Friday, April 28, 2017
 
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Demonetization a national priority




By K.N. Pandita


The fracas created by the opposition on demonetization issue shows that it has failed to show due respect to the verdict of the majority of people in this country. It has also to learn that sitting in the opposition does not absolve the opposition of becoming realists about the development of the country.



Uncharitable opposition

The opposition has to understand that Prime Minister’s decision about demonetization is not a small decision taking into account the demographic dimensions of our country. It should have understood that such big decisions of far-reaching consequence could not be taken without going through the process of hair-splitting debate on its implications. It is ridiculous to level silly charges like a “hasty” or “motivated” decision.

From day one of assuming the charge of the Government, Prime Minister Modi prioritized action against two serious problems facing the country, namely terrorism and black money. He often reiterated his Government’s commitment of acting against these two issues that sapped the energy of the nation. Modi reiterated his commitment of fighting all facets of terrorism, including the crucial funding of militants and terrorists by a network of saboteurs determined to cause serious damage to the economy of the country.


What is the network and what is the truth about it? Let us address this question. Our readers will recollect that in his historic speech on the night of 8 September regarding demonetization of notes of 500 and 1000 rupees, the Prime Minister said a solitary sentence that in financial matters things had come to a pass where the drastic measure of ordering demonetization of bigger notes had become a necessity. Instead of asking the PM to elucidate the ground situation in financial matters that necessitated taking a drastic step and listening from him the rationale of his decision, the opposition made it an instrument to garner support of ignorant people in and out of national political structure by exploiting small unease caused to the people in the course of shift to new currency.



Compulsions

We help our readers to have a peep into the compulsions for the Modi Government to take a rare but drastic step of declaring the bigger currency non-legal tender. This should be the eye opener for all patriotic Indians. In democracy, a political party is not always to rule; there are times when it has to accept to be ruled.


Pall of secrecy

All the chairpersons and MDs of India’s top banks were meeting at Reserve Bank of India’s headquarters on the 15th floor of the Mint Street office in a special session that started at 7 pm that evening. They were discussing the situation from the Non-Performing Assets (NPAs) in the economy.

By the way, it was the outcome of their deliberations on the subject that has evoked a larger controversy among the legal fraternity on the precise status of J&K in the constitutional framework of Indian Union a la the recent judgment of the Supreme Court.
In Delhi, on the other hand, the top Cabinet Ministers of the Modi Government were meeting over an agenda regarding MoUs between India and Japan.

None of the top bank chiefs or the Ministers of the Government were aware of what was to happen that night. The nature of the decision demanded unprecedented secrecy.
The Cabinet meeting closed at 7.30 pm and the PM went to meet the President to inform him about his plan. It was an administrative and constitutional requirement. The Ministers were instructed to remain in the meeting hall.


Just before 8 PM, the TV sets were switched on to listen to the PM, with the understanding that the meeting would continue after the PM address. Of course, the announcement from the PM was going to be earth-shattering for most bankers who had to rush back to their offices to handle the situation arising from the ban imposed on bigger currency notes.



Genesis of demonetization

People in our country were never told that demonetization option was under Indian Government’s serious consideration as early as 2010 when Congress was in power. The role of a British Company named De La Rue in pushing fake currency in our country was talked about in some small knowledgeable official circles. In a raid on nearly 70 odd Indian bank branches along India-Nepal border in 2009-10, CBI had recovered counterfeit currency with them. This was a surprise of course, but for the intelligence fraternity the more stunning fact was that the fake currency notes recovered in these banks were not brought by any smuggler but were received from RBI itself. Actually, RBI was sending counterfeit notes to the bank branches around the country.

Those were the days when Nepal had become the frequent rendezvous of ISI-sponsored anti-India separatist and terrorists. Needless to remind that Pakistani and Kashmiri terrorists had hijacked an Indian airplane from Kathmando and taken to Kandahar where Azhar was exchanged for the release of hostages.


CBI’s raid on the RBI resulted in the agency finding same counterfeit notes in the vaults of the RBI. These were in the denomination of 500 and 1000 rupee notes. The shocking fact is that the counterfeit and fake currency notes which Pakistan was pushing into India was being collected and distributed by none other than the Reserve Bank of India among its branches. The bank that controls India’s currency had been compromised. Congress rubble-rousers who have stalled the session of the Parliament over the demonetization ruckus do not know how the Government led by their party was striking at the very roots of India finances and economy. And very ironically, the Congress part Prime Minister was known as a professional economist and finance expert. This also shows how Congress echelons are pitting their minions against the NDA Government only to drag the country into chaos and disorder.


Defending culprits involved in circulating counterfeit currency in UP and Bihar, the defence lawyer asked for the proof that the currency circulated was counterfeit. He had reasons to ask that question. The report of Indian Government labs asked to put the currency notes under scrutiny that were seized from alleged ISI agents said it was real and not fake currency. But a foreign lab where these notes were sent for confirmation reported that these were so close to the real notes that it was extremely difficult to prove these were counterfeit. Such was the perfidy of the saboteurs.



RBI under cloud

CBI’s persistent investigation led it to the source of the mischief, namely De La Rue, a company from which RBI imported 95 per cent of its currency paper. The Company’s profits from supply of paper to India were in the neighbourhood of 30 per cent of its total profits, and when Government of India blacklisted it, the company came to the verge of bankruptcy with 2000 metric tonnes of paper lying unused. The CEO of the company, James Hussey – godson of Queen Mother herself – resigned over something bizarre called “paper quality issues”. Interestingly an insider of the company laconically remarked that either drops of water had seeped into the paper or there was a fly in a role of paper somewhere that had spoilt the whole lot. The truth about the disuse of costly paper was suppressed.

However, in a formal statement De La Rue said the irregularities were of a “serious nature” but that it was “confident that neither the physical security nor the security features incorporated in the paper have been compromised for any customer and that the irregularities referred to relate only to testing of paper specifications at the relevant facility”.


Yet another serious security lapse was exposed in 2010. In a hush hush manner, in 1997-8 RBI had outsourced the printing of currency notes to US, UK and Germany to the tune of Rs. 1 lakh crores. The reason for outsourcing given by the officials was the soilage factor and bad condition of notes, both unconvincing to the inquiry committee. Shockingly the panel observed that RBI’s system of assessment with respect to demands and supply of bank notes in the country was off the mark resulting in a gap.


On November 3, 2011 a complaint was received by the Central Vigilance Commission (CVC) signed by “unnamed officers of the Ministry of Finance”. They said that the security was compromised not just by De La Rue, but also other companies – French firm Argo Wiggins, Crane AB of USA and Louisenthal, Germany. Insiders say that the information of compromise in security features of the paper for currency had at different times been withheld from the Home and Finance Ministry of India.


On November 3, 2010, BRBNMPL(Bharatiya Reserve Bank Note Mudran Private Ltd) – which signs currency note contracts on behalf of the RBI – wrote to the Directorate of Currency, Ministry of Finance, that currency paper supplied by Crane AB of USA and Louisenthal, Germany, had failed tests in Hoshangabad as well but cleared re-tests at the suppliers’ foreign laboratories.


Note paper scandal

In 2015, after Modi sought help in investigations in the fake currency notes from the US, it came out that the German company Louisenthal was also selling raw notes to Pakistan, resulting in a ban on the company.


The Indian Express quoting an official of the German firm said, “We are only keeping our interests in mind. We have proof that high-quality fake Indian currency notes are being produced in Pakistan and pushed into India through Bangladesh, Nepal, Sri Lanka and Vietnam. The availability of a common supplier could be one of the reasons behind such high-quality fake notes.”

This is how the Indian currency was compromised at every point – RBI, Home Ministry, Finance ministry, and the Indian and Foreign printing presses. Worse of all, our entire currency production was outsourced to unscrupulous forces who were merrily sharing the real stuff with Pakistan who was happily and arrogantly snubbing us and creating a havoc with our economy.


Pakistan Check-mated?

The free flow of Indian currency paper to Pakistan encouraged its Government to set up 5 printing presses to print fake currency notes. These were smuggled to Nepal and Bangladesh (often on PIA flights). The currency entered India via UP and Bihar (Nepal border), via Malta in West Bengal (from Bangladesh), via Rajasthan border, Punjab border and via Chennai and Mangalore through the Indian expats from Gulf.
Pakistan used to pump in money to fund student bodies (like in JNU and Jadhavpur), media and journalists and also political parties to completely influence the elections.



The “Imminent” Assault

The Modi Government has acted aggressively against Pakistan on fake currency issue and also militarily — specifically the Surgical Strikes and the heavy bombardment to the extent that Pakistan had to beg India to stop beating them up, Pakistan will obviously want another front to strike.


According to General GD Bakshi, a prominent security and defence analyst, India has some Rs 16 trillion of Rs 500 and Rs 1000 in circulation (which is 96% of the entire money supply). Pakistan was already printing Rs 15 trillion (Rs 500 / Rs 1000) with a view to push them in India to completely “unhinge” the Indian economy in what Gen Bakshi calls an “Economic Pearl Harbour.”This would have led to unprecedented terror strikes and runaway inflation and steep price rise, which would have spelt doom for India in many ways.


Modi rises to occasion


All those whom you see now coming together to fight demonetization know exactly what was being planned and what led to all this. If they still choose to fight this act by the Modi Government, you should know exactly from which team they are fighting this existential war of India’s future! And, with the context of how RBI, Home and Finance Ministry, and banks were compromised over the years, one can very well understand the reason for extreme secrecy and quick action – which the critics ironically call “knee jerk” and “unprepared Government plan”.







(The writer is the former Director of the Centre of Central Asian Studies, Kashmir University.Feedback- [email protected])



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