Some random thoughts on Demonitisation

Prime Minister’s sudden announcement of Rs.500 & Rs.1000 currency notes being no longer valid legal tender starting from 09th November midnight has evoked a mixed response among the Indians. On one hand, there are die-hard Modi fans who are cheering this as a historic decision which would curb the nuisance of the black money and corruption for once and all and on the other hand, there are political opponents of the BJP who are blaming the unprepared government for the chaos which has unleashed since the announcement. It is extremely difficult to make any conclusive arguments about how this decision would affect the Indian economy at large. There are arguments and there are counter arguments both of which look very reasonable and powerful making the fence sitters wonder on what is actually going on. The news was broke to me by my wife who was informed by someone watching the TV. As usual, I thought this as just another rumour mongering stunt on the social media which keeps on spinning surprises from time to time. I googled the news and voila this was true. And suddenly, I became apprehensive for no reason. Although, I had nothing to worry but I started constructing fanciful scares in my mind. What better way of venting out your apprehension than social media? I was among the first ones to protest and wasted no time in equating Modi’s government as the ones incharge of a banana republic. As expected, I was hounded by Modi supporters online who were equally judgmental about the decision. Both the sides, the ones supporting and the ones protesting were driven by the emotions rather than rationality. Both the camps started digging out write ups available online in order to gravitate to their confirmation bias. It took me a couple of days to regain my sanity and I resorted to going through the matter in an objective fashion. The most obvious question is to find out the reasons for Modi taking such a major step. His supporters would waste no time in concluding that here is a man who wants to clean up the mess and is ready to go an extra mile for the same. This is the least convincing answer for a cynical personal like me. If Modi was so obsessive about cleaning up the mess then he would not have been surrounded by a large number of tainted ministers and politicians in the centre and the state governments ruled by the BJP. A sincere person would always put his own house in order before preaching others. I am ready to give in to the counter argument presented by his supporters that his decision is going to affect one and sundry without any discrimination. Yes, this decision has the potential of discomforting the real estate dealers, jewelers, corrupt babus and the professionals like doctors and lawyers. This is the very class which has been a vociferous supporter of the BJP and one has to concede that there is an element of bravery and political risk in what Modi has done. The answer lies in the ideological construct of Modi and the RSS. The entire artefact of the RSS ideology hinges on supreme sense of victimization which can be only overcome through radical steps. There is this admiration of a virtual bravado which would spare no one. It is this obsession of the Sangh ideology which finds no wrong in violence, genocides and strong corporal punishments whenever the things don’t move the way they want. This is precisely the imagery which the BJP and Modi had constructed for themselves and were able to assume the reins of power with it. However, their thirty months in power were failing them. They needed some radical steps to live up to their macho image and this demonetization was a low hanging fruit for them and they went for it. Yes, they have not been considerate to their own sympathisers and this is exactly how fascism works. The fascists do not like to listen to dissenting voices even if they come from within. Here lies a warning for each one of us. If we continue to fuel the megalomaniacs, their arrogance would not spare us even if we were their best of supporters. Coming to the economic merit of demonetization, it has its own pros and cons. This government is telling us that demonetization had become inevitable. This is a clear cut admission by the government that their machinery has failed to nab the black money hoarders and is incapable of stopping the entry and circulation of counterfeit notes. The demonetization would severely affect the liquidity bringing down the monetary transactions while hurting the economy at least in the short term. What the present regime has done is not exactly the demonetization of high currency denominations but this is essentially an exercise for replacement of the existing currency. Thus liquidity is expected to return to normalcy after the government’s promised 50 days. Coming to the advantages of demonetization, it makes people reluctant in hoarding the money in cash form. This propels spending which is favourable for wealth distribution. In the last three days, I have seen some of the most stingy people willing to share their money with others. The long pending receivables and payments are getting settled. Suddenly the people are discoverning new meanings of money. This jolt albeit a very short lived one is helping people to question the real meaning of life. Those who did not find any purpose in life beyond material pleasures are suddenly realizing that all their money may render useless within a flash. Obviously, these benefits are never thought of by the policy makers while implementing the demonetization moves. In the longer run, this is indeed a statement by the government. A statement to the people at large that they just cannot escape from the state. By instilling the fear of punitive measures, the government would indeed be able to make a sizeable chunk of the population to adhere to the laws of the land. This means that the state and its machinery would become more powerful in the coming days. Here again, the philosophical question arises on how to take a powerful state in our stride. If the state was powerful and benign then it ought to be the best thing happening to its citizens. However, a state is as benign or as hostile as the set of people in the ruling dispensation. Going by the history of the BJP, this may not be a very good news for the marginalized sections of the society. On the flip side there is no reason to not believe in the democratic processes laid down by the Indian constitution. Keeping my fingers crossed on what the future is going to unfold.

Investment Avenues for AlBurooj Society Corpus Fund

Salam, to all the elders and friends. This write up is exclusively about the Investment Avenues for the Corpus Fund of the AlBurooj Maintenance Society. We would be soon handed over the realms of the maintenance of the Society. We have had a very good beginning with the formation of a committee and a very competent set of selfless office bearers. The best part was the unanimity about the decisions taken which very much speaks about the quality of the people we are having. The members are obviously a little apprehensive about moving forward and meeting the financial requirements of such a gigantic residential set up. It is a norm with the most Housing Societies of the day to create a corpus and deploy it in Bank Deposits or Mutual Funds or any financial product which yields a regular monthly cash flow. This is easily the best way of assuring regular incomes to meet the tall financial needs of the maintenance activities. The only catch about the financial products in contention is that they are interest bearing and antagonistic to our faith. Allah swt says in Quran in Surah Baqarah, Ayat no.275, “Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein”. I am aware that there are also differing Fiqhi positions in Islam which allow participation in interest based transactions in certain conditions. And many of our esteemed members might have leanings to such interpretations and it is absolutely fine. We should respect the faith of all the individuals and must not impose our interpretations on others. This is where we can explore other possible investment avenues which are very much compatible with the teachings of Islam. One of the probable options is to invest with a going business concern who would share profits with us but each one of us would agree that finding such a business concern and further to trust them with an amount running in Crores is not a wise thing to do. The other tangible option is to make investments in real estate or shops. As for real estate, we would be handicapped for not having liquidity to meet our regular requirements and thus it becomes a no-no option. For shops, the rates of returns are generally modest and managing the rental collection and disciplining the tenants would almost be an impossible task. Apart from the faith related problems, the interest based income from the Bank Deposits has one more issue. Best rates are offered by the Co-operative Banks which are not inherently zero risk. In Gujarat, we had a very hard time for the investors who parked their funds with the Co-operative Banks as many of them busted in the past. Those at the helm of the affairs have often been found indulged in creating a nexus with the defaulters and siphoning off Crores of rupees of the investors. Thus, even if Bank Deposits is an any option to by, the only probable risk free option is Nationalised Banks which obviously promise lower returns. This pretty much leaves us with an option of equity markets. However, we are all aware that inspite of the better returns promised by the equity markets, fund management is a full time job requiring a lot of skills and that too a risky proposition if investments are done in unworthy scrips. Here comes the utility of a Shariah compliant Equity Fund. Presently, the SEBI has approved two products form fund houses viz. Taurus and Tata Mutual Fund. I would not elaborate about Taurus due to relatively low brand equity and uncertainties involved with an unknown player. Speaking about Tata Mutual Fund it comes from the house a very reputed business house of the Tatas. They had launched a Shariah compliant fund “Tata Ethical Fund” back in 1996 and has been going strong since last twenty years. It has continuously outperformed the debt funds, Equity funds as well as the Sensex in its journey of twenty years. Those unaware about the Shariah compliant Mutual funds may note that this fund invests in the shares of those companies which do not trade in an unIslamic fashion. Thus the companies which do not deal in Interest, Gambling, Alcohol, Tobacco and Entertainment are qualified as Shariah complaint. There is one more speciality about these scrips which is that the companies where the money is interested are cash rich and are mostly zero debt companies. Since Islam also forbids from paying interest, the companies chosen are also the ones which has least debt exposure. This automatically means that companies are financially very healthy. A tabular presentation of the returns is as under: 1 mth 4.0 172 3 mth 4.6 218 6 mth 10.6 202 1 year -0.6 149 2 year 13.1 72 3 year 19.8 100 5 year 14.6 20 Source: http://www.moneycontrol.com/mutual-funds/nav/tata-ethical-fund-direct/MTA736 Fund Details: http://www.tatamutualfund.com/our-funds/equity/diversified/tata-ethical-fund In 2013, the SEBI has mandated all the fund houses to launch the direct plans of mutual funds thus bypassing brokers who chunk away a significant portion of the returns as brokerage. We can thus directly interact with the Fund House and ask them to devise services suitable to us. Thus, we can opt for Systematic WithDrawal plans of say Rs.3.5 lacs to Rs.4.0 lacs a month which would be adjusted from our portfolio. If the dividend earning is less than the withdrawn amount then our portfolio goes down by that amount and if the earnings are on a higher side our portfolio inflates by that amount. Thus, we would be saved from the volatilities of the stock market and would be benefited from the expertise of top class fund managers. I am feeling a little awkward while writing all this due to the fact that this seems to be a propaganda to drawing people to buy a specific product. However, my only intention is to avoid interest based incomes and thus demonstrate our deep faith in Almight Allah swt and his perfection of life made for us which is Islam. Even if the returns are slightly lower on side, we should not shy away from paying a couple of hundreds bucks extra per month. However, if the trend is to be believed we would be better off with the investments in the Mutual Fund. There are many more wiser, saner and mature people in our Society and the Committee. The decision would be eventually taken by all of you after making all considerations. This is my humble plea to give this investment a consideration. In case, further details are required I would be more than happy for volunteering this cause whenever required.

Where is the pride in taking Pride?

I moved into my new apartment at a relatively posh Muslim locality in Ahmedabad a few months back. While I am not very sociable and generally don’t expect to get cosy with the neighbourhood, I have found most residents to be quite decent. While almost half of more than 400 hundred flats remain unoccupied, those moving in are trying to foster a healthy relationship among themselves and doing their bit to make the place a little better for living. In a bid to overcome the little differences on certain issues, some people try to pacify the situation by expressing metaphors like “Proud to be a Member of the Society” (I am refraining from naming the Society for obvious reasons). This sparked a thought in me on what people are actually taking pride about? Their obvious intention is to develop a shared vision and a common ground for a joyful and peaceful co-existence. However the kind of skeptic I am, I sometimes feel that such metaphors turn out to be traps. Traps of deriving pride from certain ideas which we care least about; traps which push the individuals, nations and civilizations in loving some abstracts while creating an indifference to many things around them. If we carefully study the human history, the mankind has been plundered to wars and reckless killings by this very pride which people take in their ethnic identities, religious identities and national identities. The rich Indian philosophy of Vasudhaiva Kutumbakam (The whole world is a family) or the Islamic traditions of Universal Brotherhood tend to get lost when such identities try to assert themselves. While none can deny the utility of wearing the identities which help people to extract warmth from their fellow beings, but the overdose has a potential threat of relegating us to the lowest depths. The depths, which bring pain and misery to the mankind. What explains a man hating someone whom he has never met just because he happens to have a different nationality? What are the reasons for a man following a certain faith being looked upon as a lesser mortal from his fellow beings? Prophet Muhammad peace be upon him famously quoted in his last Hajj sermon for not claiming superiority or taking pride on the basis of race, caste or creed. He instead termed those as superiors who are better in their conduct and are God fearing. And what better way to fear God than to love to his creations. Any pride resulting in looking someone down is a sure shot recipe for disaster. This write up is not at all about catching someone from his collar for taking pride in his being but it is only about making a casual reminder for not missing out on the larger view of loving the people and the world around us. I have got an enough share of hostilities of my friends and foes alike for my opinions and would be the last one in inviting wrath from my “proud” fellow beings for writing such a crude piece. I would conclude this by a line from Annie-Marie Slaughter “The false pride of perennial celebration, of wearing flag label pins while betraying the values that the flag stands for, is like the self-esteem curriculum for toddlers, where everything is praised and no achievement ultimately has meaning.”