Gurugram, December 2, 2019

Dear Sir,

I am a common man. I don’t expect you to read or bother about what a common man writes. Yet, I could not help writing this letter. I know, you are a very busy person. I have tried to be as brief as possible.

Sir, you are one of the foremost industrialists of this country. Whatever you say carries weight. Naturally, what you stated at an award function in Mumbai on November 30 about your impression of the UPA government and the present government has attracted a lot of attention.

You stated that in UPA 2, industrialists could criticise anyone but now there is an atmosphere of fear and people are afraid to criticise the government. I understand, you are worried about the falling growth rate of the economy.

Sir, I want to ask a few questions:

• Did you or any member of your fraternity ever criticise UPA govt for rampant corruption?

• Did you or any member of your fraternity ever criticise the UPA government for remote control being in the hands of Sonia Gandhi and Rahul Gandhi?

• Was this form of parliamentary democracy ideally suited to India?

• Did you or any member of your fraternity ever criticise those industrialists and businessmen who have looted money from banks and cheated public and thereby contributed to the current economic crisis?

• Don’t you think that you are speaking the language of leftists, pseudo intellectuals (writers, film actors, etc,), so-called liberals and other irresponsible politicians who have been making false allegations of intolerance?

• Will you please disclose names of industrialists and businessmen who criticised Modi Government and were punished?

Sir, recently some powerful industries have been arrested. Extradition proceedings are going on against some big names who looted money and fled India. Hope, you will not cite examples of those who are being investigated for their economic offences in support of your allegation.

With kind regards.

Yours faithfully

Devendra Narain

A common man

@narain41

(After using Manmohan Singh as puppet Prime Minister for good ten years, Sonia Gandhi is using him to attack Narendra Modi’s policies. Perhaps, she believes that his reputation as an economist who, as Finance Minister, brought major economic reforms during 1990s would give credibility to his criticisms. Dr. Singh attacked Modi for demonetisation and GST. These days his assignment is to blame Modi’s policies for decline in economic growth.

What is the credibility of the man who caused tremendous loss to the economy through series of scams during his terms as Prime Minister of India after helping his supporters to amass vast unaccounted wealth?

What is the credibility of the man who, as Prime Minister, was never tired of shamelessly telling the nation that he would be happy to work under the leadership of Rahul Gandhi?

What is the credibility of the man who in 2014 shamelessly told people to vote for duffer Rahul Gandhi because “he has all the credentials to be Prime Minister.”

Most of the people who write on or speak about him have no personal experience of working under or interacting with Dr. Singh. In 2015, I had written an article based on years of my personal experience in 1980s and 1950s. Since Dr. Singh is again in news because of his sharp attack on Modi for economic slow down, I am reproducing that article to help readers judge his capabilities.)

(Devendra Narain’s memoir)

                                  Manmohan Singh, an insider’s experience

   At a time when others are busy evaluating Prime Minister Modi’s first year, ex-TRAI chief, Pradeep Baijal, through his self-published book, has brought Dr. Manmohan Singh into focus once again. No doubt, himself an accused in 2G spectrum allocation scam, Baijal’s motive is to place on record his helplessness before the might of a Prime Minister but right now my focus is on the persona of Dr. Singh. One may ask, ‘what is the new thing to be said about him?’ Millions of words have already been written. However, I decided to write because I  find very little written by those who worked under him before he became Manmohan Singh. One such person is C. G. Somiah, former CAG, who was Secretary, Planning Commission (PC) under him.  Most of the writings are by those who observed him from a distance but that is not sufficient to evaluate the persona of a man.  

    I had the fortune or misfortune of working under him twice, once in 1980 when he was Member-Secretary, PC  and I was a Deputy Secretary in the Commission and again between 1985 and 1987 when he was Deputy Chairman of the Commission and I was head of the Project Appraisal Division. Though I did not work under him later, I got opportunity to closely interact with him  when he was Finance Minister and I was a Joint Secretary, in charge of monitoring of central projects. I would narrate a few incidents to show his mindset and style of working.

   Sometime in 1980, I was asked to appraise a proposal to set up a naphtha-based petrochemical complex in West Bengal. My finding was that since gas-based petrochemicals were much cheaper in international market, a plant based on imported naphtha would be uneconomical. When my appraisal note, duly approved by my boss, reached Dr. Singh, he sent for me. When I entered his room I found him quite agitated. Without mincing words, he told me that my appraisal note had created ‘a first-rate constitutional crisis’ because Jyoti Basu, the West Bengal Chief Minister, was very much interested in the project and such an adverse appraisal note would make  him very angry and that he (Dr. Singh) would find it difficult to finalise the state’s five-year plan with the CM. By that time, I had appraised hundreds of projects, quite a few had gone against political interest or interest of powerful lobbies but no one had accused me of creating any ‘political’ or ‘constitutional’ crisis. An appraisal note being only an advisory, the government had every right to reject it. I politely told Dr. Singh that I was a mere deputy secretary, incapable of creating any ‘constitutional crisis’ and the government was free to reject my advice. I further told him that instead of getting angry, the West Bengal CM should be happy that he had been cautioned before it was too late. That infuriated Dr. Singh more. He asked me to leave his room. Mercifully, the state plan was finalised without any ‘constitutional crisis’. Later, a naphtha-based petrochemical complex was set up in Haldia and suffered losses for a long time.

    Sometime in 1978 when Atal Behari Vajpayee was Foreign Minister, I was asked to appraise a proposal to set up a split-location cement plant, part in Nepal and part in India. My finding was that the project was not in India’s economic or financial interest. I had quantified the annual financial loss to the country. I had added that if the government viewed the project as aid to Nepal, it was a different matter. One day in 1980, in a meeting in the PC, I heard an angry Dr. Singh saying that ‘politicians make all sorts of senseless commitments creating problems for the government’. I found an entirely different Dr. Singh who was once so anxious to please Jyoti Basu. It kept on haunting me for some time before I realised that there was no inconsistency in his stand. In one case he was trying to win favour of Jyoti Basu and in the other case he was trying to win favour of Prime Minister Indira Gandhi because the proposal to set up a cement plant had been mooted by Indira Gandhi’s opponent Atal Behari Vajpayee.

   In 1985, I had a personal encounter with him. My boss, Mr. Nitin Desai, Advisor, left the PC to join the UN. Before leaving the Commission he told me that he had advised Secretary not to impose anybody on me. The reason was that there was hardly any senior person with more experience on project appraisal than me and he knew that I would not work under a person who did not know the subject. However, Dr. Singh wanted to bring a favourite who was totally ignorant of project appraisal.  I requested him not to bring such a person but did not succeed. Left with no choice, I announced my decision to revert to my cadre, IRS. Soon thereafter, a couple of senior Secretaries met Cabinet Secretary and successfully stopped appointment of that person. Dr. Singh quietly swallowed the snub.

   Sometime in later part of 1985 in a meeting of the National Development Council held to discuss the Seventh Five-Year Plan, Prime Minister Rajeev Gandhi strongly criticised the PC (of which he himself was Chairman) for not appreciating the importance of education. Dr. Singh was sitting next to the Prime Minister on the dais, with his head down. He was unable to face the gathering of Cabinet ministers, state Chief Ministers and officers of the central and state governments. During the tea-break, the topic of conversation was whether Dr. Singh would resign. When he joined us for tea, there was no sign of any shame or regret on his face. A few months later, Rajeev Gandhi publicly called the PC ‘a pack of jokers’. There was again speculation whether Dr. Singh would resign. C. G. Somiah  has written in his book that it was he who persuaded Dr. Singh not to resign. I doubt that. In my opinion and in the opinion of many others who were in the PC, Dr. Singh was the last person to resign from a high-ranking post. Perhaps Somiah  gave him an excuse to stay.

  Sometime in 1986, one day Dr. Montek Ahluwalia, an Additional Secretary in the PMO, brought a proposal from Prime Minister Rajeev Gandhi that the PC should prepare transport and energy models keeping in view India’s needs 20 years hence. The petroleum model, prepared by a professor of economics in Jawaharlal Nehru University, was discussed in a meeting chaired by Dr. Singh. An important part of the model was calculation of long-run marginal cost (LRMC) of production of crude. Dr. Singh himself did not make any comment. He merely asked senior bureaucrats and technocrats to give their views. They all praised the professor for doing an excellent work. I was the last to be invited to comment. I said that in my opinion calculation of LRMC was misleading because it was based on very limited data which could not be considered representative. This was a big shock to the professor and others present. After some uproar, Dr. Singh said that if what I had said was correct, then the entire model would have to be redone. Later, I learnt that the professor had completely  rewritten his report.

    As Finance Minister, Dr. Singh was Chairman of a Group of Ministers set up to review problems faced in the implementation of public sector projects. As Joint Secretary and chief Monitor of Central Government and public sector projects (I was Joint Secretary in the Department of Programme Implementation), it was my duty to present papers on problems to the Group. One such paper was on the problems in implementation of road projects. During the discussion I got the impression that Dr. Singh had not read the paper. He was sitting totally disinterested. As expected, the transport Minister was successfully misleading him as well as the then Deputy Chairman, PC. I tried my level best to persuade a few Secretaries to correct the Minister but none had courage to do so. I could not speak when my own secretary refused to say anything. Later, I went to Dr. Singh’s room to tell him that the transport Minister had misled him and everybody. His reaction was more frustrating. 

   Dr. Singh might have been a brilliant student of economics with D. Phil from Oxford but theoretical knowledge of economics is not sufficient to understand real-life economic issues and to solve economic problems. During his tenure as Member-Secretary or Deputy Chairman, PC, I did not find any major contribution by him except papers on high cost of economy prepared by different divisions of the PC on Dr. Singh’s order (when he was Dy. Chairman). Those papers were never discussed. Later, thousands of kilograms of papers were sold as scrap.

   Many people give him credit for initiating economic reforms in 1991 but several senior colleagues of mine who had longer experience of working with him believed that he was merely carrying out orders coming from the World Bank which had been working for a long time to get the Indian market opened to the West.

    I was never surprised when I heard or read that Dr. Singh never asserted as Prime Minister or that he did nothing to stop ministers from indulging in corrupt practices. Having closely watched him for several years, I knew his mindset and his priority. If any geneticist examines Dr. Singh’s genetic make-up, he might not find any gene that makes one political leader but would certainly find several genes that make one ambitious, pliable, a Teflon and master of the art of survival.

Devendra Narain

@narain41

https://www.devendranarain.com

 PS

I often find people who nevert worked under #MnamohanSingh but have known him from a distance, praising or defending him. I had opportunity to work under or interact with Dr Mnamohan for more than a decade and half. He did not hesitate to pressuriese a junior officer, bring a favourite even if totally ignorant to a highlly technical post, betrayed his lack of undrstanding and also lack of interest in solving serious issues.

https://www.devendranarain.com

Who sabotaged objectives of #demonetisation?

(I had written this article originally written on Dec 17, 2016. It is reproduced here because people continue to ask why currency notes worth only about Rs. one lakh remained unreturned.)

In 1966, when I was a probationer at the National Academy of Administration (now called Lal Bahadur Shastri National Academy of Administration), Mussoorie, Shri V. V. Badami (now late), Director of National Academy of Direct Taxes, Nagpur, was invited to address probationers of all Services. In course of his brilliant lecture, he narrated a very interesting story. A hunter went deep in a forest with his gun to shoot a tiger that had become a man-eater and was playing havoc in the villages near the forest. As soon as he spotted the tiger, he aimed his gun at the target and fired. He missed his aim because the tiger had also seen its prey and had jumped to attack the hunter. The tiger too missed the target because it had taken a long jump, going over the head of the hunter. Back from the forest, the hunter practised for a couple of days to perfect his aim. When he had attained sufficient confidence, he went back to the forest in search of the man-eater. There he saw the tiger practising short-jump!

The moral of the story is that law-breakers always try to outsmart law enforcement agencies.  This is what they are trying today to frustrate the objectives of Prime Minister Narendra Modi’s attack on everything that is ugly and dangerous in India – black money generated and accumulated by corrupt, counterfeit currencies and activities of criminals, from terrorists, naxalites and drug and human traffickers to local musclemen. Considering the shortage of new currency notes, the government kept several legal windows open till December 15 (it amounted to demonetisation in phases) and introduced rationing on withdrawals from banks and ATMs. Law-breakers did not take much time to devise short-cuts. The result is that while needy people are staring at “NO CASH” notices at banks and ATMs or collecting much less than their quota after long wait in queues,  hundreds of crores of new currency notes are being found in the possession of criminals and rich and powerful are able to get whatever they want and are easily converting their black money into white without standing in queue. The situation is very much like ration-card holders either getting much less than their quota or returning empty-handed after looking at “NO STOCK” notice on fair price shops while the supplies meant for them are illegally diverted to market.

When supplies are not available at fair price shops, the first target of people’s anger is shop owner. Similarly, when people are not getting their quota of new currency notes after demonetisation, the first target of their anger is bank. True, as being reported by media every day, many unscrupulous bank employees are obliging their favourites (often for a consideration) by adopting all sorts of unfair means: keeping good part of stock of new currencies for the rich and powerful, opening new bank accounts in fictitious names or in names of shell companies, allowing misuse of ‘Jan Dhan’ accounts of the poor, etc. etc. Some enterprising bankers are running parallel banks, away from bank branches. A couple of days after the demonetisation, I came to know of such a parallel bank. An acquaintance of mine (call him AB) who urgently needed several thousand rupees explained his problem to his acquaintance in a large public sector bank. AB was advised to come to a place away from the bank branch with three cheques of ₹24,000 each. At the specified place AB handed over cheques to his acquaintance and collected cash. That banker was nice enough to explain the modus operandi. If 25 employees of a bank withdraw ₹24,000 each from their own accounts, a corpus of ₹6 lakh is created. With that corpus, a trusted bank employee virtually runs a parallel branch at a secret place, on a smaller scale though. He dispenses cash to and collects cheques from favourite customers. He also collects old currencies to be deposited in customers’ bank accounts. When the corpus is exhausted, he returns to the branch; old currency notes are deposited and withdrawals are made against cheques collected. The corpus is again ready for the next round. That explains why rich and influential people are not found in the queues. In this season of demonetisation, KYB (Know Your Banker) is more important than KYC (Know Your Customer). Mounting burden of NPAs (non-performing assets) is result of coy relationship banks have maintained with rich and powerful at the cost of common people.

However, such actions of bank employees cannot explain availability of new currency notes worth crores of rupees in running vehicles, bathrooms, offices and homes across the country soon after demonetisation. It defies logic that large number of crates full of currency notes can be smuggled out of large number of bank branches across the country to be handed over to politicians, businessmen, hawala operators and other criminals. As in the case of diversion of supplies from fair price shops to market, diversion of new currency notes to unscrupulous persons is possible only when leakages are taking place at several places along the supply chain. Supply of currency notes from four note printing presses – one each in Eastern, Western, Central and Southern India – to lakhs of bank branches and ATMs   throughout the country requires careful logistics and supply chain management under police protection. The drawings presented below will give an idea of the supply chain.

There are elaborate procedures for taking money out of printing presses to the nearest chest and from there to various banks. Currency chests are extended arms of the RBI. When bank premises are used as currency chest, banks do so on behalf of the RBI. For short distances, currency notes are transported in specially built trucks. Railways are used for long distances. (Post-demonetisation Air Force planes and helicopters have also been used.) RBI officials accompany when notes are transported from the RBI to chests. Each bank is responsible for movement from bank chest to a branch. Banks take the services of cash-in-transit companies for transportation from currency chests to their respective branches and to (nearly 150,000) off-site ATMs. Police protection is a must for each movement. ATMs attached to bank branches are filled with cash by bank officials.

Every movement is well documented to avoid any misappropriation. To maintain the secrecy of movements, Regulation No. 33 of the RBI (Staff) Regulations, 1948, requires that “every employee shall maintain the strictest secrecy regarding the Bank’s affairs and affairs of its constituents and shall not divulge, directly or indirectly, any information of a confidential nature either to a member of the public or of the bank’s staff, unless compelled to do so by judicial or other authority, or unless instructed to do so by a senior officer in the discharge of his/her duties.” The RBI has a Central Vigilance Cell headed by Chief Vigilance Officer (CVO) at Mumbai to undertake preventive vigilance and anti-corruption measures as also investigate complaints /allegations having vigilance angle against the employees of the Bank.

Under such a system, illegal diversion of new currency notes worth hundreds of crores of rupees after demonetisation is not possible without the connivance of officials of the RBI, commercial banks and police. It is quite possible that what has been detected so far is only part of the stolen treasure. It is also quite possible that part of the stolen treasure fall in the hands of naxals and terrorists.

The government must order CVOs of the RBI as well as commercial banks to conduct inquiries into each movement of new currency notes to identify the instances of diversions and persons responsible for that. If CVOs cannot do that, there is no point in having such an institution. Detailed external audit is also necessary. Incidentally, the Comptroller and Auditor General (CAG) of India has not been authorised to audit the RBI. The RBI accounts are audited by auditors appointed by the Central government under the provisions of the RBI Act. A few months back the present CAG had suggested that the RBI should also be audited by his organisation.

Enquiries should also be made whether such thefts or illegal diversions of currency note were taking place in the past also.

Ironically, illegal diversions of new currency notes are taking place soon after the RBI observed ‘Vigilance Awareness Week, 2016’ from October 31 to November 5, 2016.

My experience is that corruption and inefficiency in India are much deeper and widespread than common people believe. Dealing with such a corrupt and inefficient system is the biggest challenge before Prime Minister Modi. Demonetisation was not as successful as expected because of corruption and inefficiency.

Modern technology can ensure safe transportation of currency notes. Government should seriously consider using serially numbered unbreakable boxes fitted with GPS tracking chips and digital locks which can be opened only with the help of codes kept in encrypted form and communicated only to persons authorised to open boxes in the presence of  authorised witnesses.

Devendra Narain

@narain41

www.devendranarain.com