on some harm coming from things not being as they should, which usually centre around the theme of safety. For example, the obsession is “the building will burn down”, therefore the compulsion is checking that the oven is switched off.

Contamination: the obsession is focused on the presence of germs, dirt or harmful bacteria and how this will impact the person and/or their loved ones. For example, the obsession is “the floor is dirty; me and my family will get sick and die”, the compulsion is repetitive cleaning.

Orderliness: the obsession is a fear of sitting with uncomfortable feelings, or to prevent harm coming to oneself or others. Objectively there appears to be no logical link between the obsession and compulsion. For example,” I won’t feel right if the jars aren’t lined up” or “harm will come to my family if I don’t line up all the jars”, so the compulsion is therefore lining up the jars.

Intrusive thoughts: the intrusive thought is usually highly distressing and repetitive. Common examples may include thoughts of perpetrating violence towards others, harming others, or questions over one’s character or deeds, usually in conflict with the person’s true values. An example would be: “I think I might hurt my family”, which in turn leads to the compulsion of avoiding social gatherings.

Hoarding: the intrusive thought is the overvaluing of objects or possessions, while the compulsion is stashing or hoarding these items and refusing to let them go. For example, “this newspaper may come in useful one day”, therefore, the compulsion is hoarding newspapers instead of discarding them the next day.

Source: Dr Robert Chandler, clinical psychologist at Lighthouse Arabia

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

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Biography

Her family: She has four sons, aged 29, 27, 25 and 24 and is a grandmother-of-nine

Favourite book: Flashes of Thought by Sheikh Mohammed bin Rashid

Favourite drink: Water

Her hobbies: Reading and volunteer work

Favourite music: Classical music

Her motto: I don't wait, I initiate

 

 

 

 

 

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Rating: 2.5/5

German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

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