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Originally published by The New Indian Express, deleted without explanation.

MUMBAI: A district cooperative bank, which has Bharatiya Janata Party (BJP) President Amit Shah as a director, netted the highest deposits among such banks of old Rs 500 and Rs 1,000 notes that were abruptly demonetised on November 8, 2016, according to RTI replies received by a Mumbai activist.

The Ahmedabad District Cooperative Bank (ADCB) secured deposits of Rs 745.59 crore of the spiked notes -- in just five days after Prime Minister Narendra Modi made the demonetisation announcement. All the district cooperative banks were banned from accepting deposits of the banned currency notes from the public after November 14, 2016, -- five days after demonetisation -- on fears that black money would be laundered through this route.

According to the bank's website, Shah continues to be a director with the bank and has been in that position for several years. He was also the bank's chairman in 2000. ADCB's total deposits on March 31, 2017, were Rs 5,050 crore and its net profit for 2016-17 was Rs 14.31 crore.

Right behind ADCB, is the Rajkot District Cooperative Bank, whose chairman Jayeshbhai Vitthalbhai Radadiya is a cabinet minister in Gujarat Chief Minister Vijay Rupani's government. It got deposits of old currencies worth Rs 693.19 crore.

Interestingly, Rajkot is the hub of Gujarat BJP politics -- Prime Minister Modi was first elected from there as a legislator in 2001.

ADC bank board of directors screenshot - click to enlarge.

Incidentally, the figures of Ahmedabad-Rajkot DCCBs are much higher than the apex Gujarat State Cooperative Bank Ltd, which got deposits of a mere Rs 1.11 crore.

"The amount of deposits made in the State Cooperative Banks (SCBs) and District Central Cooperative Banks (DCCBs) -- revealed under RTI for first time since demonetisation -- are astounding," Manoranjan S. Roy, the RTI activist who made the effort to get the information, told IANS.

The RTI information was given by the Chief General Manager and Appellate Authority, S. Saravanavel, of the National Bank for Agriculture & Rural Development (NABARD).

It has also come to light, through the RTI queries, that only seven public sector banks (PSBs), 32 SCBs, 370 DCCBs, and a little over three-dozen post offices across India collected Rs 7.91 lakh crore -- more than half (52 per cent) of the total amount of old currencies of Rs 15.28 lakh crore deposited with the RBI.

The break-up of Rs 7.91 lakh crore mentioned in the RTI replies shows that the value of spiked notes deposited with the RBI by the seven PSBs was Rs 7.57 lakh crore, the 32 SCBs gave in Rs 6,407 crore and the 370 DCCBs brought in Rs 22,271 crore. Old notes deposited by 39 post offices were worth Rs 4,408 crore.

Information from all the SCBs and DCCBs across India were received through the replies. The seven PSBs account for around 29,000 branches -- out of the over 92,500 branches of the 21 PSBs in India -- according to data published by the RBI. The 14 other PSBs declined to gave information on one ground or the other. There are around 155,000 post offices in the country.

Fifteen months after demonetisation, the government had announced that Rs 15.28 Lakh crore -- or 99 per cent of the cancelled notes worth Rs 15.44 lakh crore -- were returned to the RBI treasury.

Roy said it was a serious matter if only a few banks and their branches and a handful post offices, apart from SCBs and DCCBs, accounted for over half the old currency notes.

"At this rate, serious questions arise about the actual collection of spiked notes through the remaining 14 mega-PSBs, besides rural-urban banks, private banks (like ICICI, HDFC and others), local cooperatives, Jankalyan Banks and credit cooperatives and other entities with banking licenses, the figures of which are not made available under RTI," he said.

The SCBs were allowed to exchange or take deposits of banned notes till December 30, 2016 -- for a little over seven weeks, in contrast to district cooperative banks which were allowed only five days of transactions.

The prime minister during his demonetisation speech had said that Rs 500 and Rs 1,000 notes could be deposited in bank or post office accounts from November 10 till close of banking hours on December 30, 2016, without any limit. "Thus you will have 50 days to deposit your notes and there is no need for panic," he had said.

After an uproar, mostly from BJP allies, the government also opened a small window in mid-2017, during the presidential elections, allowing the 32 SCBs and 370 DCCBs -- largely owned, managed or controlled by politicians of various parties -- to deposit their stocks of the spiked notes with the RBI. The move was strongly criticised by the Congress and other major Opposition parties.

Among the SCBs, the Maharashtra State Cooperative Bank topped the list of depositors with Rs 1,128 crore from 55 branches and the smallest share of Rs 5.94 crore came from just five branches of Jharkhand State Cooperative Bank, according to the replies.

Surprisingly, the Andaman & Nicobar State Cooperative Bank's share (from 29 branches) was Rs 85.76 crore.

While Maharashtra has a population of 12 crore, Jharkhand's population is 3.6 crore. Andaman & Nicobar Islands have less than four lakh residents.

The poorest of all the cooperative banks in the country is Banki Central Cooperative Bank Ltd in Odisha, which admitted to receiving zero deposits of the spiked currency.

Of the total 21 PSBs, State Bank of India, Bank of Baroda, Bank of Maharashtra, Central Bank of India, Dena Bank, Indian Overseas Bank, Punjab & Sindh Bank, Vijaya Bank, Andhra Bank, Syndicate Bank, UCO Bank, United Bank of India, Oriental Bank of Commerce, and IDBI Bank (14 banks) -- with over 63,500 branches amongst them -- did not give any information on deposits.

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Economic Times had covered the expose of PayTM by Cobrapost in Operation 136, Part II. Subsequently the story was quietly deleted without any official retraction. AamJanata believes that stories silently vanished tell a story of their own, and therefore is republishing the story here.

A sting operation conducted by Cobrapost called attention to reports that the Prime Minister’s Office (PMO) may have approached Paytm to get user details of protestors in the Kashmir Valley.

As per the investigation titled 'Operation-136 II', Ajay Shekhar Sharma - who is incidentally senior VP and brother of Paytm founder Vijay Shekhar Sharma - is captured on camera claiming that someone from PMO had called to asked for data of users to identify stone-pelters.

The video, however, does not mention whether Paytm complied with the alleged requests or not.

"PayTM=PayToPM"

Following reports, Paytm has released a statement on Twitter rubbishing the claims made by Cobrapost.

"There is absolutely NO TRUTH in the sensational headlines of a video doing rounds on social media. Our users’ data is 100 percent secure and has never been shared with anyone except law enforcement agencies on request. Thank you for your continued support."

However, Congress president Rahul Gandhi calls it " proof that (we) were absolutely correct about demonetisation".

The sting operation

Cobrapost's reporter had posed as an employee for an NGO affiliated to the RSS and is heard telling another top Paytm official that he wanted to promote books like the Bhagavad Gita and the Ramayan on the company platform.

The reporter openly says that the campaign is driven by a Hindutva agenda, to which the official responds by admitting to having promoted PM Narendra Modi’s book 'Exam Warriors' by highlighting it on Paytm's homepage.

In the video, Ajay is also heard making his political affiliation to RSS very clear right at the onset of the conversation. He also claims that Union Minister for Rural Development Narendra Singh Tomar and MP CM Shivraj Singh Chouhan know him by name and face.

Originally published at: Economic Times

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Governments all over the world resort to spin to present themselves in the best possible light.

The boundary between gloss and outright lies can often be blurred. Statistical information is the easiest to fudge. The actual numbers may not be fabricated; that would be too obvious. Instead the spin masters use a few standard tricks: they select which numbers to present and which to hide, and they drawing unwarranted conclusions from a headline number. Official statistics present every opportunity to cross the line from disingenuous spin to downright misleading propaganda - or lies, in plain English.

Statistics is like a bikini, as the wit said, what it reveals is interesting; what it conceals can be vital.

Here’s an example of misuse of official statistics from India.  The Finance Minister tweeted a headline number about annual revenues from direct taxes. For the first time in 2017-18 it had crossed the 1 trillion rupee mark.

But he did more than just mention that 10.02 lakh-crore number. He made 2 further statements - one was implied and the other is an explicit and clear conclusion. Both bear further examination.

The statement that the 2017-18 revenue was 18% higher than in the previous year was not there just for completeness. The implication is that it was a substantial rise; it was a creditable, praiseworthy performance of the Indian economy. Is that really true?  

An 18% rise, on the face of it does sound a whopping rise! And it would be creditable if it had bucked the trend. Is that the case?

We do have the figures going back to 2001. They are here, on page 2 of this report from the Govt of India.

The data cover the years 2001-01 to 2016-17. Lets take the 10.02 trillion Rupees number given by the FM in his tweet for 2017-18 and add it to the existing time series data. The following chart shows the growth in direct tax revenues over the years.

Now, set in the context of previous years’ data the 10.02 trillion figure for 2017-18 looks like it is no more than the trend growth.

What about the  18% y-on-y growth? That sounded impressive. Again, taking the entire data series and plotting the y-on-y % aage increase over the previous year, we get this interesting plot.

So, now the 18% looks par for the course; its good but can it factually be described as ‘historical’? The y-on-y growth has returned to levels last seen in 2010-11, and is nowhere near the amazing near 40% growth seen in 2006-7, and the 36% seen the following year.

Now lets turn to the second part of the statement. The FM drew a clear conclusion about what led to the (not so) creditable 18% growth in 2017-18. He ascribed it unequivocally to ‘accountable governance’ under his leader, the Prime Minister. Leaving aside for the moment the question of the extent to which the Govt allows itself to be held to account, if the 2017-18 performance is ascribed to the leadership of the Prime Minister, the question that begs to be asked is this:

What led to the  9% growth in 2014-15, the 6.6% rise in 2015-16,  and the somewhat better 14.5% in 2016-17? You can’t claim credit for a good (if not stellar) performance and deny responsibility for a dismal performance.

References:

  1. Income Tax Department,  Time Series Data, Financial Year 2000-01 to 2016-17. See https://www.incometaxindia.gov.in/Documents/Direct%20Tax%20Data/Time-Series-Data-2016-17.pdf

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DeMonetisation did not promote the uptake of digital transactions

Driving India towards a less-cash, digital payments economy was one of the aims claimed by the Prime Minister when he invalidated 86% of India's circulating currency. The reasoning was that India was a largely cash-based economy; if circulating cash was reduced, people would rapidly move towards electronic, or digital payment systems for their commercial transactions. That at any rate was the hope.

Did it happen?

Rupa Subramanya thinks it did. She claimed as much in a blog in the Hindustan Times. She accepts that the original aim of taking out black money has not been met, given that almost all of the Specified Bank Notes (SBNs) hav now been returned for exchange or deposit. But she goes on to say that her research shows that the secondary aim of pushing the country towards digital payments and away from a cash based economy has been achieved. To quote from her article:

....several key components of digital payments such as Point of Sale Debit and Credit (PoS) purchases, National Electronic Fund Transfer (NEFT), Immediate Payment Systems (IMPS) and mobile banking, are way above their pre-demonetisation trends

.....

The bottom line of the research conclusively demonstrates that there was a structural break after November 2016 with a permanent increase in digital payments and decrease in the relative importance of cash. Whatever you may think of the original goals and whether they succeeded, it’s clear digitisation is one demonstrable success story of demonetisation.

She expresses the use of digital payments not in absolute terms but as a proportion of total M3 Money. However, though she says she has published her findings,  they are not in peer reviewed journals. Rather the findings are published in research papers for the Observer Research Foundation - a think tank. I haven't seen these papers and therefore cannot comment on the methodology of the research. In any case she does not cite a source, nor does her article present the full results of her analysis. Her data source, though is the same that I have used earlier in a series of tweets and in a twitter Moment. This is the Reserve Bank of India's Database on Indian Economy.

I believe her conclusions are premature, they may even be misleading or wrong, based as they are not on absolute value of payments but on payment volumes as a ratio of M3.

I present here my own much simpler and more intuitive analysis of the RBI data set and draw very different conclusions.

Data and Methods: The RBI dataset consists of monthly transaction amounts for each of several different modes of digital transactions. The data goes back to 2004 and the latest available data is for August 2017, 10 months after DeMonetisation. Rather than look at just at the figures a few months either side of D-Day (DeMonetisation-Day if you are a fan or Disaster-day if you are a critic), I suggest it is best to look at the entire period. Since these are time series data (defined as data collected consistently with a defined periodicity - in this case monthly) the most obvious and simple technique would be to chart the data against time, draw a vertical line at D-day and look for a change in the trend . If D-Day did indeed result in qualitative sustained change in aggregate behaviour the change in trend would be obvious. I used the statistical programming language, R and the charting package ggplot2 to draw and annotate the charts. These statistical programmes are widely used in academia and business.

Results: The results of my analysis are best presented as a series of charts. They speak for themselves.

The key point to get is that by looking at the entire time series for each of the main digital payment modalities, two conclusions leap out immediately.

One, that in the first few months after D-Day there was a spurt the volume of payments made by digital means.

Two, for some payment modalities, they have subsequently fallen back to levels that were seen well before D-day. In particular retail electronic clearing, and plastic card volumes are effectively back on the same trend growth they always were since long before D-Day. Mobile banking transactions in particular were going up steeply in the months before D-Day was even a glint in anyone's eye; they went up even more steeply after D-day - and here's the crucial point, they have more latterly dropped right back. If we superimpose what we know about the re-introduction of new currency notes this looks like a perfect fit. As cash was re-introduced into the system, people began giving up on mobile banking transactions.

Another set of charts looks at the volumes (i.e number) of transactions.

Here there appears to be a small shift upward that, despite some month on month fluctuation appears to be settling down at a level clearly higher than anything seen pre D-Day. In the case of mobile transactions it is small-ish numbers and starting from a very low base; in the case of digital transactions its a step change from about 1.4 billion transactions a month to about 2 billion. But the volumes transacted appear not to have shifted much at all - it is in keeping with long-running trend and it is certainly not a step change.

Undoubtedly, there has been a steep growth in the number of Point of Sale outlets, as shown here:

Starting from a very low base, this is only to be expected given the huge Government push including cash incentives and subsidies for the take up of POS machines. The extend to which these have penetrated much beyond the largest urban centres and the plushest retail outlets is the big question. The last chart above is based on data published by NITIAayog

Conclusions. My analysis leads me to conclude that any effect of DeMonetisation on the use of digital payment systems has been transient, small and short-lived. Some change has occurred (POS terminals for example) but the fact that both retail electronic clearing and card usage is back on what I call 'trend growth' (i.e. on the same trend as obtained before D-day) would suggest that there has not been a structural change that can be confidently ascribed to DeMonetisation.

Post-script discussion. In all the commentary on Digital Payments insufficient attention has been paid to a most fascinating report that was published on Oct 5 by Visa India. Amitabh Kant, CEO of NITIaayog, wrote the foreword to this report. Nobody who read the detailed figures or had taken in the measured  recommendations in this report would have supported a sudden, cataclysmic and disruptive withdrawal of 86% of the currency, certainly not with the intention of promoting a digital payments economy. Among the key findings of the report are:

  • Cash usage costs the economy 1.7% of GDP (Note: borne largely by the State)
  • According to a 2014 World Bank survey, only 0.38 percent of women above 15 years old used the internet to make payments compared with 2.04 percent
    of men; 3.25 percent women had used a debit card versus 5.25 percent of men.
  • The cost of a point-of-sale (POS) terminal in India ranges from INR 8,000 to INR 12,000. The annual operating cost is INR 3,000
    per terminal. Low transaction volumes especially outside of Tier 1 cities, make it unviable for banks to expand their footprint into such segments.
  • RBI and the Govt of India already had a plan to transition to a less-cash economy.
  • If India  invested a total of INR 58,000 crores (USD 8.6 billion) over the next five years through tax
    rebates, it could not only expedite the pace of payment digitisation but also save about INR 70,000 crores (USD 10.4
    billion) in that period through a reduction in the cost of cash with a potential to save 4.7 lakh crores (USD 70 billion)
  • If we invested 60,000 crores and undertook a series of reforms and regulatory changes cash use could come down in 2025 from 1.7% of GDP to 1.3%.
  • In particlar see exhibit 7 of the rport which details the benefits from a sustained programe of policy changes as well as investments to improve the infrastructure for digital transactions. Effectively, a 5 year programme of sustained policy implementation and investment would potentially result in a growth of digital payments for Personal Consumption Expenditure from 4% to a whopping 36%, a drop in cash need from 11% of GDP to 10%.

 

This article examines @santvarun's tweets summarizing the press briefing by senior INC leader Ajay Maken and connects them with relevant information in the public domain.

Three days ago, the UK newspaper, Guardian, made public excerpts of a 97-page show cause notice issued by the Directorate of Revenue Intelligence (DRI) to an Adani Group company: M/S Maharashta Eastern Grid Power Transmission Company Limited (MEGPTCL).

On 5/2/2013, DRI under UPA-II initiated an enquiry into over-invoicing on import of electrical machinery by a subsidiary of the Adani Group.

This investigation ended on 15/05/2014. The summary of this investigation:

Note: The accused MEGPTCL, a wholly owned subsidiary of Adani Enterprises Limited, an Adani Group company, is a Power Transmission Company (TransCo). For electricity to reach our homes, first the fuel is procured, then electric power generated in a plant. This power is then transmitted through a Distribution Company to our homes. So the electricity chain is: import coal --> import machinery for Generation Company (GenCo) --> import machinery for TransCo --> sell power through DisCom. The DRI investigation exposes the TransCo part of this chain. The background, as described in Michael Safi's Guardian report:

India is electricity-starved. More than 240 million Indians – enough people to form the fifth-largest country on Earth – lack access to regular power.

In the early 1990s, to encourage power companies to build electrical infrastructure, the Indian government eliminated import tariffs on technical equipment such as reactors and transformers. Profit margins on these projects increased overnight.

Adani saw the business opportunity. In 2010, the Maharashtra Eastern Grid Power Transmission Company Limited (MEGPTCL), a wholly owned subsidiary of Adani Enterprises, was granted a license to develop two electricity transmission networks in the north-east of the state.

Per the DRI investigation, Adani Group routed the purchase of equipment via a front company in Dubai, thus inflating the price of equipment by nearly 400%. The ensuing profits were then transferred to a trust in Mauritius controlled by Vinod Adani.

Vinod Shantilal Adani, the elder brother of industrialist Gautam Adani, set up a firm in the Bahamas in 1993 and, shortly afterwards, "corrected the spelling" of his name to Vinod Shantilal Shah.

The Guardian article also detailed how the illicit profits were siphoned off out of India (as summarized in the DRI notice).

How much money was siphoned off  by MEGPTCL? Nearly INR 1,500 crores!

The DRI notice was issued May 15, 2014. 9 days later, Narendra Modi flew from Ahmedabad to Delhi on an Adani aircraft to become India's 15th Prime Minister.


What happened to the DRI investigation once Modi took office is detailed by investigative journalist Josy Joseph in his book, A Feast of Vultures: The Hidden Business of Democracy in India, whose excerpts were carried in The Wire.

So there's a siphoning off of illicit profits by the Adani Group, who have backed the winning horse in the 2014 General Elections Narendra Modi, who then proceeds to stymie the investigation against them. The public is left to bear the cost of it all, which is where the INR 2/unit #AdaniTax comes in. It’s not only about the INR 1,500 crore; inflated invoices have a downstream impact on wheeling & generation charges:

Further, Adani Group clearly stands to profit from every part of the electricity chain ( import coal --> import machinery for Generation Company (GenCo) --> import machinery for TransCo --> sell power through DisCom). There are more dots to join - one detailed in the June 2016 issue of The Economic & Political Weekly by Paranjoy Guha Thakurta.

Thakurta also co-wrote with Aman Malik a similar article in The Wire which talked about an ongoing investigation into over-invoicing by as many as FORTY of India's biggest energy companies. A side note: Thakurta recently resigned as Editor of EPW after a defamation notice from - no prizes for guessing - Adani Group!]

Summaries of these articles from the INC Press Release:

The more you delay the adjudication process, the more the cases fade away from public memory and our collective consciousness.

Adding up all the over-valuations: in coal imported - INR 29,000 crore; in power plant machinery - INR 9,000 crore; in compensatory tariffs - minimum INR 10,000 crores!

So the INR 50,000 crore question is, how does this affect the electricity tariff charged to consumers? See the excerpts below:

To repeat: As many as 40 energy companies, including Adani Group, overvalued invoices and transferred the (inflated) cost to electricity consumers! Why should consumers foot this padded bill? Why is Narendra Modi, of na khaunga na khaane doonga fame, silent on this?

The demands made by the INC:

  1. Immediate reduction of tariff by up to factor of ₹2/ unit wherever these companies are producing & transmitting electricity.
  2. Immediate CBI investigation monitored by a judge of the Supreme Court into the corrupt practices of over-invoicing
  3. The Central Electricity Regulatory Commission should investigate all private power generating entities to identify over-pricing of equipment

It is high time that Narendra Modi stopped dishing out #LalQileKeJumle and took strong action against looting of Indian public! Expose ! Remove !

Postscript: Aamjanata.com agrees it is high time Narendra Modi delivered on his repeated vows to cleanse the system of political corruption.

Post-postscript:

  1. A piece in The Voice of Nation that tells you of the closeness of the Adani brothers - note the sympathetic tone. Is this supposed  to be the voice of India?
  2. A recent Climate Change news article on Modi & Adani wreaking havoc on the environment.
  3.  Vinod Adani was mentioned in the "Panama Papers"