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.
No comments:
Post a Comment