BALTIMORE - Bitcoin blew by another milestone.
This morning, the world's first cryptocurrency hit a new record of $9,680.
It started off the year trading at just $997.
"I can't believe what happened," said a friend.
"I bought $1,000 worth in 2012. Bitcoin was trading at about $8 at the time. Then one of the big cryptocurrency exchanges, Mt. Gox, was hacked and almost $500 million worth of bitcoin was stolen. I got out.
"If I had just held onto my stake, it would have been worth more than $1.2 million today."
Lighter Than Air
You hear stories like that all the time now. They are bull market stories. The hero regrets having sold too early.
Later on come the bear market stories when he regrets having sold too late.
But let's enjoy the bull stories now... while we can.
The typical story has its hero... and its villain. The hero bought bitcoin when everyone told him not to. Now he's regarded as a genius. Even his father-in-law is asking his opinion on everything from politics to cocktail recipes.
Last week, the geniuses multiplied...
From what we can tell, bitcoin is headed to the moon. Or to Hell.
Weightless... frictionless... why not?
If it hit $9,000... why not $90,000... or even $900,000?
Bitcoin is a perfect "investment" for the fake-money era. Lighter than air. Not here; not there. Neither animal, vegetable, nor mineral.
Immaterial. Implausible. Imponderable. And immeasurable. There is nothing to hold it back.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.
Wednesday, November 29, 2017
Shutting Out Chinese Products is Not Going to Create Jobs
Public rallies against imported Chinese goods are held quite regularly these days, across different parts of the country. India's dependence on Chinese goods has only grown over the years. This can be made out from Figure 1, which plots India's imports from China every quarter, for the last few years.
Figure 1 tells us very clearly that India's imports from China have grown over the years. Having said that, it doesn't make sense to look at imports in isolation given that India exports stuff to China as well. Hence, Figure 2 (on the next page) plots India's trade deficit with China (i.e. the difference between our total imports from China and our total exports to it).
Figure 1:
Figure 2 clearly shows that India's trade deficit with China has grown over the years. This means that we import much more from China than we export to it. A major reason for this lies in the fact that most of the Indian firms are small in size. Take a look at Figure 3.
Figure 2:
What does Figure 3 tell us? It tells us very clearly that close to 85 per cent of Indian manufacturing firms are small. They employ less than 50 workers. In case of China, only around 25 per cent of the manufacturing firms are small. Also, in case of China, more than 50 per cent of manufacturing firms are large i.e. they employ more than 200 workers. In the Indian case, around 10 per cent of the manufacturing firms are large. And India has very few middle-sized firms which employ anywhere between 50 to 200 workers.
Figure 3: Distribution of manufacturing workforce among small,
medium and large firms in India and China
Given this small size, Indian firms lack economy of scale, which is basically a proportionate fall in costs gained with increased production. Hence, Indian products are costlier than Chinese products. In a recent newsreport, Blooomberg quotes a small shopkeeper as saying: "India-made lights cost twice as much... Customers aren't willing to pay that."
The other factor that helps make Chinese imports cheaper is the huge fall in international shipping costs over the years. This is a point that Tim Harford makes in his new book 50 Things That Made the Modern Economy: "Goods can now be shipped reliably, swiftly and cheaply: rather than the $420 that a customer would have paid... to ship a tonne of goods across the Atlantic in 1954, you might now pay less than $50 a tonne."
This has had a major impact on the way goods are manufactured and business in general is carried out. As Harford writes: "Manufacturers are less and less interested in positioning their factories close to their customers - or even their suppliers. What matters instead is finding a location where the workforce, the regulations, the tax regime and the going wage all help make production as efficient as possible. Workers in China enjoy new opportunities; in developed countries [AND DEVELOPING COUNTRIES] they experience new threats to their jobs; and governments anywhere feel that they're competing with governments everywhere to attract business investment. On top of it all, in a sense, is the consumer, who enjoys the greatest possible range of the cheapest possible products - toys, phones, clothes, anything [EMPHASIS ADDED]."
The point is that the Chinese factories operate on a very large scale and that makes their products cheaper than the ones being made in India. The fact that transportation costs are low, helps as well.
Those against Chinese products want this dominance of Chinese products on India to end. As Arun Ojha, national convener of Swadeshi Jagran Manch recently told Bloomberg: "Our youth are losing jobs and we are becoming traders of Chinese products."
It is important to dissect Ojha's statement. What he is essentially saying is that because Indians are buying Chinese products, Indian industry is shutting down and the Indian youth are losing jobs. So, what is the way out? The way out is that we stop buying Chinese products and start buying Indian ones. Will this help?
This is where things are no longer as straightforward as they seem. The straightforward interpretation here is that, as Indians stop buying Chinese goods and start buying Indian goods, Indian industry will flourish, and Indian youth will find jobs. Now only if it was as simple as that.
Henry Hazlitt discusses a similar situation in his brilliant book Economics in One Lesson, in the context of United Kingdom of Great Britain and United States of America. As he writes: "An American manufacturer of woollen sweaters... sells his sweaters for $30 each, but English manufacturers could sell their sweaters of the same quality for $25. A duty of $5, therefore, is needed to keep him in business. He is not thinking of himself, of course, but of the thousand men and women he employs, and of the people to whom their spending in turn gives employment. Throw them out of work, and you create unemployment and a fall in purchasing power, which would spread in ever-widening circle."
An American manufacturer of sweaters can sell his sweaters for $ 30 per piece. At the same time, an English manufacturer can sell the same sweater for $25 per piece. Hence, the American manufacturer charges $5 or20 per cent more for the same product than the British one. Of course, if both the products are allowed into the American market, the consumer will buy the cheaper one. This would mean that the British manufacturer would flourish. In the process, the American manufacturer might have to shutdown and this would mean a loss of a huge number of jobs.
The American government would obviously be bothered about the American manufacturer and the American jobs. Given this, to ensure that the American manufacturer can compete, the American government needs to impose a duty of $5 on the British manufacturer. This will mean the British manufacturer will also sell sweaters for $30. In the process, the American manufacturer would be able to compete, and jobs would be saved.
This trouble with this argument, as convincing as it sounds, is that it does not take the point of view of the consumer buying the sweater into account. As Hazlitt puts it: "The fallacy comes from looking merely at this manufacturer and his employees, or merely at the American sweater industry. It comes from noticing only the results that are immediately seen, and neglecting the results that are not seen because they are prevented from coming into existence."
If the consumer ends up paying $30 per sweater, he would be paying $5 more. This basically means that he would have $5 less to spend on other things. As Hazlitt writes: "Because the American consumer had to pay $5 more for the same quality of sweater he would have just that much less left over to buy anything else. He would have to reduce his expenditures by $5 somewhere else. In order that one industry might grow or come into existence, a hundred other industries would have to shrink. In order that 50,000 persons might be employed in a woollen sweater industry, 50,000 fewer persons would be employed elsewhere."
If the British manufacturer was allowed a level playing field and sweaters continued to sell at $25 per piece, the American manufacturer would soon have to shutdown. The loss of these 50,000 jobs would be noticed. This would be the seen effect of letting the British sell in the American market.
If these jobs are to be protected, then even the British sweaters would have to sell at $30 per piece. This would leave the consumer with $5 less, which he could have spent on something else, otherwise. This lack of spending would impact other industries and jobs would be lost there. It's just that the loss of these jobs would not be so visible as was the case with the American sweater industry. This is the unseen effect.
Now replace the United States with India and the United Kingdom with China in the above example, the entire logic remains the same. If Indians move towards buying more Indian goods than Chinese, they will end up paying more for those goods. This will leave them with less money to spend elsewhere. This would impact other industries, where jobs would be lost. It's just that these job losses won't be so obvious.
This is a rather obvious point that most people miss out on while analysing this issue. There is a certain opportunity cost of money. As Dan Ariely and Jeff Kreisler write in Dollars and Sense-Money Mishaps and How to Avoid Them: "The opportunity cost of money is that when we spend money on one thing, it's money that we cannot spend on something else, neither right now nor anytime later."
Given this, shutting out Chinese products is not going to create jobs in India. The only way jobs can be created is if Indian industry can compete with China. Right now, it doesn't.
Vivek Kaul is the Editor of the Diary and The Vivek Kaul' Letter. He is the author of the Easy Money trilogy. The books were bestsellers on Amazon. His latest book is India's Big Government - The Intrusive State and How It is Hurting Us.
Figure 1 tells us very clearly that India's imports from China have grown over the years. Having said that, it doesn't make sense to look at imports in isolation given that India exports stuff to China as well. Hence, Figure 2 (on the next page) plots India's trade deficit with China (i.e. the difference between our total imports from China and our total exports to it).
 |
Figure 2 clearly shows that India's trade deficit with China has grown over the years. This means that we import much more from China than we export to it. A major reason for this lies in the fact that most of the Indian firms are small in size. Take a look at Figure 3.
 |
What does Figure 3 tell us? It tells us very clearly that close to 85 per cent of Indian manufacturing firms are small. They employ less than 50 workers. In case of China, only around 25 per cent of the manufacturing firms are small. Also, in case of China, more than 50 per cent of manufacturing firms are large i.e. they employ more than 200 workers. In the Indian case, around 10 per cent of the manufacturing firms are large. And India has very few middle-sized firms which employ anywhere between 50 to 200 workers.
medium and large firms in India and China
 |
Given this small size, Indian firms lack economy of scale, which is basically a proportionate fall in costs gained with increased production. Hence, Indian products are costlier than Chinese products. In a recent newsreport, Blooomberg quotes a small shopkeeper as saying: "India-made lights cost twice as much... Customers aren't willing to pay that."
The other factor that helps make Chinese imports cheaper is the huge fall in international shipping costs over the years. This is a point that Tim Harford makes in his new book 50 Things That Made the Modern Economy: "Goods can now be shipped reliably, swiftly and cheaply: rather than the $420 that a customer would have paid... to ship a tonne of goods across the Atlantic in 1954, you might now pay less than $50 a tonne."
This has had a major impact on the way goods are manufactured and business in general is carried out. As Harford writes: "Manufacturers are less and less interested in positioning their factories close to their customers - or even their suppliers. What matters instead is finding a location where the workforce, the regulations, the tax regime and the going wage all help make production as efficient as possible. Workers in China enjoy new opportunities; in developed countries [AND DEVELOPING COUNTRIES] they experience new threats to their jobs; and governments anywhere feel that they're competing with governments everywhere to attract business investment. On top of it all, in a sense, is the consumer, who enjoys the greatest possible range of the cheapest possible products - toys, phones, clothes, anything [EMPHASIS ADDED]."
The point is that the Chinese factories operate on a very large scale and that makes their products cheaper than the ones being made in India. The fact that transportation costs are low, helps as well.
Those against Chinese products want this dominance of Chinese products on India to end. As Arun Ojha, national convener of Swadeshi Jagran Manch recently told Bloomberg: "Our youth are losing jobs and we are becoming traders of Chinese products."
It is important to dissect Ojha's statement. What he is essentially saying is that because Indians are buying Chinese products, Indian industry is shutting down and the Indian youth are losing jobs. So, what is the way out? The way out is that we stop buying Chinese products and start buying Indian ones. Will this help?
This is where things are no longer as straightforward as they seem. The straightforward interpretation here is that, as Indians stop buying Chinese goods and start buying Indian goods, Indian industry will flourish, and Indian youth will find jobs. Now only if it was as simple as that.
Henry Hazlitt discusses a similar situation in his brilliant book Economics in One Lesson, in the context of United Kingdom of Great Britain and United States of America. As he writes: "An American manufacturer of woollen sweaters... sells his sweaters for $30 each, but English manufacturers could sell their sweaters of the same quality for $25. A duty of $5, therefore, is needed to keep him in business. He is not thinking of himself, of course, but of the thousand men and women he employs, and of the people to whom their spending in turn gives employment. Throw them out of work, and you create unemployment and a fall in purchasing power, which would spread in ever-widening circle."
An American manufacturer of sweaters can sell his sweaters for $ 30 per piece. At the same time, an English manufacturer can sell the same sweater for $25 per piece. Hence, the American manufacturer charges $5 or20 per cent more for the same product than the British one. Of course, if both the products are allowed into the American market, the consumer will buy the cheaper one. This would mean that the British manufacturer would flourish. In the process, the American manufacturer might have to shutdown and this would mean a loss of a huge number of jobs.
The American government would obviously be bothered about the American manufacturer and the American jobs. Given this, to ensure that the American manufacturer can compete, the American government needs to impose a duty of $5 on the British manufacturer. This will mean the British manufacturer will also sell sweaters for $30. In the process, the American manufacturer would be able to compete, and jobs would be saved.
This trouble with this argument, as convincing as it sounds, is that it does not take the point of view of the consumer buying the sweater into account. As Hazlitt puts it: "The fallacy comes from looking merely at this manufacturer and his employees, or merely at the American sweater industry. It comes from noticing only the results that are immediately seen, and neglecting the results that are not seen because they are prevented from coming into existence."
If the consumer ends up paying $30 per sweater, he would be paying $5 more. This basically means that he would have $5 less to spend on other things. As Hazlitt writes: "Because the American consumer had to pay $5 more for the same quality of sweater he would have just that much less left over to buy anything else. He would have to reduce his expenditures by $5 somewhere else. In order that one industry might grow or come into existence, a hundred other industries would have to shrink. In order that 50,000 persons might be employed in a woollen sweater industry, 50,000 fewer persons would be employed elsewhere."
If the British manufacturer was allowed a level playing field and sweaters continued to sell at $25 per piece, the American manufacturer would soon have to shutdown. The loss of these 50,000 jobs would be noticed. This would be the seen effect of letting the British sell in the American market.
If these jobs are to be protected, then even the British sweaters would have to sell at $30 per piece. This would leave the consumer with $5 less, which he could have spent on something else, otherwise. This lack of spending would impact other industries and jobs would be lost there. It's just that the loss of these jobs would not be so visible as was the case with the American sweater industry. This is the unseen effect.
Now replace the United States with India and the United Kingdom with China in the above example, the entire logic remains the same. If Indians move towards buying more Indian goods than Chinese, they will end up paying more for those goods. This will leave them with less money to spend elsewhere. This would impact other industries, where jobs would be lost. It's just that these job losses won't be so obvious.
This is a rather obvious point that most people miss out on while analysing this issue. There is a certain opportunity cost of money. As Dan Ariely and Jeff Kreisler write in Dollars and Sense-Money Mishaps and How to Avoid Them: "The opportunity cost of money is that when we spend money on one thing, it's money that we cannot spend on something else, neither right now nor anytime later."
Given this, shutting out Chinese products is not going to create jobs in India. The only way jobs can be created is if Indian industry can compete with China. Right now, it doesn't.
Vivek Kaul is the Editor of the Diary and The Vivek Kaul' Letter. He is the author of the Easy Money trilogy. The books were bestsellers on Amazon. His latest book is India's Big Government - The Intrusive State and How It is Hurting Us.
Friday, November 24, 2017
We told you so: AAP on ‘EVM tampering’ in UP
The Aam Aadmi Party (AAP) on Thursday reignited the electronic voting machine (EVM) tampering debate, after some incidents were reported during the first phase of civic elections in Uttar Pradesh on Wednesday.
Senior AAP leader Atishi Marlena said the party had been shouting from rooftops since March this year about EVM tampering to favour the BJP.
Viral video
Wednesday’s incident came to the fore after a video of a voter from Meerut, Tasleem Ahmad, went viral on social media. In the video, Mr. Ahmad is seen pressing the button for the BSP but the light next to BJP glows.
He reportedly waited for 15 minutes at the booth, called the senior district officials and the media, and recorded the entire episode on his phone. Similar incidents of tampering were also reported from Kanpur and Agra.
“In all these incidents of tampering, the common thread is that the votes go to the BJP no matter for whom they are cast,” Ms. Marlena said.
She said the first such incident happened in Dhaulpur, Rajasthan, in April this year, where no matter what button was pressed the light aside BJP would come on.
Incidents have also been reported from Bhind in Madhya Pradesh, Uttarakhand and Sultanpur in UP.
Ms. Marlena said that the AAP local leaders from UP had on several occasions in the last few months requested the election commission to conduct the local elections using ballot paper instead of EVM.
“We had doubts on the authenticity of the elections using EVMs as it could easily be tampered as it has been in the past. The latest cases have only established what we have been saying,” she said.
Senior AAP leader Atishi Marlena said the party had been shouting from rooftops since March this year about EVM tampering to favour the BJP.
Viral video
Wednesday’s incident came to the fore after a video of a voter from Meerut, Tasleem Ahmad, went viral on social media. In the video, Mr. Ahmad is seen pressing the button for the BSP but the light next to BJP glows.
He reportedly waited for 15 minutes at the booth, called the senior district officials and the media, and recorded the entire episode on his phone. Similar incidents of tampering were also reported from Kanpur and Agra.
“In all these incidents of tampering, the common thread is that the votes go to the BJP no matter for whom they are cast,” Ms. Marlena said.
She said the first such incident happened in Dhaulpur, Rajasthan, in April this year, where no matter what button was pressed the light aside BJP would come on.
Incidents have also been reported from Bhind in Madhya Pradesh, Uttarakhand and Sultanpur in UP.
Ms. Marlena said that the AAP local leaders from UP had on several occasions in the last few months requested the election commission to conduct the local elections using ballot paper instead of EVM.
“We had doubts on the authenticity of the elections using EVMs as it could easily be tampered as it has been in the past. The latest cases have only established what we have been saying,” she said.
Wednesday, November 22, 2017
One Example of How a Good and Simple Tax Should Work
Late last week I was paying the Goods and Services Tax (GST) I had collected on behalf of the government, to the government.
In the process of payment, I made a mistake, which, with the benefit of hindsight I can say was a rather silly one. Basically, the entries for the state GST and integrated GST got interchanged. In the process, I ended up paying more integrated GST than I had to and less state GST than I had to.
Integrated GST is a tax which the seller must collect from the buyer on the inter-state supply of goods and services. State GST and central GST are taxes which the seller must collect from the buyer on the intra-state supply of goods and services.
Let's understand this through an example. I am based out of Mumbai in the state of Maharashtra. I write a column for a magazine, which is based out of New Delhi. In this case, when I bill the magazine (the buyer), I will raise an invoice with an integrated GST of 18 per cent.
If I write a column for a website (it could even be a magazine/newspaper) based out of Mumbai, then I will raise an invoice with a central GST of 9 per cent and a state GST of 9 per cent. The point to be noted here is that the overall rate of tax in both the cases (interstate and intrastate) is the same. Only the division is different.
Anyway, getting back to my story. Given that I hadn't paid the right amount of state GST, this meant that I had logon to the GST portal once again and pay the state GST I hadn't. The integrated GST I had already paid will now get adjusted against the payments that I will make in the months to come. The money is safe. There is nothing to worry on that front.
Of course, I didn't realise I had made a mistake while paying the GST. It was only when my chartered accountant started filing the GST return, this mistake was noticed. After this, I frantically logged on to the GST portal in order to pay the state GST, I hadn't. In fact, I almost ended up paying the integrated GST all over again. Thankfully, I noticed the mistake this time around.
In the process of making this mistake I had a rather obvious realisation. As someone who is collecting GST on behalf of the government, it doesn't matter to me whether I am collecting state GST or central GST or integrated GST. This is something that should work at the backend of the system that has been created to implement GST.
How the GST collected by the government is split between the different governments (central and states) is not something I am really bothered about. Once I have upload my returns and have paid the right amount of GST, the system should be able to figure out, using GST numbers which have state codes and the PAN number of buyer as well as the seller built into it, what proportion of the GST should go to the central government and what proportion should go to the state governments.
Given this, I as a user should simply be making an entry for the total GST that I need to pay. The GST system can then easily figure out, the various kinds of GST, given that each buying-selling transaction along with the value, is reported as well.
But that is not how the current GST system works. The backend has become the front end as well. That is how the system has been designed.
It is well worth asking why? Dear Reader, if you have ever filed an income tax return form on your own even once, you would already know the answer. When the government designs these forms, it does not keep the ease of use of the end user in mind. That's the idea with which the government has always operated. This has seeped into the GST system as well.
The success of any government system (or for that matter any system) also depends on how easy it is to use. This ease of use will make GST a good and simple tax, which it currently isn't. In case of the GST, the government has just made the laws. The actual taxes need to be collected by the seller from the buyer. The seller then needs to hand the tax over to the government. The seller also needs to file returns. Currently, this entire process that has been made extremely cumbersome.
I am no GST expert, but I am sure that if some thought was given to the entire process of filing GST returns and paying GST to the government, it could be simplified. But for that to happen, first and foremost what is needed is bureaucratic will, even more than political will.
Indian bureaucrats have never liked to make things simple for the citizens of this country, because a simple system would discourage rent-seeking, which many of them excel in. And therefore, I feel that the GST will continue to be as complicated as ever.
CVC closed graft cases in AIIMS, claims whistleblower
New Delhi: The Central Vigilance Commission closed cases of corruption involving senior functionaries in Delhi's AIIMS, whistleblower IFS officer Sanjiv Chaturvedi has claimed.
Chaturvedi, who is seeking a probe against Central Vigilance Commissioner K V Chowdary, recently sent documents, running into almost 1,000 pages, in support of his claim to the president's office.
The winner of the Ramon Magsaysay award for exposing corruption in public office has shared the details of seven cases with the president's secretariat. The seven includes one on his alleged victimisation while he was chief vigilance officer (CVO) at the All India Institute of Medical Sciences.
Chaturvedi served as CVO, acting as the distant arm of the CVC to check corruption, at AIIMS from July 2012 to August 2014.
He brought various corruption cases to the notice of the CBI during his tenure. The CBI after a detailed probe recommended departmental action in four cases, naming officers and senior faculty members, which were closed by the CVC, reveal documents accessed by Chaturvedi through RTI.
According to the vigilance manual, cases of corruption with a criminal angle are first sent to the CBI by the CVO of the organisation. The cases of departmental action are acted upon on the basis of the CVC's direction.
The probity watchdog said in its response that the report was examined in each case and taken to its logical conclusion at the appropriate level.
"Such reports are confidential documents and at the time of tendering advice by the Commission due note is taken of the views of the appropriate authority," the CVC said.
Since each case involves other officers, it is not considered appropriate to furnish the details, keeping in view privacy rights and confidentiality of the reports of the various investigating agencies, it said.
Chaturvedi has enclosed a set of documents, accessed through RTI applications on all these corruption cases, with the complaint to the president's secretariat.
The first case relates to alleged corruption related to Rs 7,000 crore infrastructure work in AIIMS, and alleged illegal extension of B S Anand as head of the engineering wing in AIIMS in September 2012 for supervising the project.
The CBI registered a case against Anand and Vineet Chaudhary, former deputy director of the AIIMS and an IAS officer, in January 2014, regarding pecuniary loss, property purchase and other issues, according to the documents.
In its report submitted to the health ministry in December 2014, the CBI recommended action against Chaudhary, records show. However, the CVC decided to close the case in July 2016, on the recommendation of the minister of state in health ministry instead of the department of personnel and training (DoPT).
The DoPT is disciplinary authority in case of IAS officers on central deputations.
Another case deals with the purchase of disinfectants and fogging solution.
These items, declared to be 'proprietary', patent items manufactured by a single firm, were purchased by the store officer of the AIIMS trauma centre allegedly from a firm belonging to his son and daughter-in-law.
A CBI report sent to the health ministry in October 2015 severely indicted store officers and then AIIMS director M C Mishra for their alleged involvement in the irregularities.
This case was closed by the CVC in June this year, on the recommendation of the health ministry.
A third case of alleged corruption related to huge "superfluous purchases" made by AIIMS functionaries on the basis of "fake quotations and travel claims" and violation of the Medical Council of India's regulations by accepting hospitality from a private medical college by a senior doctor.
In this case, the CBI and the MCI in their reports sent to AIIMS in May 2013 recommended action. However, the CVC closed this case in February 2015, according to the documents.
In a fourth instance, Chaturvedi has alleged that ignoring its own instruction of March 2006, the CVC allowed the same persons, indicted by the CBI on the basis of his enquiry, to write his annual confidential report for 2015-16.
The CVC in its response said the initiation and acceptance of Annual Performance Assessment Reports of officers are governed by extant rules of the government.
"In the case of APARs of CVOs, they are submitted for acceptance by the Commission after they are recorded by the concerned reporting and reviewing officers," the Commission said.
A parliamentary standing committee on health in its report submitted in August 2015 "strongly deprecated non serious attitude of health ministry in tackling corruption cases at AIIMS".
Monday, November 20, 2017
KUNAL SAHA SENDS LEGAL NOTICE TO W.B. MEDICAL COUNCIL PRESIDENT FOR MAKING SLANDEROUS COMMENTS THAT PBT IS “CHEATING” PEOPLE
Lawyer on behalf of PBT president, Dr. Kunal Saha, sent a legal notice to West Bengal Medical Council (WBMC) president and Trinomul-Congress MLA, Dr. Nirmal Maji demanding a public apology after Dr. Maji made baseless and slanderous comments last week after MCI directed to investigate Dr. Maji and two other doctors for their role in alleged dialysis of a pet dog at SSKM Hospital, a premier super-specialty government medical center in Kolkata following complaint lodged by Dr. Saha.
In an interview published on 15th November, 2017 in a popular Bengali daily Eisamay in relation to the news of dog’s dialysis, Dr. Maji was quoted to have said that Dr. Saha has been “cheating” people of West Bengal through his charitable organization (PBT). In the same interview, Dr. Maji also threatened that WBMC would take steps to cancel medical registration of Dr. Saha who is originally a physician from Kolkata and registered with WBMC although he has been settled permanently in USA (as an HIV/AIDS specialist) for the past more than two decades.
The legal notice sent by Dr. Saha’s advocate has further stated that if Dr. Maji fails to send a satisfactory response within 10 days, Dr. Saha may have no other option but to move the court of law for the ends of justice. PBT was established by Dr. Saha in 2001 and over the 16 years, PBT has been helping countless victims of medical negligence to find justice and trying to cleanse the rot in Indian healthcare system through public interest litigations (PILs) in Supreme Court and High Courts across India.
In an interview published on 15th November, 2017 in a popular Bengali daily Eisamay in relation to the news of dog’s dialysis, Dr. Maji was quoted to have said that Dr. Saha has been “cheating” people of West Bengal through his charitable organization (PBT). In the same interview, Dr. Maji also threatened that WBMC would take steps to cancel medical registration of Dr. Saha who is originally a physician from Kolkata and registered with WBMC although he has been settled permanently in USA (as an HIV/AIDS specialist) for the past more than two decades.
The legal notice sent by Dr. Saha’s advocate has further stated that if Dr. Maji fails to send a satisfactory response within 10 days, Dr. Saha may have no other option but to move the court of law for the ends of justice. PBT was established by Dr. Saha in 2001 and over the 16 years, PBT has been helping countless victims of medical negligence to find justice and trying to cleanse the rot in Indian healthcare system through public interest litigations (PILs) in Supreme Court and High Courts across India.
Of Falling Real Estate Prices, Dr Arvind Panagariya and the Art of Continuing to Suck Up
Dr Arvind Panagariya, the former vice-chairman of the Niti Aayog, today in a column titled Demonetisation: Evaluating the Critics, in the Business Standard, writes: "The second avenue through which demonetisation has directly expunged unaccounted wealth is real estate...Unsurprisingly, an attack on unaccounted cash struck at the heart of this black wealth by cutting real estate prices by a quarter."
There are multiple questions that this statement raises:
1) What is the source for this data? This isn't exactly a conversation between two property dealers, or two prospective real estate buyers, who can quote any offhand numbers, while having a conversation. This is a statement being made by someone who was at the top of an economic institution run by the Indian government. This is a statement by an economist working in a top university in the United States.
Also, if real estate prices have fallen by 25 per cent after demonetisation, why isn't this visible in official data sources. Take the case of Reserve Bank of India's All India House Price Index, which has been plotted as Figure 1.
 |
Figure 1 clearly shows that housing prices across the country have been on their way up. There has "clearly" been no dip, as Dr Panagariya claims. How do things look if we plot one-year return instead of index values? Let's take a look at Figure 2, which does that.
 |
Figure 2 tells us clearly that the one-year return in real estate has been falling over the last six and a half years. This trend started much before demonetisation took place. Also, how have the returns been post demonetisation? Between the end of December 2016 and June 2017 (the latest data available), real estate prices as per the All India House Price Index have gone up by 4.3 per cent. The returns between September 2016 and June 2017, have been 6.9 per cent.
Other than RBI's All India House Price Index, there is NHB's Residex. As of now this index has data only up to March 2017. And the one year median return between March 2016 and March 2017, as per this index, across 49 cities, was 2.8 per cent. This is very low. But where is the 25 per cent fall that Dr Panagariya has written about?
2) For a moment let's assume that Dr Panagariya is right and real estate prices have fallen by 25 per cent. If real estate price all across the country have fallen by 25 per cent on an average, then there will be cities/town/localities where the price has fallen by more than 25 per cent. Which are these places? Can Dr Panagariya provide us with a list? This would make for a super investment right now.
Let's say there is this town where real estate prices have fallen by 50 per cent post demonetisation. It is worth remembering that a 50 per cent loss wipes off a 100 per gain. (If the price of an asset moves from Rs 50 to Rs 100 that makes for a 100 per cent gain. When it falls back to Rs 50 that is a 50 per cent loss). If there exists such a town, it would make for a great real estate investment right now. Can Dr Panagariya provide us with names of a few such places?
3) Also, if prices have fallen by 25 per cent, why are real estate transactions not happening? Why has the total number of unsold homes of real estate companies, only continued to grow? It is worth remembering here that a 25 per cent fall within a time period of a year, is a huge fall. Falls like these in case of real estate, only happen once in a few decades. And if something like this has happened, as Dr Panagariya claims, then why aren't people buying? Interest rates on home loans have also fallen post demonetisation.
Take a look at Figure 3. It plots the growth in home loans outstanding with banks.
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Figure 3 clearly shows that the growth in home loans outstanding has fallen post demonetisation. What this means is that people are not buying as many homes as they were in the past. If prices have fallen by 25 per cent post demonetisation, people would have bought homes and the curve in Figure 3 would slope upwards i.e. people would take on more and more home loans to buy homes.
4) Further, if real estate prices have fallen by 25 per cent, as claimed by Dr Panagariya, it is time that the state governments cut the ready reckoner rates on which stamp duty needs to be paid, by a similar proportion. This should be fairly easy given that BJP governments govern most of the big states across India and a direction from the PMO should be suffice to get them to do the needful. But nothing of that sort has happened. Why hasn't this been done till date, is a question that only Dr Panagariya can answer.
5) To conclude, it is safe to say that Dr Panagariya has just made up this data, in order to justify demonetisation. It's a sad day today, when an Indian economist, working in one of the best American universities has had to fudge data in order to please his former political bosses.
The irony is that Dr Panagariya is no longer a part of the government. And he doesn't really need to say things which do not hold up against data, unless, he is looking for another stint with the Modi government. That changes things.
Vivek Kaul is the Editor of the Diary and The Vivek Kaul' Letter.
Friday, November 17, 2017
The champion of free press
New Delhi: Prime Minister Narendra Modi has celebrated National Press Day by committing his government to "upholding freedom of press and expression in all forms".
The assurance stood out in contrast with concerns expressed by civil society and the Opposition that sections of media had become more pliable than they were even during the Emergency and that those asking unpalatable questions were being branded "anti-national".
"A free press is the cornerstone of a vibrant democracy. We are fully committed to upholding freedom of press and expression in all forms," Modi said on Thursday. The statement has been made against the following backdrop:
• India has slipped three notches on the World Press Freedom Index 2017, down to 136 among 180 countries, under "threat from Modi's nationalism".
• The Hindi daily Rajasthan Patrika left the space reserved for its editorial comment blank on Thursday as part of a campaign against the state government's ordinance restricting freedom of the press.
• On the social media, journalists have been threatened and humiliated by people describing themselves as Hindutva advocates and Modi supporters.
• Prime Minister Modi has never addressed a media conference. His predecessor Manmohan Singh's record is only a shade better with three formal media conferences in a decade. But Singh did offer himself for questioning on the return leg of his foreign tours. Modi has stopped having the media accompany the Premier on overseas visits, foreclosing the Q&A sessions.
• Union ministers were deployed to defend BJP chief Amit Shah's son Jay, a private citizen, who has filed a criminal defamation case against a news portal.
• On National Press Day, too, Modi maintained his silence on the murder of journalist Gauri Lankesh in Bangalore 72 days ago.
The assurance stood out in contrast with concerns expressed by civil society and the Opposition that sections of media had become more pliable than they were even during the Emergency and that those asking unpalatable questions were being branded "anti-national".
"A free press is the cornerstone of a vibrant democracy. We are fully committed to upholding freedom of press and expression in all forms," Modi said on Thursday. The statement has been made against the following backdrop:
• India has slipped three notches on the World Press Freedom Index 2017, down to 136 among 180 countries, under "threat from Modi's nationalism".
• The Hindi daily Rajasthan Patrika left the space reserved for its editorial comment blank on Thursday as part of a campaign against the state government's ordinance restricting freedom of the press.
• On the social media, journalists have been threatened and humiliated by people describing themselves as Hindutva advocates and Modi supporters.
• Prime Minister Modi has never addressed a media conference. His predecessor Manmohan Singh's record is only a shade better with three formal media conferences in a decade. But Singh did offer himself for questioning on the return leg of his foreign tours. Modi has stopped having the media accompany the Premier on overseas visits, foreclosing the Q&A sessions.
• Union ministers were deployed to defend BJP chief Amit Shah's son Jay, a private citizen, who has filed a criminal defamation case against a news portal.
• On National Press Day, too, Modi maintained his silence on the murder of journalist Gauri Lankesh in Bangalore 72 days ago.
Wednesday, November 8, 2017
This #AntiBlackMoneyDay, It's Important to Link Political Donations to Aadhar
Do you know Ankit Gupta? I don't.
If I don't know him, why am I talking about him?
I am talking about him because I get a mail from him every day to link my Aadhar card to all my bank accounts. While the mail has his name, it basically comes from the private sector bank, I primarily deal with.
The mail goes on to point: "As per Government of India Gazette No. 13012/79/2017/Legal-UIDAI (No. 4 of 2017), it is mandatory to link your Aadhaar card to all your bank accounts. Please ensure you do it at the earliest so that your account remains active." Nowhere does the mail say that the last date to do so is December 31, 2017.
And if this weren't enough, I also get mails from mobile service provider to link my mobile number to my Aadhar card. These mails are slightly less aggressive than the ones being sent out by the private bank I deal with.
It is almost impossible to carry out any transaction with the government without an Aadhar card. If there is a birth an Aadhar card is needed. If someone dies an Aadhar card is needed, as well.
In fact, when the Aadhar card was first introduced it was claimed that "it is a voluntary facility". But that is not how things have eventually turned out to be. As Jean Dreze writes in his new book Sense and Solidarity-Jholawala Economics for Everyone: "A tacit understanding quickly emerged that while Aadhar was voluntary in principle, it was due to become essential for everyone who wanted to function - get a driving licence, transfer property, have a civil marriage, or just get paid as an NREGA worker. In short, frankly speaking, it was compulsory."
In fact, in my case, I got an Aadhar card finally made, when applying for an ISBN for my book India's Big Government. An Aadhar was compulsory. You couldn't apply for an ISBN without an Aadhar card. Why is an Aadhar card necessary to apply for an ISBN for a book? What is the connect? What is the government trying to achieve through this? These are questions I am still asking myself.
While ordinary citizens, like you and I, need to keep showing and linking our Aadhar card everywhere, the same does not apply to politicians and political parties while seeking political donations. In his new book How the BJP Wins-Inside India's Greatest Election Machine, Prashant Jha goes into detail on how political parties raise money to fight elections.
First and foremost, the candidate fighting the election needs to be economically strong, invest his own money and at the same time have networks with local businessmen who are willing to finance his electoral campaign. Of course, the businessmen who finance candidates do so in cash.
As Jha writes: "Major state-level businessmen are the second source of funding. And they contribute in various forms. They give cash - this is particularly true for contractors, builders, those dependent on government largesse and licenses in future."
In fact, some state level political parties, auction seats to the highest bidder. So, other than needing cash to fight an election, the prospective candidate also needs cash to get a ticket in the first place.
If I don't know him, why am I talking about him?
I am talking about him because I get a mail from him every day to link my Aadhar card to all my bank accounts. While the mail has his name, it basically comes from the private sector bank, I primarily deal with.
The mail goes on to point: "As per Government of India Gazette No. 13012/79/2017/Legal-UIDAI (No. 4 of 2017), it is mandatory to link your Aadhaar card to all your bank accounts. Please ensure you do it at the earliest so that your account remains active." Nowhere does the mail say that the last date to do so is December 31, 2017.
And if this weren't enough, I also get mails from mobile service provider to link my mobile number to my Aadhar card. These mails are slightly less aggressive than the ones being sent out by the private bank I deal with.
It is almost impossible to carry out any transaction with the government without an Aadhar card. If there is a birth an Aadhar card is needed. If someone dies an Aadhar card is needed, as well.
In fact, when the Aadhar card was first introduced it was claimed that "it is a voluntary facility". But that is not how things have eventually turned out to be. As Jean Dreze writes in his new book Sense and Solidarity-Jholawala Economics for Everyone: "A tacit understanding quickly emerged that while Aadhar was voluntary in principle, it was due to become essential for everyone who wanted to function - get a driving licence, transfer property, have a civil marriage, or just get paid as an NREGA worker. In short, frankly speaking, it was compulsory."
In fact, in my case, I got an Aadhar card finally made, when applying for an ISBN for my book India's Big Government. An Aadhar was compulsory. You couldn't apply for an ISBN without an Aadhar card. Why is an Aadhar card necessary to apply for an ISBN for a book? What is the connect? What is the government trying to achieve through this? These are questions I am still asking myself.
While ordinary citizens, like you and I, need to keep showing and linking our Aadhar card everywhere, the same does not apply to politicians and political parties while seeking political donations. In his new book How the BJP Wins-Inside India's Greatest Election Machine, Prashant Jha goes into detail on how political parties raise money to fight elections.
First and foremost, the candidate fighting the election needs to be economically strong, invest his own money and at the same time have networks with local businessmen who are willing to finance his electoral campaign. Of course, the businessmen who finance candidates do so in cash.
As Jha writes: "Major state-level businessmen are the second source of funding. And they contribute in various forms. They give cash - this is particularly true for contractors, builders, those dependent on government largesse and licenses in future."
In fact, some state level political parties, auction seats to the highest bidder. So, other than needing cash to fight an election, the prospective candidate also needs cash to get a ticket in the first place.
Monday, November 6, 2017
Kamal Haasan should be shot dead, says Hindu outfit leader
A senior leader of a Hindu outfit, the Akhil Bharatiya Hindu Mahasabha (ABHM), on Friday slammed veteran Tamil actor Kamal Haasan for his “Hindu terror” remarks and said people like him should be “shot dead”.
Referring to the statement made by Mr. Haasan on Thursday in a column for a weekly magazine, ABHM leader Pt. Ashok Sharma said “these people accuse the followers of Hinduism of Hindu terror only to push their own biased communal agenda”.
“There is no other way to handle people like Kamal Haasan but to either hang them or shoot them dead,” he said. Members of the outfit have also announced the boycott of all Kamal Haasan films.
Referring to the statement made by Mr. Haasan on Thursday in a column for a weekly magazine, ABHM leader Pt. Ashok Sharma said “these people accuse the followers of Hinduism of Hindu terror only to push their own biased communal agenda”.
“There is no other way to handle people like Kamal Haasan but to either hang them or shoot them dead,” he said. Members of the outfit have also announced the boycott of all Kamal Haasan films.
Across the aisle: GST unravels, quick fixes not answer
The idea of a Goods and Services Tax (GST) was, and is, a good idea. It is a tax that is in force in about 160 countries with some variations in each country, but the basic principle is that it is a one-rate tax applicable to all goods and services unless these are exempted.
The Chief Economic Adviser (CEA), in his report on the revenue neutral rate (RNR), recommended a rate of 15 or 15.5 per cent. Taking note of the difficult transition path from VAT to GST and from Service Tax to GST, he also acknowledged the need to have a merit rate (RNR minus) and a demerit rate (RNR plus). That would have preserved the essential principle of a GST while enabling a smooth transition.
The Chief Economic Adviser (CEA), in his report on the revenue neutral rate (RNR), recommended a rate of 15 or 15.5 per cent. Taking note of the difficult transition path from VAT to GST and from Service Tax to GST, he also acknowledged the need to have a merit rate (RNR minus) and a demerit rate (RNR plus). That would have preserved the essential principle of a GST while enabling a smooth transition.
Not True Gst
The NDA/BJP government violated the principles of a true GST, brushed aside the report of the CEA and constructed its own GST. Given the BJP’s penchant for inventing acronyms, it could have given the tax a name other than GST, because what we have got is not a true GST nor a ‘good and simple tax’. Mr Rahul Gandhi trashed the tax as Gabbar Singh Tax, and that label has stuck to the tax. It will take a lot of undoing and repair to shake off that label.
The GST and its implementation were flawed in concept, design, rate or rates, inclusion and exclusion criteria, exemption thresholds, advocacy and dissemination, compliance requirements, infrastructure, preparedness, training and so on. Nothing about the GST introduced on July 1, 2017, was right.
The consequences of a deeply flawed GST and hasty implementation are there for all to see. The biggest sufferers are the small and medium business enterprises, especially manufacturing businesses. Micro enterprises (a source of self-employment) have closed down and gone out of business. Small enterprises (usually with family members as workers) are struggling to survive and many have closed shop with little hope of resuming their business. Medium enterprises (the source of employment for 90 per cent of the non-agricultural workforce) are barely able to keep their heads above the water but have paid a heavy price: cutting back on production, reducing the workforce, borrowing for additional working capital, paying large amounts for professional help in complying with the law, and living in constant fear of the tax officials.
The government haughtily rejected the criticism made in Parliament when the law was being debated. It brushed aside the well-intentioned advice of business associations and tax practitioners. It entrusted the drafting and implementation of the laws to civil servants who had never run a business in their lives nor risked a rupee of their own money in starting or supporting a business. The result was the innumerable flaws and the enormous hardship heaped on the business community and the consumers.
Mr Fixit at Work
It is only when the ‘tax problem’ threatened to become a ‘political problem’ that the government seems to have woken up from its slumber.
Now, the government is struggling to ‘fix’ the problems in the GST regime. The desperation is visible: look at the number of changes made and the deferments and waivers granted in the four months since the GST was implemented with effect from July 1, 2017. And they are not done yet; there will be another meeting of the GST Council on November 11, 2017, to ‘fix’ more problems and, believe me, that will not be the last meeting called for the purpose!
I counted 27 reduction of rates; 7 prescription of rates; 22 exemptions; one waiver; and 15 extensions of time. The 11th Amendment to the GST Rules was made on October 28, 2017. Many of the changes were to correct obvious errors in the design and structure, especially the provisions concerning small and medium enterprises. Some were to defer controversial or complicated provisions such as the reverse charge mechanism, application of TDS/TCS, and the e-way bill system. Common sense seems to have returned after subjecting small and medium enterprises to four months of hardship.
Need Complete Overhaul
Some things, however, cannot be ‘fixed’ quickly — for example, the multiple rate structure, the HSN classification, the exclusions like electricity and petroleum products, the cascading effect, the ‘pay first, refund later’ rule and the diarchic control. Changes in these elements will require a complete overhaul of the present GST structure and extensive amendments to the laws. That seems beyond the comprehension of the government.
Criticism of the government was not confined to India. The Financial Times reported stories of small businesses that had shut down. It quoted Dr Jahangir Aziz, a Singapore-based economist, who said that the government had underestimated the impact of transition, both in terms of the hit to growth and how long the dampening effect could last. The Economist, in a scathing editorial, recalled the hardship and disruption caused by demonetisation and said, “The shambolic implementation of the GST is likely to make matters worse.” The conclusion was devastating: “The BJP is not that interested in policy. It offers voters mainly distraction.”
That the economy has taken two damaging hits is a fact. That the growth rate of GDP has declined in six quarters from 9.1 per cent to 5.7 per cent is a fact. It is possible that 5.7 per cent is the bottom of the decline and the growth curve may turn upward. That can give bragging rights to the government, but the undeniable facts are that businesses have closed down and jobs have been lost.
There is no Quick Fix for that.
The above is from The Indian Express
Thursday, November 2, 2017
Statins May Raise Odds of Type 2 Diabetes in Those at High Risk
(HealthDay News) -- For populations at high-risk for diabetes, statin use is associated with increased risk of developing diabetes, according to a study published online in BMJ Open Diabetes Research & Care.
Jill P. Crandall, MD, from Albert Einstein College of Medicine in Bronx, New York, and colleagues assessed incident diabetes by annual 75 g oral glucose tolerance testing and semiannual fasting glucose among 3,234 participants enrolled in the Diabetes Prevention Program Outcomes Study, a long-term follow-up to a randomized clinical trial of interventions to prevent type 2 diabetes. Lipid profile was assessed annually, and statin use was assessed at baseline and semiannual visits; participants' physicians determined statin treatment.
The researchers found that the cumulative incidence of statin initiation before diabetes diagnosis was 33 to 37 percent among the randomized treatment groups at 10 years. Irrespective of treatment group, statin use was correlated with increased diabetes risk, with a pooled hazard ratio of 1.36 for incident diabetes. Adjustment for baseline diabetes risk factors and potential confounding variables related to indications for statin therapy did not materially affect risk.
"In this population at high risk for diabetes, we observed significantly higher rates of diabetes with statin therapy in all three treatment groups," the authors write. "The effect of statins to increase diabetes risk appears to extend to populations at high risk for diabetes."
Bristol-Myers Squibb and Parke-Davies provided funding and material support during the Diabetes Prevention Program; Merck-Sante provided medication, and LifeScan provided materials during the Diabetes Prevention Program and the Diabetes Prevention Program Outcomes Study. Several pharmaceutical, health care, nutrition, and sports equipment companies donated materials, equipment, or medicines for concomitant conditions.
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