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8

As soon as the demonetisation of Rs.500 and Rs.1000 notes was announced, I had said that it was a forced and public funded "bailout" of banks. This article examines news reports from the last year and explains how I arrived at the conclusion.

Please note: I am not an economist or banker or accountant or even particularly good with money or calculations. As a result, almost all the conclusions in this article are actually quoted from news reports and analysis. I have merely strung them together. I could still be wrong, feel free to argue in the comments.

As soon as the demonetisation of Rs.500 and Rs.1000 notes was announced, I had said that it was a forced and public funded "bailout" of banks. This is a phenomenon polite people call recapitalization unless the government literally dumps money into banks.

This view has not changed. But many are skeptical, saying that excessive money with banks is not good for them as they will have to lend it out in order to earn from it. That is true, and they will have to lower interests and give out more loans and such. However, to those following the news, I'm simply presenting various things that happened in the year before the demonetisation. Particularly with regard to the Non Performing Assets - NPAs. Too many NPAs and the banks won't be able to function. On the other hand... pay attention here: The bank with the largest number of NPAs - State Bank of India - doesn't seem to be in as much crisis as several others - say... Indian Overseas Bank - guess why? Because with that size come plenty of other performing assets as well as deposits keeping the show going.

For the record, it isn't the first time that the government has forced the country into actions that end up putting money in banks. The Jan Dhan Yojana was the first. It doesn't seem to have yielded much. Then came the DBTL, where in spite of the Supreme Court saying that citizens must not be deprived of their rights because of not having an Aadhaar, a convoluted scheme was imposed on them where the gas subsidies provided for the state would be provided as deposits into their bank accounts as opposed to people paying less for gas while buying it. Small amounts at a time, but it would end up totaling to a good amount of money belonging to citizens getting deposited into the banks by the government. People were free to withdraw it, but at least some of it would hopefully remain as deposited, just like some Jan Dhan accounts would indeed see use even if most remained empty. But these are old stories.

The NPAs of banks had increased to an alarming level by the end of the December quarter, last year. Then governor of RBI, Raghuram Rajan had been on the case of banks for NPAs for a while, and took a firm view of the matter, giving the banks until March 2017 to deal with their NPAs. Banks were to start flagging and resolving NPAs and restructured loans and by March, skeletons were tumbling out of banking closets and it was clear that the banks had been underplaying NPAs in order to show better results to investors (presumably). With the pressure on from the RBI, the banks started turning the heat on defaulters. It is no secret that it is banks with large corporate loans struggling the worst with NPAs, and I can only speculate that people who knew people who knew people had a lot of money at stake. To quote from the linked article:

RBI had conducted an asset quality review of Indian banks and found many accounts that were showing stress were required to be classified as non-performing. But since banks were not classifying those accounts as NPA, the banking regulator directed lenders to classify them as sub-standard and provide accordingly. Sub-standard assets attract 15-20 per cent provisioning as compared to five per cent provisioning requirement in standard assets.

RBI had asked the banks to complete the exercise of classifying assets as NPA in the third and fourth quarter.

As a result, many banks including the likes of Bank of Baroda, IDBI Bank, Bank of India suffered record losses in the Oct-Dec quarter. Since the remaining accounts (those which were not classified as NPA in Q3), need to be classified as NPA in Q4, losses could her mount. Bankers said this has prompted the banks to call the management of the defaulting companies and ask them to make payments, which will help the lenders avoid further losses.

Incidentally, this is around the time when Narendra Modi claims that planning for demonetisation started (although there doesn't seem to be much evidence of planning going by the manner in which it has been carried out).

Soon after this began noises of Raghuram Rajan not continuing as the governor of RBI after his tenure was complete. What happened behind scenes is anyone's guess and rumors and claims out in public range from Raghuram Rajan not wanting to continue to the government not wanting him to continue. Regardless, he was succeeded by Urjit Patel, who headed GSPC in Modi's Gujarat when GSPC took loans to the tune of 20,000 crore and basically had nothing to show for them, with no gas ever being produced. His closeness to Ambani (who profited majorly from the GSPC mess) as well as Jignesh Patel is well known. So, given Modi's preference for complete incompetence in area where competence is expected being a requisite for appointments, who better than Urjit Patel to head RBI while it was overseeing banks reducing NPAs?

Unlike Raghuram Rajan's approach, where the RBI would support banks in dealing with bad loans, Urjit Patel was of the view that "bad banks" take over the debt. It is unclear what happened of that approach or whether and what efforts continued toward NPAs, but they continued to rise. Attempts by Modi (and one wonders why Modi) to get Indian state owned firms to take over floundering defaulting companies (and their debt) failed a month before demonetisation was declared by Modi. To quote from the link:

India's government is pushing state-owned steel, power and shipping firms to take over assets of private companies that have defaulted on loans, but faces resistance from them, leaving it scrambling to clear a $135 billion pile of stressed loans from banks' books.

[...]

Last month, steel ministry officials met with Modi to outline measures to revive a sector reeling under bad loans and cheap Chinese imports. Days later, in a renewed push, Finance Minister Arun Jaitley met with top lenders, including State Bank of India (SBI.NS) and ICICI Bank (ICBK.NS), steel and shipping ministry officials and some state-owned companies.

He gave the state-owned firms a list of 23 troubled steel, power and shipping companies with bad loans totaling $14.5 billion, according to government officials and minutes of the meeting seen by Reuters.

The state-owned firms were "encouraged" to buy at least one asset and take a minority stake in a company on the list.

The banks needed lots of money and fast, or many of them being Public Sector Banks with the government owning more than half of them, it would stress the government for funds. One wonders what was wrong with turning the screws on NPAs harder. The banks needed money and fast.

How could this be achieved? Well, how about if all the people in India put most of the money they had into banks and left most of it there?

What followed, with demonetisation seems to be a harebrained scheme to get most of the cash with the country into banks. This is how not only do the banks not have enough cash planned and are not even in a position to provide enough cash in the near future, we have increasing noises about "cashless" transactions being an intent behind the demonetisation. So the money gets transferred from account to account, but remains with the banks instead of returning to the people with limits withdrawn and notes available again.

Then with demonetisation with banks bloated with funds, some of the staggering NPAs were "written off" to reduce their burden and free the money the banks would have to provision for the bad loans. Any taxes the government got would be a bonus (but given the expenses and waivers of demonetisation, I doubt these were the real motive).

Added feedback from someone who knows more about money than me: While the increased deposits will allow the banks to lend more, earn more, lower interest rates, etc, the interest earned by the banks and taxes to the government will no doubt be useful toward recapitalizing the banks. As will various confiscations of deposits be.

So now the thoughtless demonetisation with it unending new rules being pulled out of hats has happened. Banks have a different problem. Too much cash. And the methods to deal with it won't necessarily result in big profits for them. What they will do to existing loans with the economy and thus borrowers stressed far worse is anyone's guess.

Finally, how do I know that this is really a bank bailout and not a coincidence? Well, now that things are going south with the demonetisation, the usual process of protecting Modi from the consequences of his own action has already begun. From being "Freedom at Midnight" - Modi's project planned meticulously and in complete and necessary secrecy for 10 months, the story now is that the RBI and Finance Ministry presented the demonetisation plan to Modi in a manner that "turning down the scheme was out of the question". And guess why (emphasis mine):

Prime Minister Narendra Modi is working “more than ten hours a day” just on ensuring that the 8 November money measures announced by him ensure a smooth landing for the economy rather than turbulence. This despite the fact that the plan actually owed its origin to the Reserve Bank of India and the Ministry of Finance, who persuaded the PM to go forward with an idea which will affect (and has affected) over a billion citizens of this country. Prime Minister Modi showed moral courage in coming forward and accepting ownership of the currency swap scheme announced on 8 November, and has since then publicly backed every twist and turn in that policy by the monetary and fiscal authorities. Senior officials say “Prime Minister Modi was presented with the issue in such a way that turning down the scheme was out of the question”. Through the plan, concerned officials wished to “shield those in high positions in banks across the country from the consequences of the crony-oriented lending that they had been doing, specially since 2006”, the year when Narasimha Rao’s liberalisation policy was fully substituted by the UPA into a faux Nehruvian economic policy that combined Fabian socialism with Wall Street ways. “Officials argued that a windfall of up to Rs 550,000 crore would flow to the banks through the enforced extinguishing of currency notes issued by the RBI, and that this would recapitalise several banks that were in effect bankrupt, thereby allowing them to lend again”. The Prime Minister was assured that “steps would be taken to ensure that the common man suffered minimal discomfort” and that “the informal economy would accelerate its absorption into the formal without jobs being affected”. It needs to be mentioned that it is the formal sector that is responsible for not repaying bank loans of a value crossing Rs 750,000 crore, which will be several times the value of tax evasion by the informal sector. NPAs are being written off by banks at an accelerating pace over the past six years, with still more businesses declaring themselves unviable by the month.

I rest my case.

Nagrik Chetna Manch (NCM) filed a Contempt Petition (21656 of 2015) on 6th July 2015 initiating proceedings for committing civil contempt of the Hon’ble by violating it’s interim orders dated 23.09.2013 and 16.03.2015 in Writ Petition (Civil) 494 of 2012 and dated 24.02.2014 in Special Leave Petition (Criminal) 2524 of 2014. The contemnors are (1) Pradeep Kumar Sinha, Cabinet Secretary, Union of , (2) Swadheen S Kshatriya, Chief Secretary , (3) Raghuram Rajan, Governor, Reserve Bank of India (4) Nasim Zaidi, Chief Election Commissioner, of India.

NCM noticed that there was a spurt of directives in the last few months by both the Central and State governments violating the orders of the Supreme Court by mandating linkages of benefits to the possession of Aadhaar number. We give below a few examples for the basis of the Contempt Petition.

The Department of Electronics and Communication Technology integrated Aadhaar to draw benefits in the newly launched Digital India Program. The Ministry of Labour and Employment made Aadhaar card compulsory for ESI services. The Ministry of New and Renewable Energy made Aadhaar mandatory for receiving capital subsidy. The Ministry of Rural Development made Aadhaar compulsory for MNREGA services.

The Govt. of made Aadhaar compulsory for ration services at Fair Price Shops and for school admissions and the Election Commission of India issued instructions for linking Aadhaar card with Elector’s Photo Identity Card.

In it’s interim order dated 23.09.2013 passed in WP (C) 494 of 2012, the Supreme Court had directed, “in the meanwhile no person should suffer for not getting the Aadhaar number and when any person applies to get the Aadhaar number voluntarily, it may be checked whether the person is entitled for it under law as it should not be given to any illegal immigrant.” In its order dated 24/03/2014 in SLP 2524/2014 filed by the Unique Identification Authority of India against the Central Bureau of Investigation and others, the Supreme Court had restrained the UIDAI from transferring any biometric information of any person to any other agency without a written consent.

Nagrik Chetna Manch has prayed for prohibition of linkage of Aadhaar number to any benefits, to end the discrimination of persons into Aadhaar and non-Aadhaar residents and restrain the from transferring any biometric information of any person from or to any other agency without specific written permission.

NCM’s Contempt Petition 21656 of 2015 in the Supreme Court

On 6th July 2015, Nagrik Chetna Manch (NCM) filed Contempt Petition bearing no. 21656 / 2015 under Art 129 & 142 of the Constitution of India read with section 12 of the Contempt of Courts Act 1971 for initiating contempt proceedings against the Contemnors for committing Civil Contempt of Hon’ble Supreme Court whereby violating it’s interim orders dated 23.09.2013 and 16.03.2015 passed in WP (C) no. 494 of 2012. As well as order dated 24.02.2014 passed by Hon’ble Supreme Court in SLP (Crl) no. 2524 of 2014. Contemnors being (1) Pradeep Kumar Sinha, Cabinet Secretary, Union of India, (2) Swadheen S Kshatriya, Chief Secretary Government of Maharashtra, (3) Raghuram Rajan, Governor, Reserve Bank of India (4) Nasim Zaidi, Chief Election Commissioner, Election Commission of India.

Earlier NCM had filed WP no. 932 of 2013 in public interest against the use of the UID number by RBI, ECI, RGI and GoI on the grounds mentioned in the WP in which notice had been issued on 19.11.2013 by the Hon’ble Supreme Court and the same was tagged with aforesaid WP (C) 494 of 2012.

In it’s interim order dated 23.09.2013 passed in WP (C) no. 494 of 2012, the Hon’ble Supreme Court while feeling importance of this matter, listed it for final hearing. And also directed that in the meanwhile no person should suffer for not getting the Aadhaar number and when any person applies to get the Aadhaar number voluntarily, it may be checked whether the person is entitled for it under law as it should not be given to any illegal immigrant.

In an order dated 24/03/2014 in another matter Special Leave to Appeal (Crl) No.2524/2014 filed by the Unique Identification Authority of India (UIDAI) against the Central Bureau of Investigation () and others, the Supreme Court had restrained the UIDAI from transferring any biometric information of any person who has been allotted the Aadhaar number to any other agency without his consent in writing. The order further stated that no person shall be deprived of any service for want of Aadhaar number in case he/she is otherwise eligible/entitled. All the authorities were directed to modify their forms/circulars/likes so as to not compulsorily require the Aadhaar number in order to meet the requirement of the interim order passed by the Hon’ble Supreme Court.

Despite these orders neither the nor States and their functionaries have been complying the orders of the Supreme Court in letter and spirit. They have continued to cause suffering by continuously mandating more and more for registration and linkages to the Aadhaar. The NCM quotes a few examples of the violations by the contemnors in the Petition.

The Department of Electronics and Communication Technology, for example, launched the Digital India Program on 1st July 2015. This program integrates Aadhaar as a mandatory feature to draw any benefits. The Ministry of Labour and Employment, Govt. of India issued advertisement in for making Aadhaar card compulsory for ESI services. The Ministry of New and Renewable Energy, Govt. of India issued notice No. 5/34/2013-14/RT dated 01.01.2015 for making Aadhaar card compulsory for receiving capital subsidy. The Ministry of Rural Development, Govt. of India issued letter dated 18.02.2015 and again on 25.02.2015 for making Aadhaar card compulsory for MNREGA services. The Minister of Rural Development, Govt. of India answered a unstarred question on 05.03.2015 whether the Union Government proposes to link accounts opened under Pradhan Mantri Jan Dhan Yojana with Aadhaar number to transfer subsidy and wages under MGNREGS directly indicating that “The States have been asked to take active measures to link the bank accounts of the workers with their Aadhaar numbers. In order to make use of the benefits under the PMJDY, all States have been requested to undertake an immediate drive to open Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts for all the active wage seekers who already do not have a Bank/ Post Office account in the nearest commercial Bank/ Post Offices. Wherever accounts have been freshly opened by MGNREGA workers under the PMJDY, such accounts are being linked with Aadhaar number of the beneficiaries.”

The Govt. of Maharashtra issued Cabinet Resolution dated 03.03.2015 for making Aadhaar card compulsory for ration services at Fair Price Shops. The Resolution also requires the transfer of biometric information to the Govt. of Maharashtra despite there being no consent in writing of the persons whose biometric it may be. The Govt. of Maharashtra issued GR dated 21.04.2015 for making Aadhaar card compulsory for school admissions.

The Reserve Bank of India issued letter dated 26.11.2013 for making Aadhaar card readers compulsory for all new infrastructure services.

The Election Commission of India issued letter dated 27.02.2015 for linking Aadhaar card with EPIC. This process of seeding is meaningless without discriminating, and thus causing to suffer, those without an Aadhaar.

In the meanwhile as the common man continues to suffer the Aadhaar, NCM has alleged in its Petition 932 of 2013, that the linkage of Aadhaar to various databases is destroying governance and ability to govern. NCM has also highlighted that it will end the rule of law and perhaps even compromise the sovereignty of India. Such linkage of bank accounts to Aadhaar is facilitating money laundering. Linkage of Aadhaar to the EPIC and NPR is destroying the ability to distinguish citizens from residents and giving citizenship to illegal immigrants as well as anti-nationals.

NCM in the CP filed, prays for prohibition of operations related to Aadhaar number by Contemnors forthwith and until final disposal of WP (C) no.494 of 2012, require contemnors to end suffering caused by discrimination of persons into Aadhaar and non-Aadhaar residents through the continued usage or seeding of Aadhaar by any agency and restrain the contemnors from transferring any biometric information of any person who has been allotted the Aadhaar number from or to any other agency.

Qaneez Sukhrani

Secretary, Nagrik Chetna Manch

Telephone: +919822056782

The online donation form on BJP websites openly accepts payments from People of Indian Origin, who are essentially not Indian Citizens and thus can't legally donate to political parties in India.

BJP appears to be illegally soliciting foreign funding from People of Indian Origin (who are not Indian citizens). BJP is not unaware of the distinction between non-resident Indians (who are Indian citizens staying abroad) and people of Indian origin (who are foreign citizens with links to India who can register for easier visas to visit and so on), since many of them had made spirited arguments related with the Nationality of Raghuram Rajan when he became the governor of Reserve Bank of India.

illegal fund collection bjp
Bharatiya Janata Party has been accepting foreign funds. Image: @kapsology

When Home Minister Sushilkumar Shinde announced an investigation into Aam Aadmi Party's funding, it was mostly a lark with a lot of accusations flying, but Aam Aadmi Party hardly having a problem defending against accusations from parties with most of their funding unaccounted and both Congress and BJP receiving foreign funding from organizations like Vedanta and DOW Chemicals AND government organizations on record in a PIL based on excellent research filed by Association of Democratic Reforms.

bjp congress foreign companies funding
BJP and Congress have accepted funds from foreign companies in violation of the FCRA.

Ridiculous reached new heights when Meenakshi Lekhi insinuated that Aam Aadmi Party may be receiving terrorist funding and one thing led to another and it turns out that BJP not only solicits funds from foreign citizens, it also does not declare the vast majority of its funding. Whether terrorist or not is another question, but it is a blatant flaunting of our laws and should be investigated.

And this has been going on for years. I checked the Wayback machine archive, and the BJP donation page accepting illegal donations has been archived for the last two years at least and all the versions accept money from People of Indian Origin. Here is a version of BJP's Donation page from June 2011.

sonation form on BJP website shows Afghanistan as first choice
BJP's donation page archived from June 2011 also accepts payments from people of Indian origins.

As you can clearly see, you can be an Afghan National and still provide your passport number and donate - I have not chosen "Afghanistan" - all the options here are the default options from the page. I think it is a poetic irony that the party that accused another of being funded by terrorists, though their funding is completely transparent, can indeed be funded by terrorists. It accepts the money, it does not disclose most of its funds. Do the math.

Illegal soliciting of funds by BJPAnd lastly, while the Aam Aadmi Party transparently declares any and all donations it receives, this is not the case with other political parties, most of whom have the vast majority of their funding shrouded as "unaccountable". They are also fighting to prevent citizens from trying to find out by filing RTIs with them.

unaccountable funding of <strong class='StrictlyAutoTagBold'>Indian</strong> political parties

 

 

Images from @kapsology (on Twitter) - the nice ones with red markings pointing out the problem. Screenshot images from me.

Arun Jaitley's advocate, Pratibha Singh has sent a legal notice to blogger Prashant Panday and Arun Jaitley has posted it on his personal website as well. The blogger had made certain accusations about Jaitley's finances.

I think this is a good thing. Not the practice of sending notices to bloggers to shut them up, but the act of a politician challenging accusations of corruption himself without letting them fester and blow up into rumor mills. Of course, exposing corruption runs the risk of angering people, and a legal notice serves nicely as a weapon to try and get a corruption expose taken offline. We saw it on my blog when I got a notice over an expose I had made. So it is not as if I don't understand what happens to the blogger who cannot afford to fight legal battles.

Firstly, I believe that blogging is conversations. It is an important voice for people, but there is no logic in assuming a blogger is always correct or in dismissing the harm done to a person who is on the receiving end of bad publicity. Asserting a blogger's right to say whatever he wants regardless of the consequences to another is not a responsible call, in my opinion. Particularly when the article is published in a newspaper. As the notice states, it was published on the Times of India website as well as getting picked by a newspaper in Tripura. The Times of India piece seems to be taken down, but the Tripura one is still available online. There is no telling where else it has spread, since newspaper content does spread like wildfire.

While I am against the arbitrary imposition of a 48 hour deadline for taking down content that can be imposed by anyone at large, I am not against demanding accountability from content itself. There is no such thing as the right to slander. And inventing it will be dangerous to a country that thrives on polarization, not to mention the overall quality of information where stakes are high. This is a stand I have taken fairly consistently regardless of which political party is accused or doing the accusing.

A whistleblower ought to have documents that back up his accusations, without which it becomes malicious gossip. And the hate between political parties as well as parties basing their entire existence on anticorruption is such that a person with proofs against a politician getting a legal notice cannot be silenced as easily. Worse, the internet smelling injustice has a way of decimating attempts to silence it. The content targetted for removal would get a wider audience instead. Unlike the common man of India, the common netizen of India isn't that easily silenced.

Even in the case where the issue is not as high TRP as a politician, a whistleblower who has proofs can simply present them as proof that he is not defaming. It is not defamation if you can prove it true. My reply to the notice had presented the sources for my claims and the matter ended there. I did take down the original post for fear of legal harrassment, but I believe that if I had the time (which I don't, for personal circumstances), I could also have defended it in court, which is something that is highly unlikely to pan out if your expose is genuine. No one wants to prove themselves corrupt to avoid a blogpost.

Now look at the rest of the scene. Politicians are ganging up to avoid RTI into political parties. Our sources of accurate information are severely restricted. In such a situation, a legal notice such as this actually helps clarify the issue, in my opinion. There are claims the person is making on record. If those can be proved wrong, the whole matter becomes much simpler - in the case of a corrupt politician. If the notice makes explanations that make the sources of the accusation of corruption wrong in some manner, then it is a clarification got at relatively less effort. In any case, the accused person responding to the accusation on record has to be a plus if the objective is against corruption rather than a PR war.

Also, I think given the deteriorating standards of journalism, demanding accountability from content that can make or break the reputation of a politician in the run up to elections is hardly unreasonable. I hope that this sets off a flurry of notices against mass media by politicians who would like to set the record straight. This is also what I thought about the allegations of US citizenship of our new RBI governor Raghuram Rajan. These things must be on record and clear as a matter of transparency. It should not be a matter of either silencing a blogger/journalist or defending a politician.

In my view such actions will be very welcome in today's vile political scenario which thrives on disinformation and mud singing. They will help the common man separate manipulation from facts and empower democracy.

In my view, politicians themselves addressing accusations of corruption with any visibility will go a long way toward getting some answers while we figure out how to get the RTI working.

9

indian currency note for five rupees

The Millenium Post mentions that India's new governor is a US citizen. His profile on Wikipedia mentions his nationality as American, with an Overseas Citizenship of India. Other stray profiles mention his nationality as only American, while he has spoken of himself as an Indian in a speech. Others have vouched for his Indian citizenship without providing sources. (more about these and other sources below post).
google search profile for Raghuram Govind RajanThis, in my view is a very serious allegation, as India does not allow non-citizens in government office (though this would hardly be the first violation even if true). When we speak of the governor of the Reserve Bank of India, then I believe it is important that there be clarity. According to the Millenium Post and Wikipedia, he is what is called an Overseas Citizen Indian and American citizen. This automatically means he is not a citizen of India. There is no confusion about it. India does not allow dual citizenship and any Indian voluntarily taking citizenship in another country ceases to be a citizen of India. Here is what the Citizenship Act, 1955 says:

Termination of citizenship.- (1) Any citizen of India who by naturalization, registration otherwise voluntarily acquires, or has at any time between the 26th January, 1950 and the commencement of this Act, voluntarily acquired the citizenship of another country shall, upon such acquisition or, as the case may be, such commencement, cease to be a citizen of India:

The American Embassy page understands this very clearly too [emphasis mine].

 An OCI card is similar to a U.S. "green card" in that a holder can travel to and from India indefinitely, work in India, study in India, and own property in India (except for certain agricultural and plantation properties). An OCI card holder, however, does not receive an Indian passport, cannot vote in Indian elections, and is not eligible for Indian government employment.

If true, it is really unclear how not only did Raghuram Rajan hold the position of CEA, he is now to be the Governor of the Reserve Bank of India. This is completely unrelated to his competence and about the laws of India. I am no lawyer, but the Citizenship Act seems quite clear on this.

Conferment of rights on overseas citizen of India states [emphasis mine]

Apart from the benefits and privileges available to an Overseas Citizens of India as enumerated above, such a citizen would also be entitled to other rights which the Central Government would specify and which would be notified in the official Gazette from time to time. However, there are certain sector such as public employment, voting rights etc where the rights would not be available to overseas citizens.

An overseas citizen of India shall not be entitled to the rights conferred on a citizen of India -

  1. under article 16 of the Constitution with regard to equality of opportunity in matters of public employment;

  2. under article 58 of the Constitution for election as President;

  3. under article 66 of the Constitution for election of Vice-President;

  4. under article 124 of the Constitution for appointment as a Judge of the Supreme Court;

  5. under article 217 of the Constitution for appointment as a Judge of the High Court;

  6. under section 16 of the Representation of the People Act, 1950 in regard to registration as a voter;

  7. under sections 3 and 4 of the Representation of the People Act, 1951 with regard to the eligibility for being a member of the House of the People or of the Council of States, as the case may be;

  8. under sections 5, 5A and 6 of the Representation of the People Act, 1951 with regard to the eligibility for being a member of the Legislative Assembly or a Legislative Council, as the case may be, of a State;

  9. for appointment to public services and posts in connection with the affairs of the Union or of any State except for appointment in such services and posts as the Central Government may by special order in that behalf specify.

Additionally, there are concerns about conflict of interest. The same article in Millenium Post mentions:

‘Prime Minister Manmohan Singh has approved the appointment of Dr Raghuram Rajan as RBI Governor for a term of three years,’ the government said in a release. A section of observers has criticised Rajan’s appointment. They point out that he is not only a US citizen but also that several positions he has held or holds — IMF chief economist, visiting professor to the World Bank and US Federal Reserve Board — could not have been without the backing of the American government. This factor, they fear, may induce him to act more in favour of US than Indian interests. There are also fear relating to Reliance Industries Ltd (RIL), which has made huge investments in the US shale gas industry and has also applied with the RBI for a bank licence. They fear that if RIL does, in fact, get this licence, there would emerge a connection between the US shale gas industry and the Indian financial sector. This would be detrimental to India’s national interests, they point out.

There is a certain ugliness to positions of power in a democracy being held by non-citizens. There is an inherent colonization in the governor of the Reserve Bank of India being ineligible to vote because he has CHOSEN the citizenship of another country.

This is something that needs to be clarified, and fast. If the Millenium Post is wrong, then it should issue a correction. If it does not issue a correction, the correct facts should at least be put on record. If Millenium Post is accurate, then the government should explain why a foreigner will lead our economy - no matter how good he is, and why the country was not informed if an exception was made to its laws and the reasons for it. Either way, this should be made clear.

It is entirely possible that someone at Millenium Post did a lazy job and picked up wrong data from the Wikipedia, but still the fact remains that they have quoted sources (without naming, so could be invented). Wikipedia, being editable by anyone is not the most reliable source of facts. However, the term Overseas Citizen of India is quite specific and had to come from somewhere even if the source is not mentioned. Not to mention the fact that Raghuram Rajan would hardly be unaware of his own details on his profile page. While not impossible, I find it tough to believe that a researcher who has his own page on Wikipedia is not interested in its contents or their accuracy enough to set the record straight on basic facts.

Other relatively smaller (and possibly inaccurate) profiles on the internet too mention his nationality as American. News of his appointment to the IMF in 2003 was reported as the first appointment of a person of "Indian Origin" to the IMF, when normal language use would simply say first Indian to be appointed to the IMF.

Bloomberg mentions him having an Indian passport, but another person (also without sources) speaks of Indian government having given him a diplomatic passport, which may not be the same thing.

Raghuram Rajan has referred to himself as an Indian, but that does not exclude his being a US citizen. Particularly if he is an OCI and sees this as the dual citizenship that he had advocated (but Indian law doesn't support). So referring to himself as Indian may
Raghuram Rajans profile stating his nationality as American with <strong class='StrictlyAutoTagBold'>Indian</strong> ethnicity not mean he isn't a US citizen.

I think part of the confusion may be from the term "American economist of Indian nationality" and similar, where "American" may refer to his area of expertise rather than citizenship. He does seem to have done most of his work about America AND lives there.

I have written to both Raghuram Rajan and Millenium Post for clarifications, but have received no replies from either. I will update this post if/when I get them. Raghuram Rajan himself clarifying the confusion would probably be best.

Even if he is an Indian citizen, it is important that such doubts don't exist about the governor of the Reserve Bank of India, particularly when the ambiguity seems to have resulted in a non-existent nationality that implies his role is against Indian law. Clarifications will help set the record straight everywhere and be overall good on this front.

 

Note: There seems to be a school of thought that thinks we are lucky to have him  and we should not look for laws to exclude him. I am of the belief that the government breaking laws is among the worst things for a democracy. If he is that important, an exception should be made or law fixed and on record.

Note 2: I am no economist, but I am not able to understand the hype over needing to have this man at all costs in the RBI to save our economy or something like that. He has been advising the Finance Ministry with all his profound wisdom for a year. The Finance Ministry controls the RBI. If his influence on the Finance Ministry has coincided with the kind of sliding line on the GDP graphs, I can't imagine what he will do in the RBI with someone else controlling him. He's hardly likely to get "freedom" anyway. Also, most of his work seems to study America, and India is a vastly different economy. Not to mention that he appears to primarily be a researcher, and his experience in bureaucratic knowledge is unclear. It appears his first gig in hands on running an economy will be the third largest economy in the world. That is one hell of a test drive. I repeat, I am not an economist, only pointing out that his influence is already present, not something new we will get and so far the results are not visible.

 

Update: Murli Manohar Joshi raised the question of how a foreigner could be appointed as governor of India in the Parliament. Raghuram Rajan is said to have provided the Speaker with a copy of his Indian passport which will be forwarded to Murli Manohar Joshi to set the record straight. I think this is important and thank you Mr. Joshi for bringing this up, however awkward it may be.

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