By M D Nalapat
GST should be reduced on exports and made applicable on petroproducts.
There was a time when the Indian rupee was supreme within the neighbourhood. Whether it be in the Middle East or in Southeast Asia, the rupee was freely exchangeable and indeed prized. It had almost the same value as a US dollar. But this changed brief years after the Union Jack got replaced by the Tricolour above the former Viceregal Palace. Since then, the rupee has fallen in value relative to the US dollar and other “hard” currencies in proportion to the rise of undeclared foreign currency deposits abroad by citizens of India and their alien nominees. Those having huge dollar hoards must be drooling in delight over the free fall of Asia’s worst performing currency of 2018, the Indian rupee. Their holdings in US dollars will now fetch many more rupees than was the case as little as six months ago. As has taken place with monotonous regularity since Soviet planning was forcibly imposed on India’s economy in the 1950s, those who were patriotic enough to rely only on rupees for their wealth and not (secret hoards of) US dollars or British pounds have been cheated of their effective wealth to the benefit of the officials, businesspersons and politicians who regularly send money back to foreign banking havens through often overground hawala routes run by individuals who mingle every week with the highest in the RBI and in North Block. It is not the small dealer in the battered rupee who is a systemic danger to the economy, although the 8 November 2016 demonetisation of 86% of the country’s currency was aimed only at him. It is the merchant banker and fund manager expert in transforming the profits of under-invoicing, over-invoicing, insider trading on select exchanges and other malpractices into billion dollar hoards in foreign banks who has, for long, been the conduit for VVIPs and VIPs who cheat the poor of India of billions of dollars and thereby add to their foreign bank balances. Regulatory and investigative agencies in India have for long known about a small group of stockbrokers, businesspersons, senior officials and financial analysts led by a former Union Cabinet Minister. This cabal subverted the markets to make profits at the expense of the retail investor and public financial institutions such as the LIC and the nationalised banks. SEBI and other agencies have claimed that they are “investigating” such unconscionable misdeeds as the co-location scandal discovered in a stock exchange. Yet they have chosen for this task people who are themselves close to the very individuals they are supposed to investigate. The CBI and ED have deputed police officers unaware of how market fixing works to the case, when these agencies should by now have developed a cadre of officers fluent in tracing market shenanigans and financial fraud. Unless the agencies see to it that those guilty of insider trading and illegal speculation are identified and prosecuted, rather than allowed to escape as at present, India’s stock market regulators will become an object of global ridicule.
India is being cheated through a tainted and rigged system. As an example, an analysis could have been made of the price of coal imported into India and that paid by other global consumers of coal from the same supplier. If the price to the Indian purchaser is much higher, something is wrong. Is it an accident that domestic production of coal (a natural resource that this country has in abundance) is unsatisfactory even while imports are shooting up at prices that seem to arouse zero attention in the DRI or the ED? Somewhere in the future, those responsible for the lack of action in the rampant under-invoicing of exports and over-invoicing of imports need to be held accountable, for it is such malpractices that are assisting the group of speculators who are busy shorting the Indian rupee, aiming for the fall of the currency to Rs 100 to a US dollar by the close of the year. When a responsible policymaker comes on television and pleads helplessness (“The causes are global, not domestic”), and when the RBI maintains the silence of the graveyard over the induced tumbling of the value of the rupee, the short-sellers involved get confidence that their steady battering of the rupee will succeed in the same way such anti-people speculation did in 2013 till exposed by The Sunday Guardian. This earlier short-selling was carried out by the same cabal of operators who are now draining the country of economic health in order to enrich themselves. Acting in the manner of a sphinx statue is not what was expected of the RBI, which should work for the benefit of those holding rupees rather than serve international fund managers who revel in making dollar profits at the expense of the rupee. Interestingly, the recent changes sought by SEBI in foreign funds seem to do little to ensure transparency over sources of cash, but in effect block those of Indian ethnicity from managing such funds. White or yellow is kosher but brown not! However, efforts at creating an artificial panic, such as by public warnings that as much as $75 billion could exit the stock market following SEBI’s diktat, indicate the need to examine the records of those generating such fears and their association with those inside and outside the country who are working to create an economic meltdown before the 2019 polls. As yet, however, the agencies that should be undertaking such activity seem to be ineffective. The Insider Vulture Cabal continues to operate in freedom, including several in high positions. Indeed, many even write articles or make statements promoting the very policies that would boost their profits.
Rather than seek to create confidence in a strong rupee, the words and actions of our supine policymakers generate a belief that the Rs 100 per US dollar mark before 2019 is inevitable, and that the slide will continue even beyond that. Prime Minister Narendra Modi needs to take personal charge of a campaign to rescue the rupee from the (till now) immune-from-action Vulture Cabal. GST should be reduced on exports and made applicable immediately on petroproducts. There needs to be a search for trading partners who would accept payment in rupees, including Iran. Should that country make available oil through rupee payments, oil imports from Tehran should rise and not decline. Incentives need to be enhanced for the Information Technology industry that is resident in India, including startups, together with fresh export incentives in general. Strong action needs to be taken against over-invoicing and under-invoicing. RBI and North Block officials chummy with global fund managers and their Indian agents need to be monitored, especially their official words and actions, or lack of them. The Union Government must not adopt a posture of helplessness, as this would only help the gang of speculators led by a former Union Cabinet Minister. The Insider Vulture Cabal is busily engaged in plucking at the flesh of the economy, so as to leave behind only a skeleton by the time the 2019 Lok Sabha elections take place.