By Mr. N. Vittal

 

I am a Maharashtrian deshishta whose forefathers migrated to Tamil Nadu 300 years ago in 1676 , at the time of Shivaji.  We speak Marathi at home.  I spent 42 years in public administration as a member of the Indian Administrative Service (IAS), Gujarat Cadre and therefore familiar with six languages – Marati, Gujarati, Sanskrit, Tamil, English and Hindi.

With the understanding I have of the culture and the people who speak these languages, I am in a position to make an analysis of Narendra Modi as the Chanakya of India 2017.

I just list below my reasons for calling him by that title…. Chanakya:2017:

Chanakya is recognized as a great pragmatic, political scientist who not only was the Dean of the famous Takshashila University, but was also the mentor of   Chandra Gupta Maurya  who established to  in  Aryavartha, the great Magadha empire which covers a vast area from Khandahar in  what is today Afghanistan and right up to Bengal with the capital at Pataliputra [modern Patna]

Chanakya, also known as Vishnu Sharma or Kautilya had a very strong ego and a high sense of   self respect.  Above all, he also an incandescent mind and had mastered the essence if  sanatana dharma as well as all  the traditional sastras and Vedas.  He was particularly a great expert in raja dharma Moksha dharma and Apat Dharma articulated by the great Vyasa in in the Mahabharatha. His magnum opus Artashastra is considered to a quintessence of wisdom of our heritage and the Aryan civilization.  Chanakya’s masterpiece not only met the demands of running an effective governance which was also good governance based on the concept of ethics and justice for all.

Sanatana dharma which is articulated through Arthashastra of Chanakya is not only a collection principles related to ethics and morals, but also has noble ideas which are also eminently pragmatic. 

The pragmatism and its effectiveness was demonstrated for all time by Chanakya who felt that the Mauriya dynasty was betrayed by a Nandas.by unethical means. After all, Mahananda   was only the barber of Surya Gupta, the  Magadha emperor and the father of Chandra Gupta.

Mahananda murdered the emperor who trusted him and usurped his kingdom, Chndra Gupta was imprisoned and had no future. It was Chanayka who as the Dean of the Takshashila who strongly felt that justice has to be done.  His anger was provoked by the insult he faced in the court of Mahananda.  Combining his personal feelings with the political vision, he became the mentor of Chandragupta, who was likely to end up as the Indian version of the famous prince of Denmark, Hamle trapped into analysis paralysis.  He made him realize the ambition of reestablishing and building a much bigger empire, the great Magada empire.

It was Kautilya or Chanakya or Visnu Shama, who guided the prince at every step of the way to use a masterly combination of Sama Dana Bedha and Danda leading to ultimate success,

At every step of the way, he helped Chandra Gupta.  Basic strategies he adopted has been described as four – sama, dhana, bedha and dhanda.  Sama means marshaling arguments and persuading one to agree.  Dana represents strengthening the persuasion not only with the strong logical arguments but with tempting gifts or bribes.  Today, what the corrupt corporate houses are doing may be a very vigorous version of bribing or lobbying which is invoking the concept of dana.  Beha was the next strategy with the emphasis on creating and exploiting differences or the well-known concept of the concept of divide and rule.

And, finally, Dhanda, which is actual punishment which may in the form of building an empire involve declaring war and defeating enemy in the war.  In fact, when we see the history of many corporate houses which have come up after our country became independent in 1947, we find that the business itself has become similar to   war and all the sama, dana, bedha, dhanda tactics have been adopted by the different corporate houses at different levels. 

My purpose in this article is to compare Narendra Modi as a leader of the nation, cast in the mould of a Chandra Gupta Mauriya, who has assimilated the lessons of Chankya thoroughly and is thus a unique phenomenon.  I have chosen the label Chankya because it is ultimately the ideas and vision that are long lasting.

Historical parallels help only to some extent.  The secret of success lies in shaping old strategies to new situations.

Modi happens to be a leader of democratic India which has got a Constitution which is rightly celebrated as perhaps the longest and the most comprehensive Constitution in the world.  The Constitution we have adopted in 1950 is now more than 60 years old and by the time Modi completes his first term in 2019, it would have entered its 70th year.  

On the eve of the Budget for 2017, two issues are dominant on the financial scene of India.  One is demonetization and the other is the GST.  The way Narendra Modi has gone about implementing the demonetization   at every step, shows how he internalized the strategy of Chanakya.  I had explained this in my paper on eight reasons why Modui sakar’s stragey is the best for implementing demonetization.

I will now list ten points which I have noticed from the time he became the Prime Minister in May 2014 till now to relate how every step he has taken reminds me very strongly of the fact that if Chandra Gupta Maurya was the disciple of Chanakya in the 3rd century B.C, Narendra Modi is the twenty first century version of Chanakya.  

There were two earlier attempts of demonetisation.  The first was in 1946 when Chintaman Deshmukh was the Governor of the Reserve Bank and R.K. Shanmugam Chetty was the Finance Minister and Jawaharlal Nehru was the Prime Minister.  Chintaman Deshmukh was not in favour of demonetisation and Nehru rfelt and R.K.  Shanmugam Chettiar to implement the demonitisation, mainly as a means to curb the rampant black market which involved the use of high denomination currency notes like more than Rs.1000.  The percentage of such high denomination notes in the currency in circulation was hardly more than 2%.  The effort failed because there were some rumours about G.D. Naidu getting the benefits because of insider leakage in Coimbatore. Shanmugam Chettiar had to resign.  

The Second attempt was in 1978 when Prime Minister  Morarji Desai, the martinet and the strong disciplinarian , a person who was very firm in his views resorted to demonetisation of currency notes above the Rs.1000, Benegal Rama Rau who was the Governor, RBI did not agree.  The entire effort ended in a failure.

So there has been general perception that demonetisation has not  been a success in India .The conventional wisdom among the macro economist and financial experts in public finance was that demonetization has been tried as a desperate method in many countries with poor financial discipline like South American totalitarian regimes  and regimes in Africa and elsewhere.  

The details which are now being released in briefing by the Ministry of Finance to the Economic Survey in the context of the budget 2017-18, it appears that demonetisation by and large has been successful and as it is readily considered, it might have caused some short term gain but there is a hope that there will be long term benefits.  At least, the least charitable interpretation of this effort is that it has not been a failure but perhaps, it turned out to be a super success.  How was it achieved?  Modi at every stage adopted the Chanakya strategy.  

(i)Absolute secrecy -  there was absolute secrecy about the decision to be taken and only three or four people in the government had any idea about demonetisation in the offing.  From the reports we have seen in the press, it appears that apart from the Prime Minister himself, the others who were privy to the decision were the long term confidant and advisor to the PM, from the days as Chief Minister of Gujarat, Hasmukh Kadia, IAS officer of the Gujarat Cadra, hailing from Gujarat, Urjit Patel, the hand picked Gujarat Governor  and Mr. Gandhi, the real Gandhian from Pudukottai who were sworn to secrecy of the entire initiative to be taken.  The criticism was initially about the secrecy but as the days proceeded it focused first on a whole range of issues which had covered in another article ‘Eight reasons why Modi Sarkar’s strategy is a very effective one for demonetisation’.  The eight different angles by which demonitisation was attacked are the following:

1.OBJECTIONS  FROM THE ECNOMICS ANGLE: 

A classic example is the article in the Times of India dated 19th December 2016  [Chennai edition] in which Professor Rajeev Gowda of IIM, Bangalore has  taken on the comments made by S. Gurumurthy in response to the criticism of former Prime Minister Manmohan Singh in the Rajya Sabha highlighting the negative aspects of   demonetisation.  The following excerpts from that article clearly  bring out  how   Gowda had tried to show from purely economics  point of view that there Gurumurthy’s claim that there was no job creation during the regime of UPA is not valid:

“Former Prime Minister Manmohan Singh penned a poignant article (“Making of a mammoth tragedy”, The Hindu, December 9) warning us of the impending pitfalls of the demonetization exercise .  in a response, Rashtriya Swayamsevak Sangh (RSS) ideologue S. Gurumurthy wrote about the economic performance of the National Democratic Alliance government (1999-2004) and the United Progressive Alliance-1 government (2004 to 2009), sidestepping the entire issue of economic and social costs of demonetization or its benefits, if any (“Not a tragedy but a remedy”, December 13).

Mr. Gurumurthy’s argument goes like this: GDP grew rapidly from 2004 to 2009.  Asset prices (stock markets, gold, real estate) also grew rapidly during this period as did the share for high denomination currency notes in circulation.  He then uses a misleading number for jobs generated in this period to make the point that GDP growth in this period was “fake” growth.  He then argues that huge amounts of ‘black cash’ led to asset price inflation which led to high GDP growth.  This bizarre argument then goes on to justify how invalidating high denomination currency notes overnight was the remedy for this surfeit of “black cash”.  Mr. Gurumurthy misdiagnoses a non-existent problem for which apparently the demonetization initiative is a remedy.

India’s GDP growth was indeed 50 percent higher in 2004 to 2009 (UPA-1) vis-à-vis 1999 to 2004 (NDA-1).  Asset prices also rose sharply between 2004 and 2009.  These are valid, independent observations in themselves and are natural correlates in most economies.  This does not imply that rising asset prices were the reason for high GDP growth – correlation is not causation.  Further, hard data refute the allegation that it was merely wealth effects of asset price inflation that drove GDP growth during UPA-1.”

The learned argument advanced by Gowda fails when applied the simple test of whether the jobs created even in the organized sectors were long term solutions and represented real addition to the economy.  Even smugglers and drug runners,  create jobs for those who are involved in the  gold ,gun and drug running but can any serious economist argue that job creation by any means will be justified, even if it has got negative social impact.?

The   series of scandals of UPA regime, like the 2G, 3G, CWG are a standing condemnation of how the so called job creation under that regime took place. Is the job creation of that regime different from the jobs created under earlier scams like the Harshad Metha stock market scam, the vanishing companies scam and Ponzi schemes like Teak Equity? Let us not forget these scams also created jobs when they lasted. 

In fact, Japan has not yet recovered from the recruit scandal of the eighties.  Around this time was the collapse of the so called tiger economies if the South east Asia staring with Thailand and covering Hong Kong, Indonesia and so on.

Corporate governance became a buzz word and the movement to check corruption in public life became universal, resulting in the UN Anti Corruption Convention of 2003.

The dawn of the 21st century saw the dotcom bust.

The   Great economic meltdown of 2008 itself was a case of financial engineering running amok, leading to the subprime crisis.  The dramatic example of how unethical application of the concept of derivatives led to a great failure was when a company, blessed with couple of Nobel laureates in economics collapsed in the Subprime crisis. 

 The whole concept of Corporate Governance became relevant because of the exclusive focus on the theory that the purpose of business is maximization of profit and it’s the bottom line that ultimately prevails.  This was the Washington cones preached by the IMF.

What Modi is trying to do is to put in practice, the ancient Indian concept of Sanatana dharma. Sanatantana Dharma which is what Hinduism really means.

When it comes to governance, Sanatana Dharma   becomes Raj dharma and when it comes to war and diplomacy it becomes Kautilya’s Artashastra. And thirdly when it comes to spiritual development it is Moksha Dharma.

In short Modi is following the santatana Dhama in governance.

Demonetisation follows Kautilyas’s Artasastra.

In this approach, one does not take an exclusive view or a narrow view of even economic activity without taking moral and ethical values into account.

When dealing with crooks, the approach is different from that adopted for dealing with the honest people.  Satam pratye satam kuryat saatam pratye saat yam kuryat, says Kautilya.

2. ADOPTING SECRECY AND SURPRISING OPPONENTS

The second set of criticism relates to the suddenness and secrecy surrounding the announcement of a major policy affecting practically every citizen of a vast country of 1.25 billion population and that too a modern democracy…. government of the people, by the people and for the people.  Even the cabinet ministers were not allowed to leave the cabinet room till the pm had personally announced the decision of the broadcast media.  The announcement took the entire nation by surprise

It is only now that the government is trying to come to terms with the ground realities about the sufferings of the common citizen.  The media are now highlighting the suffering of the common man in queues.  Especially tragic has been the cases of people who are dying and waiting in the queue. 

The action of the government is described as anti-people and anti-poor.  In fact, the very fact that in a huge country like ours, the demonetization has been introduced and has being implemented during the past six weeks, should be compared with the current experience of a small country like Venezuela in South America. That government wanted to demonetise their largest currency of 100 bolivars notes and they had to postpone the implementation of the policy by a few months, thanks to the strong protest and law and order problem created by the citizens immediately after announcement. 

The very fact that in the country the people have by and large welcomed this measure shows the extent to which public are supporting silently the initiative of the government.  As the Prime Minister rightly observed in the public meeting on 19th December 2016 at Kanpur that the success and the credit for the demonetisation as an effort at elimination of black money and corruption will go to the 1.25 billion people of the country and not to any individual leader or the government. 

3. INADEQUATE PLANNING AND ADHOC IMPLEMENTAION:

The next point of criticism is about the lack of proper planning and adhocism in the implementation.  In fact, what is considered as lack of planning and adhocism is in itself the strength of the current government’s capacity to think on its feet and take immediate corrective action instead of being slow footed and thereby giving opportunities for the crooks to game the system and with the help of the bad apples in institutions in the Reserve Bank of India and the banking system itself launder all the black money!

The very fact that the government has been alert and has come with quick responses should be appreciated instead of criticising that government has not done enough prior   thinking.  In fact, among the leaders who are criticizing the PM and the government are people who are admirers of Deng Tsio Ping who was able to lead the Chinese economy to the path of explosive growth after death of Mao. He explained his success by responding to changing situations and innovating ‘by feeling the stones ‘, as he said.  While in the case of Deng Tso Ping, his flexibility is appreciated and the economic results are admired., when it comes to Narendra Modi who is attempting to apply the same strategy in our country, these very pundits have been complaining out how everything should have been previously thought through. 

The simple idea of the whole matter is that if 86% of the money in the system is withdrawn, an equal quantity of money should be provided at least in time, but the real point is that quite a lot of this 86% varying from 20% to 50% according to estimates is black money used for malpractices.

This is repeatedly confirmed by the fact that in the states like UP, many villages have been reporting about how people are just waiting to help poor people permit them to deposit money in their Jan dhan accounts.  If everything was about board, this phenomenon would not have taken place. Bibek Debroy in a news channel town hall meeting confirmed that while in the southern states the complaints of the poor waiting in the queues has come down in the Bihar, UP and West Bengal the complaints continue.

There is also criticism that demonetization has been announced without proper preparation and educating the people about the alternatives to cash based transactions.  This has been answered in details in the article of A Surya Prakash in the New Indian Express dated 20.12.16 under the title ‘Tune in to mann ki bath’:

“This criticism may not hold if one re-visits his public utterances before November 8 and also examines the growth of black money and wealth between  2004-2014 and the consequences of continued Manmohan Singh style pussy-footing for the nation’s economy.

So first, the question as to whether Modi had foolishly rushed in where angels fear to tread or whether demonetisation was part of a well-thought out strategy. There were several occasions when Modi touched upon the issue of ewallets or electronic banking prior to November 8, but there was one occasion during which he made his intentions absolutely clear. That was on May 22 during his show on All India Radio—Mann ki Baat.

For those who listened to him that day, November 8 would have held no surprises. Obviously, Modi was mulling this option quite some time ago, because even as early as May—a full five months prior to demonetisation—he had urged people in his radio programme to move from cash to a less-cash economy when he said: “We will have to change our old habits... the world is moving towards a cashless society... through electronic technology... there is no question of our wallets getting stolen.

The Pradhan Mantri Jan Dhan Yojana has ensured that almost every family came into the banking system and got a Ru- Pay Card, which is useful both as a debit and credit card; also, with the very small instrument called Point of Sale machines now in vogue, one can make payments.

Then there is the Bank on Mobile—the Universal Payment Interface banking; and finally, there is the Aadhar card and the fact that practically everyone in the country has a mobile phone. There is no need to carry around any cash. Therefore, by synchronising Jan Dhan, Aadhar and the mobile (J.A.M), we can move ahead towards a cashless society” He virtually prepared the minds of his listeners that day to what was coming when he said, “If we learn and adapt ourselves to use these services, then we will not require currency… businesses will function automatically... underhand dealings will stop, the influence of black money will be reduced.

So I appeal to my countrymen, that we should at least make a beginning. Once we start, we will move ahead with great ease.” He also called upon people to overcome the fear of the unknown. He said 20 years ago who would have thought that so many people would have mobile phones. “Yet, we caught on to it and now we cannot do without cell phones. Maybe this cashless society assumes a similar form. But the sooner this happens, the better it will be,” he said. Could any prime minister have been more explicit than this about his intention to launch a major assault on black money, demonetise currency and nudge the society towards a less-cash economy?”

4.CHECKING TERRORISM FUNDED BY ISI PROVIDING FAKE CINDIANCURRENCY TO JEHADIS:

The next aspect is about the demonetization and its impact on fighting terrorism.  The suddenness with which the announcement was made has literally been a shock to the Pakistan’s inspired terrorism and the fierce  insistence  of the security agencies that we should use only the currency notes manufactured within the  note paper  manufactured in our country and not use imported currency paper prove that the object of choking the terrorists by starving them of fake currency has succeeded  Because in the past currency paper was imported, it gave an easy opportunity to Pakistan to play havoc with our border areas and our economy by funding terrorists.  

5.ATTACK ON  THE LEGALITY OF THE GOVERNMENT ORDER ON DEMONETISATION:

Another angle of attack on the demonetization is from the purely legal aspect.  The issue has been challenged in the court and as the matter is subjudice, we have to wait for the decision of the Supreme Court.  

From the stand adopted by the judiciary so far, one can safely presume that our judiciary has set up a very healthy and high standards when it comes to interpretation of the Constitution and there have been quite a few occasions especially after the emergency when the Supreme Court has come with concepts like the ‘basic structure of the constitution’ and ‘defense of the fundamental rights of the citizens of the country’.  The management of the economy and evolving appropriate policies is a purely executive function and we can expect that the judiciary will not interfere and take on the role of executive itself. 

In the past, it is because of the delay in amendment of laws, which given the opportunity for the corrupt elements to flourish.  A classic example is the Benami Transaction Prohibition Act, 1989 under which Rules were not framed till now.  Every time any law exists, the crooks find ways to locate the loopholes and exploit the legal loopholes and not allowing loopholes will develop by action in real time is one of the strong points of the current government and the manner which it has gone about implementing the demonetization scheme.  

The basic source corruption in the system and the all pervasive corruption and poor governance in the country has been the corruption emanating from politics.  The neta, babu, lala, jhola, dada syndrome has had a long run in our country and Modi sarkar’s effort at demonetization is the first effective step taken to tackle this menace.  The Election Commission has also come up with a recommendation that there should be total transparency and even funds, the current exemption to political parties should be brought down to Rs.2000.  There are 1480 political parties are registered with Election Commission of which only about 400 are contesting elections and the remaining have been only on paper just to act as conduits for collection of black money.  The current instructions that up to Rs.20000 can be collected without giving details is also sought to be reduced by the Election Commission to Rs.2000.  Ideally there should be no exemption at all for political parties, their funds should be all transparent process and through the normal banking system.  After all, other democracies have systems and there is no reason why India cannot clean up its democratic system, that too after 70 years of independence.  

6.MODI IS FOLLOWING TRUMP, CHARISMA CANNOT BE THE BASIS OF LAW MAKING:

Mathew Idicula in an open article in TIMES OF INDIA [Chennai edition] dated 16th December 2016 makes interesting comments about the personalised approach to policy making by Modi in the case of demonetization:

“The Centre’s move rendering 86 per cent of the currency invalid raises serious legal and institutional questions. Can the promise made by the RBI governor be rescinded by the government in such a manner? Further, can the Centre restrict a citizen’s right to withdraw their own money? In this article, I examine how the demonetisation policy deinstitutionalises the state as it undermines the rule of law and instead seeks to legitimise public policy through charismatic authority. Demonetisation and the rule of law: One of the prerequisites of a state governed by the rule of law is that legal and institutional norms are stable, clear and predictable.

Decision-making cannot be impetuous or arbitrary. But unlike previous instances of demonetisation in 1956 and 1978, the latest move by the government has come via an executive and not a legislative action. The notification for cancellation of the legal tender status of the notes (the Attorney General seeks to distinguish it from demonetisation) was issued under Section 26 (2) of the RBI Act. This provision states that the Centre can, “on recommendation of the Central Board” of RBI, declare that “any series of bank notes of any denomination shall cease to be legal tender”. Hence, the government has to demonstrate with documentary evidence that the decision was indeed taken as per the advice of the RBI and not by the whims of the prime minister. There is also no clarity regarding the legal basis on which limits and conditions were placed on cash withdrawals. The RBI Act does not have any such provision.

Article 300A of the Constitution provides that right to property can only be restricted by the authority of law. Since bank notes are movable property, any restriction on its access must be provided by law. However, demonetisation was carried out without issuing an ordinance or amending any law. Further, for people without bank accounts, demonetisation amounts to compulsory acquisition of property without provision for compensation as their old currency is no longer exchangeable. Since the launch of demonetisation, there have been multiple policy somersaults which further raises legal questions. For example, while the notification clearly states that old 500 and 1000 rupee notes can be exchanged until December 30, on November 24, the government abruptly declared there will no longer be any exchange. Such U-turns go against the doctrine of legitimate expectations, an essential principle of the rule of law which provides that people have a legitimate right to expect a public authority to honour a promise or policy proclamation.

A new language of legitimacy: The ad hocism in decision making regarding demonetisation erodes the institutional legitimacy of the Indian state. The institutional crisis afflicting the country has exacerbated over the years as individual whims take precedence over institutional norms. What we are witnessing now is not just personalisation of political power but also that of public policy. The demonetisation policy was not announced by the RBI or finance ministry It came as a personal appeal by Modi. The promotion of partisan agendas can also be seen in the design of the new 500 and 2000 rupee notes. These notes unabashedly promote Modi’s pet scheme Swachh Bharat Abhiyan and, more controversially, don Devanagari numerals. It is important to note that Article 343 of the Constitution states that only the “international form of Indian numerals” shall be used for official purposes. This was the result of a delicate compromise struck by the members of the Constituent Assembly on the vexed language question.

Now this constitutional settlement is also being undone. As demonetisation continues to take a heavy toll on the common man (reportedly causing more than 90 deaths) even after a month, our ministers remind us that we are undergoing a “cultural revolution” to replace the old order and create a “new normal”. This new normal seems to have little regard for law, economics, historic agreements, institutional propriety or even basic humanity. Legitimacy of state action is instead based on a leader’s virtue and his appeal to the inner virtue of all people.

In Modi’s address to the people on November 8, he said, “In this fight against corruption, black money, fake notes and terrorism, in this movement for purifying our country, will our people not put up with difficulties for some days? I have full confidence that every citizen will stand up and participate in this mahayagna.” There is a Gandhiesque call for a grand sacrifice. Even if demonetisation causes inconvenience to people, its virtue legitimises suffering. Standing in long queues is an essential rite of passage in the moral purification of our country. In the post-revolution moral republic, legitimacy is not primarily derived from the

Weberian idea of rational-legal authority of the state but rather on the charismatic authority of the leader. Authority flows, not from the rule of law or the barrel of the gun, but from the leader’s ability to persuade people to sacrifice. The politics of morality is the currency of charismatic authority and this further deinstitutionalises the state. For all its charisma, such a form of authority is also most tenuous for if it fails to keep the people enchanted, the revolution will relapse.”

7.PUBLIC FUNDING OF ELECTIONS:

One of the suggestions made by the reformers is public funding for elections is a better remedy than demonetisation.  But in Germany, where such public funding is allowed, there was still case of fund collection beyond that and Willy Brant had to pay the price.  If it can happen in a country like Germany, there is no guarantee that any public funding will be effective in our country.  For the first time, Modi sarkar’s effort on demonetization has created a genuine opportunity for cleaning up the system and that is because this government has been transparent and throughout in his career, Modi has been articulating the strategies and policies.  The mistake many people made was that he was a regular run of the mill politicians for whom a cynical and hypocritical approach is taken as a norm.  That is what makes all the difference and Modi is a unique leader and the current effort of demonetization is a unique exercise in effective governance, first time since independence.  The comments made earlier on the larger issue of legal cover will apply here also.

8.EVEN ADVANCED COUNTRIES LIKE SWEDEN, DENMARK AND JAPAN HAVE NOT GONE TOTALLY CASHLESHOW CAN INDIA TRY?

The last argument is that even advanced countries have not gone totally cashless.

The best answer to these doubting Thomas is provided in detail by Nandan Nilakeni in his book Rebooting India.

After this article was written, there were further developments.  The Standing Committee on Finance in the Lok Sabha invited the Reserve Bank Governor to appear before it to explain the background and the issues arising out of the demonetisation.  Based on the evidence, there were criticism that the autonomy of the RBI has been compromised.  In fact, this criticism is not valid and Narender Pani in his article had given reasons why these points raised about autonomy of Reserve Bank.  I am mentioning it particularly so that when a comprehensive view of the entire demonetization   is taken, this aspect about the so called compromising of the RBI autonomy is seen in proper perspective.  

Even after that one issue was raised about possible conflict with the Election Commission.  As the demonitisation exercise was going on and the Reserve Bank was issuing guidelines about remonitisation, the Election Commission has announced dates for five key states like Utter Pradesh, Arunachal Pradesh, Assam, Punjab and two others.  But the Election Commission wanted that the ceiling should be doubled from 24000 to more for political parties and from the reports dated 29th/30th January 2017, it appears that both the Constitutional institutions, the Election Commission and the Reserve Bank were on a collision course.  But it has been neatly resolved.  In fact the Modi Sarkar had two options.  They could have stuck to the stand that the RBI is not only a Statutory body and its responsibility was backed by the solid power of the legislation.  Whereas, in the case of Election Commission, these powers were only for a limited period.  So on the question of micro management of currency, the issue would have ultimately gone to the Supreme Court for a final decision between the power of the RBI and the legal authority for currency management, the guidelines of the Election Commission for free and fair election would prevail.  But this would have had a negative political consequence of the Modi Sarkar being painted as been not respecting tradition and trying to saffronise the entire administration.  It has been neatly avoided by the Reserve Bank by taking a technical stand that while they may not relax on the issue of ATM limits, on the current accounts, limits are all removed from 1st February 2017.  In other words, Modi is practicing another key message of Chanakya in Arthashastra.  It is never a good strategy to corner an enemy and leave him no escape route.  After all, face is important.  In the so called Asian values, which are the subject of management debates in the 80s, when before the collapse of the South East Asian tigers in the 1990s and scam, where as saving face guides many of the management decisions.  Even in corporate matters, in China, India, Japan and Asian countries, where as in western tradition, there is no tradition and no such aspect of saving face.  I think by the way of compromising to see that other parties also lives by the sense of dignity and not totally cornered and rendered important.

In our tradition, Krishna is called poorna purushotham and Rama is called mariyada purushotham.  Ramayana becomes extremely relevant in the context of governance.  Rama rajya is still held to be the ideal for good governance and anybody familiar with the Valmiki Ramayana and the other classic Indian versions in every part of the country would appreciate the fact that Rama after defeating Ravana in the war gives him maximum opportunity to correct himself and kills him only when he has failed to utilize the many opportunities he has given, by Rama to come to this part of dharma.  Again in the case of Dhuriyodhana, in Mahabharatha, demons that I know what is the power of dharma and what is not, but I am not able to give up adharma and come to the part of dharma.  Najami dharmam nathavo praharthihi najami papam nachava niverthihi.  

The RBI directive for removing the limits in the current accounts is in the spirit of the same Ramayana where the Ravana (in this case the black money holders) are given opportunity to come to the path of the right.  The income declaration scheme which the Modi Sarkar has announced earlier is in keeping with the spirit of Ramayana.

Another example of the Chanakya tactics in full display we have witnessed in the case of introduction of GST.  This indeed is going to be a monumental achievement in the financial management of the country which is probably long overdue and the quest for GST has almost become the quest for the holy grail.  But Modi sarkar has been able to really make a breakthrough by adopting Chanakya tactics again.  In this case, the strategy of using money bill for a saving the basic elements of the GST Act had only leave the other Parties fuming and complaining impotently about not being given a fair treatment.  But, at the end of the day, it is the proof of pudding is in the eating.  It is when we examine the political dimension of demonitisation that we can appreciate the Chanakya elements of Modi sarkar strategy more clearly by the timing of the demonitisation practically all the other opposition parties have been rendered ineffective.  While each one of the parties may have its own core supporters who may still supporting the parties, bulk of them have depended on money power if not muscle power for their hold in their respective areas.  This has become a case where while they can express their frustration, they are not able in way reverse the process of demonitisation.  Because, ultimately, it is the final results which matters when the drips are down.  On the other hand, while the BJP and the RSS are being accused of being majoritrian, they have not been able to be effective for bulk of their existence because, the majority did not effectively materialize.  It was only in the 2014 elections the majority was welded with solid core which seem to ensure longevity at least in the medium term.  Institutions like Art of Living and Bama Ramdev’s organization have become solid supporters of the BJP and that is apart from the traditional supporters of the party.  Today have reached levels perhaps of 35 – 40% can guarantee its longevity.  At the moment the other second activity at which the Modi sarkar is focusing attention is spreading the footprints of the BJP in states where it had no presence all these years of its existence.  The skillful utilization of the local conditions and the strategic alliances with local parties and seizing power have been demonstrated for example in Assam and Haryana.  

Glimpses of the Chanakyan thinking are visible if we examine practically every decision on appointment of key personnel done by the Modi sarkar since it is in power.  Governors play a major role especially when influencing the state of State politics are concerned and in this the BJP has been particularly focusing.  A record is mixed because, sometimes they have been too clever by harm and appointment of Governors who were exclusively from the BJP’s table had lead to even constitutional embarrassment and displeasure of the Supreme Court and the judiciary.  Perhaps, Arunachal Pradesh and Uttrakand are cases in point.  Nevertheless, some of these appointments have turned to be very astute like the appointment of former Chief Justice of India as the Governor of Kerala.  In the recent Jallikattu explosion which has very serious consequences especially on the Federal structure and operation of co-operative federalism, this particular individual who has the deeper understanding of the culture of Tamil Nadu has made a valuable contribution by ensuring that the legal plays through which the Jallikattu had to be piloted especially with the opposition of the activists under the animal rights and the Provision of Cruelty to Animal Act as well as environmentalists have indeed been very valuable.  In fact, the instant introduction of the legislation for long term performance and observance of Jallikuttu has been greatly aided by very critical and insightful inputs given by the Governor of Tamil Nadu.  This is what we learn from the Newspaper reports like the Indian Express of 31st January 2017.

The across the board wide spectrum steps of ensuring a Congress mukth Bharat involve that the Narendra Modi sarkar has kept the overall objective in the mind and never for a moment whether it is a major step or a minor step has never lost sight of the objective.  And it is this focus which invokes the Katoupanishads invocation – Uttishthatada jaggruta propthuvara nibhodita – 

The further confirmation of this I got from the budget discussion that were aired by NDTV on 1st February 2017 soon after the Budget was released in the afternoon of 1st February 2017,  Keity Mistry pointed out that while this is a very sensible budget and the decision about handling fiscal deficit as well as the budget deficit have been treated in a professional manner and perhaps the demonitisation and the secrecy that went around it which itself was a point of criticism of many others about the autonomy of the RBI being compromised has resulted in ultimately a fact that elections are taking place did not influence the overall phase of managing the fiscal deposit and the budgetary deposit.  The demand made for postponing the budget after the elections on 11th March 2017 was on the basis that the budget will be used as tool for influencing the votes with freebees and so on.  That could be avoided because of the professional secrecy maintained by the four people who according to the Press were the people in the know of the timing of the demonitisation decision, the Prime Minister himself, the RBI Governor, Hasmukh Hadia, IAS and the Deputy Governor of RBI, Gandhi.

The critics have been silenced by the delicate balancing of different vested interests like opposition parties cunning the government on political front and the financial experts looking for an opportunity to criticize the government for using the Budget for buying votes and influencing and the overall directives of the Election Commission about the Code of Conduct for the Polls.  It is a triple success achieved, because the Modi sarkar adopted the principles of Raja dharma and the Arthashastra as codified by Chanakya.  

The delicate balance between the stella of subsidies and the cannabis of budget deficit has been neatly achieved because of following the principles of Chanakya in this Budget of 2017.  In fact, the challenge before the Finance Minister was more than that of Ulysses, because Ulysses had to manage between two dangers whereas the Finance Minister had to balance between these two and also a third factor called the current account liability or the requirement under the Responsible Budget deficit Act to which Government is legally committed.  Instead of following steady glide path of the Chief Economic Advisor of 2%, N.K. Singh Committee has recommended 3.5% and he stuck a balance of 2.5% for 2017-18, thereby the same goal of controlling current account liability, after all visualized under the Responsible Budget Deficit Act 2013 could be achieved by 2020.  This acrobatic balancing on the financial front would not have been possible but for the Chanakya principle adopted by Modi sarkar.

In fact, the resources required for more effective implementation of development of employment schemes like MNREGA (Mahatma Gandhi National Rural Employment Generation Act) and the higher education, progress has been made towards them also because of the Chanakya principles.

The Economic Times dated 3rd February 2017 editorially commented that on the budget, arbitrarily, coercive power by taxmen.  Government must guard against a taxmen raj.  The rationale and the arguments articulated in the editorial which are below:

“The component of tax revenue slated to go up most is the personal income tax Annexure III of the budget speech, lists out a number of stronger measures that would presumably help the government achieve this goal.  To prevent the backlash to further discourage investment, the government must ensure that the taxmen use its new powers with oversight and according to due process and their actions would be amenable to swift redress, should the need arises.

The budget has proposed sweeping powers for the taxmen to attach property, conduct searches, call for documents and determine fair market value of assets.  This goes against the tenet of a non adverse or real tax regime, leading to uncertainty for individuals and businesses.  Empowering tax officers to provisionally attach property is in such cases, force people into making declarations before taking legal recourse.  And that is unfair.  Similarly empowering junior officers to conduct enquiries and expanding the scope of the searches to cover any activity done for a charitable purpose could mean roaring enquiries.  Tax officers will not be obliged either to disclose reasons for a search on appellate tribunal to maintain confidentiality.  However, search and seizures are blunt, archaic tools for law enforcements and bring back memories of a bad free reform past.  Indeed, the need for intelligent mining to create tax demands with a solid proof of evasion and avoidance.”

The argument looks very perfect but these are the types of arguments that are generally advanced by a very highly intelligent authorities and experts in the area of any subjects, particularly economics.  Having been an administrator but not a tax authority in my life, I have also witnessed honest exemplary officer like M.R. Sivaraman, IAS (1961:MP) who hailed highly responsible position in the Customs and Excise Departments and was the Secretary, Revenue during the NDA regime.  It is not only the top level officers, but there are excellent officers in the Income Tax department at the junior levels and right down to the lowest one, who many a time are witnesses and harassed.  I do not want to take names, but unfortunately, the revenue administration has acquired a bad name to extent that everybody is considered corrupt till proved their innocent.  On the other hand, the reality is the department contain excellent officers who are honest at all levels.  And if as in the present Modi sarkar, there is seriousness of intent right from the Prime Minister, the Finance Minister and senior Ministers to fight corruption as the experience with the demonitisation shows, we can be reasonable that even if the congenitally corrupt junior officers resort to misuse of their powers for sheer harassment or the raidraj, they also know that they will also be pulled up.  Not only that if they really accumulate the illegal wealth, they themselves will become victims of the amended laws.  If any proof is needed, just look at the actions initiated against the officials of the RBI and some of the nationalized banks during the first two months of demonitisation when the complaints were received about 70 crores of new currency of 2000 rupee notes being hijacked by clever gang of corrupt officials in the RBI and Nationalized Banks.  The New Indian Express came with the expose in its issue in January 2017.

What is my reply to the very highly coherent and inherently consistent and perfect solution recommended in the Editorial of the Economic Times?  My simple answer would be, we have not yet invented the technique for making omelet without breaking eggs. 

 

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