GDPR Notice

GDPR Notice:
Please note that Google, Blogger, Adsense and other Google services may be using cookies and doing whatever they do. Please take notice that by using this blog you give your consent to those activities.

Monday, May 11, 2020

Why is there is no lending in crisis?

On LinkedIn, Callum Thomas has shared a post detailing tightness in lending standards and gradual shifting to tight credit conditions.

Lending standards tighten at the exact wrong time in a crisis. Also in a crisis the ratings get downgraded en masse. When we want banks to lend, banks do not want to lend. When we want banks to stop lending, banks get busy making risky loans. This is one problem of banking regulation that has not received enough attention. 


Markets and particularly rating agencies need to appreciate the difference between Macro risk (where all aspects of the economy are impaired) v/s corporate risk (where particular company suffers impairment because of its own actions or inactions).

Credit cannot be pushed - it needs to be pulled. To achieve this, a better mechanism is interest subvention. It seems to be a much better tool when macros risks are prevalent.

An SPV which guarantees interest rate up to X% (ranging from 30-50% of lending rate - so for India it will guarantee 3% interest cost for US it could 0.75%) it should cause firms to pull credit and deploy it for productive uses.



Rahul Prakash Deodhar, Advocate, Bombay High Court is also a private investor. He can be reached at rahuldeodhar@gmail.com, on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com.

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms"

Wednesday, May 06, 2020

Will US Dollar collapse? What will be an alternate currency? What about Gold?

At this point I am not sure Dollar collapse is closer. 

A dollar collapse needs to have three points - 
  1. The fundamental weakness in USD (we have this more or less) 
  2. a World not reliant on US consumer demand 
  3. A strong challenger

Last 2 conditions are not met - at least not yet. Euro has its flaws and needs to iron those out before it can become a challenger. Yuan will not be a challenger. SDR is closest option we have but there are issues there too. I am not confident of the blockchain currencies that exist presently.

IF Dollar is really stressed we may go back to a gold-peg rather than other currencies. In fact, gold peg may be quite a good Fed policy for the short term.

If we correct the SDR structure then eventually even the US would love to have a 2-level currency system. 


Previously I have discussed views on US Dollars here:
Dollar, the International Currency system and the Ghosts of Connally

Tuesday, March 03, 2020

COVID-19 Corona Virus - What we need to know.

I have uploaded my first video on Corona Virus what we need to know. Please watch and subscribe to the YouTube Channel. Also follow Right Views on Twitter (http://twitter.com/rtvws) and Instagram (https://www.instagram.com/rtvws/)




The video is accompanied by info pack that can be downloaded here.





Rahul Prakash Deodhar, Advocate, Bombay High Court is also a private investor. He can be reached at rahuldeodhar@gmail.com, on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com.

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms"

Friday, February 28, 2020

What is the difference between NRC and NRC Assam?

I made a video explaining the same. It includes a chart explaining the difference which is detailed below.

Here is the video:




I made a chart of the difference between NRC and NRC of Assam:


Here it is:



Rahul Prakash Deodhar, Advocate, Bombay High Court is also a private investor. He can be reached at rahuldeodhar@gmail.com, on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com.

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms"

Thursday, February 20, 2020

CAA Video series

A short video series explaining CAA. I wanted to keep the videos less than 5 mins so that easy to view.






Rahul Prakash Deodhar, Advocate, Bombay High Court is also a private investor. He can be reached at rahuldeodhar@gmail.com, on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com.

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms"

Wednesday, January 29, 2020

Citizenship Amendment Act

Even those living under a rock have heard about CAA – The Citizenship Amendment Act. 2019. They have heard vocal and emotional arguments, protest and all sorts of confusing messages. In general, Indian citizens have nothing to do with CAA. The question is therefore what about CAA has evoked the protests? Is the government really discriminating against Muslims? Is the government allowed to discriminate? What about Article 14 – equality before the law? Let us answer these legally and logically. 

How to get Indian citizenship?

Indian Citizenship Act allows for 5 categories of citizenship –
  1. Citizenship at the time of independence, simply put, was given to all people living in undivided India who chose to remain in India.
  2. Citizenship by birth is not that easy. From January 26, 1950, up to July 1, 1987 people born in India became citizens of India. Those born between July 2, 1987, but before December 3, 2004, became citizens only if either parent was a citizen of India. A person born on or after December 3, 2004, is a citizen only if both parents are citizens OR one is a citizen and other is not an illegal immigrant at the time of birth.
  3. Citizenship by descent can be claimed by people born outside India. A person born outside India before December 10, 1992, can claim citizenship by descent, only if his father is an Indian citizen. If a person is born outside India, between December 10, 1992, and December 3, 2004, can claim citizenship if either parent is a citizen of India. After December 3, 2004, if you are born outside India, you can only claim citizenship by descent by registering at the Indian embassy/consulate.
  4. Citizenship by registration is available to those people who qualify in the first 3 categories but are not Indian citizens because they are citizens of other countries. These people MUST renounce their citizenship before they become eligible to become Indian Citizens.
  5. Citizenship by naturalization is a category open for everyone else provided they are not illegal immigrants or descendants of illegal immigrants. In other words, illegal immigrants or their children CANNOT ever become Indian Citizens after 2003. Even if illegal migrants marry an Indian citizen their children cannot become Indian citizens.
  6. Citizenship by incorporation of a territory is when a state or country joins India, its citizens will automatically become citizens of India on the date of incorporation of the territory. These citizens do not have do clear any hurdles to acquire citizenship. This was primarily used for accession of princly states into India.

Is getting citizenship a right of non-citizens?

Simply put, only people born in India (category II) and people of Indian descent (Category III) but with restrictions described above have a RIGHT to be granted citizenship. They can demand to become citizens.

Others can apply for citizenship, whether to grant them or not is the discretion of the government. Citizenship by registration which applies to those born in India or are descendants of Indians but are not Indian citizens cannot claim a right to be given citizenship. Whether to give them citizenship is at the discretion of the government officials. The same is the case with citizenship by naturalization. Just because you lived in India for more than 12 years does not give you a right to be granted citizenship.

Illegal migrants, their children and even those children of illegal migrants whose spouse is an Indian, all, are specifically disqualified from getting citizenship.

Law relating to migrants and refugees

When it comes to migrants and refugees the laws applicable to them are derived from India’s commitment to the United Nations Charter of Human Rights read along with Indian laws (i.e. Constitution, Indian citizenship Act, Foreigners Act etc.).

In turn, UN Human Rights are centered around (1) Declaration on the Human Rights of Individuals who are not nationals of the country in which they live - Adopted by General Assembly resolution 40/144 of 13 December 1985; (2) 1951 Convention Relating to the Status of Refugees along with 1967 Protocol Relating to the Status of Refugees and along with Resolution 2198 (XXI) adopted by the United Nations General Assembly. These are also summarised in the 2006 publication of Office of the United Nations High Commissioner for Human Rights titled The Rights of Non-citizens.

In common language, legal migrants and refugees have a revocable right to residency. However, they have no right to get citizenship. Whether to give them citizenship or not is up to the government.
Are migrants entitled to Article 14 -equality before the law?

Many commentators have unequivocally stated that Article 14 applies to migrants as well. However, it is not a clear case. Based on a reading of all the documents, migrants are required to be treated equally before a court of law. They have some fundamental rights, chiefly right to life and property (subject to restrictions), etc. The UN High Commissioner’s publication mentions that State may discriminate for legitimate reasons and further allows states permits States to draw distinctions between citizens and non-citizens with respect to two categories of rights: political rights explicitly guaranteed to citizens (but not to migrants) and freedom of movement (not granted to illegal migrants).

Further, migrants, legal or illegal, cannot claim a right to be citizens. In fact, illegal migrants or refugees cannot become citizens of India. The Citizenship Act actively forbids them from becoming citizens.

Then what happens to illegal migrants?


There is no provision to give citizenship to any illegal migrant whatever be their religion. In fact, once you are established as an illegal migrant you are disqualified from getting citizenship. In fact, even if illegal migrant marries an Indian, s/he cannot be given citizenship. Their children can NEVER become citizens of India.

When the laws are read with UN HR resolutions and the Foreigners Act, India is required to deport illegal migrants to the country of their origin. They can also be deported to other countries provided they will be safe in those countries and that country is willing to accept them. Law allows for keeping illegal immigrants in detention centers or they may even be prosecuted in accordance with the Foreigners Act.

India can only deport all non-persecuted illegal migrants. Those facing persecution cannot be deported to their country of origin. All illegal migrants have a right that prevents the host government to deport them to a country where they will face persecution or abuse.

The net effect is that the persecuted illegal migrants cannot become citizens (because of the law) and cannot be deported. It implies that persecuted illegal migrants cannot be deported because of our commitment to UN human rights.

However, UN Human rights resolutions and Indian law require the government to deport illegal migrants who are not persecuted. Alternatively, they can be prosecuted under the Foreigners Act or detained.

In all these aspects the religion of the illegal immigrant is immaterial, Indian laws do not differentiate between illegal migrants based on religion.

Enter the CAA


The CAA grants a right to illegal migrants who are facing religious persecution only in 3 Islamic countries, Pakistan, Bangladesh and Afghanistan, to claim citizenship provided they have entered India before 2014. The act creates a right in favor of those who are persecuted that they may seek citizenship.

The act is a manifestation of promises made in 1947 to the minorities of undivided India. To be clear, the understanding was that Pakistan would give citizenship to persecuted Muslims of India and India will give citizenship to all persecuted minorities (at that time this group was primarily Sikhs, Jains, and Hindus – Christians were persecuted later).

Why not make minority migrants citizens under current law?


This question has to be answered in two parts.

For illegal migrants, before CAA, there is no provision in current law to give citizenship to them or their descendants from any community. If they are not persecuted, they have to be deported. If they are persecuted, they stay here as migrants. After CAA, only the persecuted illegal migrants from 3 countries who are already in India before 2014 get to apply for citizenship. Since they could not be granted citizenship, an act of parliament was required.

For legal migrants, all religions can apply. In this case, CAA merely lowers the bar for these migrants provided they are persecuted in their country of origin. This provision is simply like setting up a separate queue for wheelchair or persons with disabilities, mothers with infants etc. However, even this part, since it concerns citizenship could not have been done without an act of parliament.


Why not include Ahmadiyyas etc. who are facing persecution?

This is a complex issue and relates to all persecuted minorities - Ahmaddiyas, Baloch, Sindhis, Tibetians, etc. There are diverse categories of reasons for this, some arise from the legal aspect of partition itself, others are emotional, some are fundamental, some are practical. I am listing only the logical ones here. When you read the description below, you may not agree with a few and agree with others. But taken together, it is not possible to accept them.

First, at any point, in any country, a lot of classes of people claim to be persecuted. Landlords have been persecuted, landless have been persecuted, some are persecuted based on their sect, others because they support some political party etc. In the three countries, too many classes of people are facing persecution. Ahmadiyya, Tribals in Bangladesh, Baloch, Mohajirs, Sindhis, liberal Muslims in Taliban held areas, etc. are known to be persecuted. Only some of these are illegal immigrants. Can India accommodate all of them?

Second, legal recognition of persecution differs from actual persecution. If the law of other countries discriminates clearly then you can recognize it. However, if the law does not discriminate but provides for a remedy for any discrimination then another state cannot take cognizance of it even if in reality there is discrimination. Such recognition will become interfering in other countries' affairs. Thus, if Pakistan, Bangladesh, and Afghanistan had not amended their constitutions to become theocratic Islamic states there would not have been a legal basis to enact this law. Even today, there is no legal justification to provide for Sri Lankan Hindus, Tibetans, or Rohingyas. If, however, China or Sri Lanka were to pass a law against Tibetan Buddhists or Sri Lankan Hindus, there will be an argument for seeking a CAA for accommodating these refugees.

Third, the law does not drive the persecution of many of these groups. These groups are persecuted DESPITE the protection of the law. However, non-Muslim migrants will have no such future possibility since the constitution of these countries does not protect these minorities. These religious minorities are therefore condemned BY their law - by their constitution itself.

Fourth, the basis of partition was not a referendum* but it was premised on separation of areas of population-based on religion. The partition was negotiated by Congress, Muslim League and the British, there were several ambiguities. However, there was one clear representation on which partition was founded – that Muslims do not identify themselves through sects and regions but only through religion and that is why they want separate land. The Ahmadiyyas, in particular, were instigators of partition and actively supported the partition of India and UN resolution on Kashmir against India. Similarly, Rohingyas were keen to separate from then Burma and join East Pakistan. This peculiarity prevents India from acknowledging separate sects including Ahmadiyyas (and further within Ahmaddiyas) within Pakistan, Bangladesh or Myanmar.

Fifth, giving citizenship to persecuted citizens under various classes within former undivided India opens pandora’s box. Will we give citizenship to Baloch? Sindhis? This has the potential to unravel the partition itself. In my opinion, if we get land along with the people, India should have no problem accepting these LEGAL migrants as citizens in the future.

Sixth, you have to also consider how many persecuted people exist illegally in India. As of now, there are no data on illegal Ahmaddiyas in India. Most Pakistani illegal migrants are Hindus and Sikhs. So the Ahmaddiyas in India are legal migrants and they have a regular mechanism to be assimilated into Indian citizenship.

Finally, you cannot promise citizenship in the future to any group of persecuted minorities coming in illegally in the future after 2014 - Ahmaddiyas or even Hindu, Sikh, Jain, etc. All of them including Hindus etc. will not be given citizenship. This is done so as not to encourage persecution of these minorities in their respective countries.

In Sum

The CAA is a mechanism to handle the status of part of the ILLEGAL immigrants. It refers to those illegal migrants (the minorities) who cannot be repatriated (UN laws) and are condemned to live in India forever. CAA makes these persecuted ILLEGAL migrants only from 3 countries into LEGAL persecuted migrants.

LEGAL migrants from all over the world can apply for Indian citizenship under category V. There is no restriction on religion – ALL religions and categories (LGBTQ, etc.) and can be granted citizenship. They have to wait for 11 years before they can apply. For LEGAL persecuted migrants from 3 countries CAA reduces the waiting time to only 5 years.

Thus, CAA has nothing to do with LEGAL migrants and ABSOLUTELY nothing to do with Indian citizens. It also does not encourage illegal migration as a clear cut deadline (past deadline) means no future illegal migrants will be granted citizenship.

* The vote in favour of Muslim League was interpreted as a referendum. However, Muslim League and Jinnah himself were vocal about separate land. Also, Referendum was held in Sylhet and North-West Frontier Province. Both created enormous problems. But that is separate history lesson.

References:

[Updated with references]


Rahul Prakash Deodhar, Advocate, Bombay High Court is also a private investor. He can be reached at rahuldeodhar@gmail.com, on twitter at @rahuldeodhar or at his website www.rahuldeodhar.com.

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms"