Have we lost the Punjab we know to Drugs?

This article written by me was first published here https://www.myind.net/have-we-lost-punjab-we-know-drugs

Punjab’s drug issue is real.  It is reported that four out of ten men are exposed to drug abuse and attendant crimes like drug peddling. About 50% of those are young farmers. Some are addicted to poppy husk and some others are addicted to synthetic drugs churned out by Pharma companies in Himachal Pradesh. Another study reports that there could be one drug addict each in 65% of families in the state.

Drug trafficking poses security risks. For example, here is a news item: “CHANDIGARH: At a time when the nexus between terrorists and drug smugglers in Pakistan has come under a harsh spotlight after the Pathankot airbase attack, a new study by AIIMS has found that opioids worth Rs 7,500 crore are consumed in Punjab every year. Of these, heroin’s share is a massive Rs 6,500 crore.” source

Is Punjab, we know of, vanishing?

An individual addicted to drugs suffers before succumbing to untimely death unless helped by systematic and specialist de-addiction and rehabilitation support. The society and the government care little for such people making it difficult for them to access such help. Dependence on drugs forces addicts deeper into peddling. The family of the addict and in time the society get pulled into this vortex.

A society hollowed out by drugs is a breeding ground for violence and exploitation. It is also an invitation for our enemies to come in to take positions for future assaults.

The Punjab we know of is a land of abundance and valor.  The Punjab we know of has provided a security shield to entire Bharat through centuries of invasions by Huns and Mughals. Our Punjab is a land of Guru Nanak and Guru Govind Sigh. It is a land of saints and warriors. It is a land of people who think big in whatever they do – be it work or leisure, love or patriotism, celebration or sacrifice.

 

As someone who is pained by the state of his state says,

” The ‘good fathers’ are busy minting money to keep up with the ‘showing off’, the ‘bad fathers’ are busy drinking alcohol to keep up the masculinity and the mothers are busy with their mid-age ailments or in their kitties, suits & shopping and meanwhile the child enjoys forbidden company

” Alcohol Taverns can be found in every nook and corner of every city & village. The no. of ‘Thekas’ are more than the no. of government schools in the state. The government doesn’t feel an iota of shame on this issue considering the alarming use of drugs in Punjab let alone the thought of closing them. The cash strapped government is poisoning its people to run the state through the revenue from alcohol business”  Source

It is tragic paradox that a land ruled by Akalis -who are very proud of the Panthic teaching -should fall prey to the drug menace.

Drivers of Drug Abuse

The most immediate reason for the growing drug abuse is economic. Punjab’s agriculture sector faces the hurdles which the sector faces all over India -too much government interference in pricing, distribution, and export controls making it dependent on Government sops. These can never be enough.  It meant that agriculture couldn’t support its population. Unlike neighboring Haryana, Punjab didn’t industrialize enough.  The joblessness of high aspiring Punjabi youth combined with lack of attention and not having good role models by their parents is surely the most immediate driver for pushing them into drugs.  Drugs offer an instant mental high and earnings through peddling – a heady, addictive, and dangerous cocktail.

Easy availability of drugs in Punjab is another driver.  A variety of drugs are available and consumed. There are synthetic drugs like heroin/smack/brown sugar, amphetamines/ice. Natural drugs like raw opium-based such as ‘bhukki’ (poppy husk), ‘doda’ (powdered poppy husk) and ‘afeem’ (a black tar-like opium are derivative) are available. A wide variety of prescription drugs such as alprazolam, diazepam (commonly known as xanax and valium, respectively), pethidine, buprenorphine, fortwin etc. too are easily available supplied by Pharmaceutical factories in neighboring Himachal. According to NCB data, in 2013, 41% (of 964 kg) of all opium seizures in India took place in Punjab, a sign of the drug’s popularity in the state.

A large number of drugs are subsequently sold to users by an extensive network of dealers. Besides dealers, one of the biggest sources of drugs in Punjab is local chemists, who sell over-the-counter prescription drugs.

A weak enforcement of drug and narcotics laws by Punjab police means the above drug supply chains operate unhindered.

Why weak enforcement?

Punjab’s unique geographical location confers on it the unsavory status of being a ‘drug gateway’ to India and the world.  Heroin produced in Afghanistan passes through Pakistan and is smuggled into Punjab through its 553 Km porous border. From Punjab the heroin is sent in other parts of India. It is also sold in International market.  A kilo of Heroin fetches Rs 1 Lakh in Afghanistan, Rs 30 Lakhs in Pakistan and Punjab, Rs 1 Crore when it lands in other parts of India and Rs 5 Crore in international markets.

This extremely lucrative drug business finances terror and criminal activities worldwide. There are powerful international and local syndicates behind it.  Politician-drug lords nexus is an inevitable outcome of this. In Punjab, political power is used to beat the competition in drug trade. Once the Politician-Drug mafia infiltrates the administration, it is very difficult take effective counter measures to destroy the drug chains.

The state government, facing criticism, has been taking some actions.

Set up in October 2015, the SSIT (special-cum-supervisory investigating team) was given until December 31 to enquire into 8 FIRs registered in 2013 against a set of more than 25 people who included a Punjab Police DSP and the alleged kingpin of the racket Jagdish Singh alias Bhola of Bathinda; a notable Amritsar leader of the ruling Shiromani Akali Dal Maninder Singh alias Bittu Aulakh; an Amritsar-based industrialist Paramjeet Singh Chahal, a clutch of NRIs and others.

Fifteen people are behind bars and cases are going on against them and others released on bail in district courts at Patiala, Mohali and Fatehgarh Sahib.

These were the Punjab police’s most high-profile arrests in the State’s crackdown on drugs which otherwise netted thousands of small-time addicts and peddlers as The Indian Express investigation of over 6500 FIRs in one year has shown.” Source

To be sure, many conditions mentioned above are present in other border states like Gujarat. But Gujarat doesn’t have the issue of drug abuse like Punjab has. For long, Dawood Ibrahim syndicate used Gujarat coast for supplying drugs to half the world.  A good coordination between Police and Intelligence arms has ensured that the drug trade is heavily curtailed. Source

Clearly, the Akali-BJP government must do much better in rooting out the drug issue.

The Genesis

Drug syndicates exploit conditions on ground to build their trade and networks. In Punjab, they found such conditions.

As Punjab enjoyed fruits of green revolution of 1970’s it became the most prosperous state in India. The prosperity, increased per capita incomes, and better standards of living meant that the hard working Punjabis were reveling in good times amply reflected and continue to reflect in Hindi movies.

 

The Punjabi Pride, legitimate as it was, soon swelled into ego fed by Pakistan’s terror strategists. While we Indians remain busy with ourselves, enemies keep a hawk’s eye on our emerging fault lines. In Bhindranwale, they found a man who believed in an independent Khalistan and was willing to do anything for it. Invoking Sikhism, he found support of some people who believed that they will be better off in independent Khalistan than they were in India. He was amply supported from Pakistan and other Khalistani elements who operated from western countries. Bhindranwale also came handy for Indira Gandhi, the then PM, to break Akali’s hold in Punjab who had come in power in 1977’s Assembly elections in alliance with the Janata Party.  Her unrestrained ambition and desire for absolute power led to horrific consequences for herself and untold miseries in Punjab. (Read )

Though Khalistani terrorists initially didn’t encourage the drug trade, easy money and ISI pressure made them change their methods for obtaining arms and ammunition. They had now abandoned their Panth.

Punjab’s economy nosedived. From a land of abundance, it became a one riven by violence and unemployment. The pride remained but its rationale had all gone. Punjabi youth were now ready for drugs. Druglords exploited this.  Politicians, businessmen, and bureaucrats completed the drug apparatus.

The Khalistani terror was rooted out through a sustained police action headed by K P S Gill, but the problem of drugs is yet to be solved.

Lessons from Punjab

It is possible for a determined state government to bust drug syndicates and destroy mafia operations. Gujarat has shown that this can be done. Can Akali-BJP coalition inspire confidence in Punjab’s voters that they can do this? This will be an important election issue. If they can’t, Punjab will face a very difficult future because we know that Congress can’t, nor can AAP. Congress is too compromised right from top to bottom to be relied on for a massive cleanup, and AAP is not only inexperienced, but it also seems to have priorities other than governance, as seen in Delhi. It will also mean virtually handing over Punjab to druglords and their masters across the border. Punjab, like Jammu & Kashmir, will be a permanent security challenge -something that PM Modi’s Government will surely like to avoid.

Punjab tells us how important it is to overhaul intelligence, surveillance, policing, investigation, and enforcement arms of every state government.

It is necessary to secure our western border to stop smuggling of drugs as being planned by the central government.

A prosperous Punjab which falls into terror and a quagmire of drugs shows us that terror does not happen because of poverty or a sense of doing relatively poorly. It isn’t caused by lack of education as we see that many terrorists come from well educated backgrounds and from well paying jobs. It is a myth that any perceived historical wrong or poverty causes terror. Terror is caused by ideas of superiority, exclusivity, and arrogance that find legitimacy in religious doctrines.

Punjab’s drug issue highlights the role of responsible parents.

Punjab is a warning for rest of us that economic prosperity is not all. It must be attained, but without Bharatiya civilization’s cultural moorings which hold us together, prosperity won’t last. India has a resilient civilization. We should build on it.

Will India’s economic juggernaut stall?

This article written by me was first published at https://www.myind.net/will-indias-economic-juggernaut-stall

India’s economy is in limelight due to its performance which is head and shoulders above its emerging market peers. Its GDP grew by 7.9% in January-March 2016 quarter. As recent corporate results show, there is a broad based recovery helped by lower raw material costs and rise in discretionary consumption (Read). This has come about despite successive droughts for last two years. It has happened due to public infrastructure investments, rising FDI due to Make in India and Ease of Doing Business initiatives, and a big turnaround in power and mining sectors. The credit for this turnaround must go to Modi government.  A normal monsoon this year should help things further. The massive Jan Dhan Mudra platform should give a leg up to economic activity at grass roots level.  Although global environment for exports remains difficult, all these factors point to a strong economic performance in years ahead.

Banking bottlenecks

India’s economy can hope to have a dream run. But our banks and financial institutions pose significant hurdles. Banks are intermediaries that pool savings and channel them into credit for economic activities like investments, working capital etc. Banks can help or hinder growth. Unfortunately banks are hobbling due to a mountain of bad loans (Gross NPA) of Rs 5.7 Lakh Crore (Source: Financial Express June 1, 2016). (Read) India’s economy is not just expanding but it also undergoing massive transformation due to both top-down (e.g. FDI led, investment led)  and bottom-up (through small business loans and faster subsidy transfers)  forces.  Our public sector banks, which dominate the sector due their sheer size, can’t match the needs of our economy.

The banking bottlenecks exist already. As economy keeps coming out of a deep and wide trough the bottlenecks can pose serious hurdles. When the real economy of industry, agriculture, and services doesn’t get enough credit to keep moving faster, shortages result. Shortages lead to inflation leading causing rise in real interest rates. The economy starts stuttering.

The above scenario is quite plausible.

The ‘Rajan’ debate

If the above scenario is considered, the current ‘debate’ on Raghuram Rajan’s tenure does seem strange.

Ever since the BJP leader and MP Subramanian Swamy fired salvos against Raghuram Rajan, the Indian and Foreign Media have come to Rajan’s rescue. He was appointed as RBI Governor in 2013 by P Chidambaram, UPA’s Finance Minister. Even the current Finance Minister, Arun Jaitley disapproves of Swamy’s criticism.  That Rajan is the best performing RBI Governor has been argued without any performance yardsticks (Read). Those who support Rajan talk about ‘his reputation’ and ‘sending positive signal to international investors’. “He is very well respected across the world. He is a very capable person and I think if his term is extended then it’s a good thing for India,” said Adi Godrej Chairman of Godrej Group (Read)

It is interesting to note that the ‘Rajan debate’ started only after Swamy raised his objections. No one is also discussing responsibilities for the banking mess.

 

Bad loans and the new financial landscape

Amazingly, Public Sector Banks’ huge Non Performing Asset (euphemism for loans which will not be paid back to banks) crisis gets discussed without any reference to Rajan and his role. One exception to this is the Supreme Court.  “Its (RBI’s) role in regulating the banking sector has come under scrutiny by the SC. Last month, it slammed RBI for not being “bothered about the mounting bad corporate debt.” It reminded RBI of its duty as a watchdog and wanted it to make public the “mind boggling” outstanding bad loans, even if it didn’t want to name defaulters who owe over Rs 500 crore to banks. It told RBI that “if a bank does not manage funds prudently and there is no hope of recovery, what do you do? Aren’t you supposed to keep vigil and take action if banks violate guidelines or are found in the wrong?”  However, RBI wriggled out by saying it does not monitor daily functioning of banks” (Read)

To be fair, Rajan has flagged the bad loans problem and has asked banks to provide for loan losses. But is this going to be enough? The following questions need to be answered.

1. How much of the bad loans can be recovered? How?

2. What caused them? Shouldn’t those who caused the bad loans willfully be probed and brought to book? Shouldn’t the bank boards which presided over such a massive problem be held accountable and changed? (Example: Vijay Mallya episode)

3. What is needed to prevent creation of further bad loans of such magnitude?

4. How to make banks more efficient and nimble to adapt to changing market conditions?

India’s financial sector has seen a lot of progress like establishing modern stock exchanges and fast electronic fund transfers. The Jan Dhan/Mudra platforms are giving a massive boosts to subsidy transfers and small loans.  New universal payment systems are coming up too.

Are our banks, particularly the public sector banks, equipped to deal with this entirely new landscape? Unfortunately, not much has changed in how our public sector banks do business. Nor they are in any position to undertake systemic and technological changes. As an example, technology makes it possible to mine formal and informal credit information of potential borrowers and help faster decision making. Do we see our Public Sector banks making use of such technology anytime soon?

What do we get from RBI and Bank Boards’ Bureau?

The regulator RBI and the PSBs’ major shareholder Government of India should be busy with the above issues.

Despite some bad loans that seem scandalous, Rajan says “Separate morality from NPA clean-up” (read).  Not much is heard from Vinod Rai, Chairman of the Banks Board Bureau. For Rai, the issue is how banks can sanction more credit without getting bogged down with audit questions. “We have given them comfort… You will see from the next month onwards,” he says (read)

Government has launched ‘Indradhanush’ program, but its progress is slow.

We also keep hearing about consolidation of public sector banks. Will merging large weak banks with small weak banks make things better?

 

Syndrome of ‘Banking Business as Usual’ will cause difficulties

Instead of discussing the above questions, Indian media, expert economists, Finance Minister, RBI, and the Banking Boards Bureau Chief have reduced the entire subject to:

1. Bad loans were caused by poor economy. So banks should take a ‘haircut’. There is no moral issue here.

2. Banks should recapitalized through public money (or even better: sold to foreign funds)

3. Interest rates should be reduced.

4. The problem will be less acute or will even go away with economic recovery.

5.  Consolidate public sector banks to create a few larger banks.

Government has launched ‘Indradhanush’ program, but its progress is slow. It sticks to the above macro-economic analysis that ignores weaknesses of public sector banks mentioned above.

With Rajan saying ‘No moral issue in bad loans’, Vinod Rai ‘Giving comfort to PSB managements’, and Arun Jaitely disapproving of ‘personal comments about Rajan’. It is business as usual.  Even if we don’t have a proper banking crisis, our banks are likely to put brakes on economy’s juggernaut that has started rolling.

Will India’s economic juggernaut stall?

PM Modi has said that ‘Appointment of RBI Governor is an administrative issue and it shouldn’t concern media’.  One hopes that this means that he will not get influenced by media’s love for Rajan and by his ‘reputation’.  One hopes that Modi recognizes the above threat to economic progress and preempts it. After all, Modi’s ‘Sabka Saath, Sabka Vikas’ hinges on ability of financial sector to support the real economy.

Modi government has been doing a lot for reviving India’s real economy. It is going to be much harder to do the same for its financial sector. If this is not done in time, the good work being done for real economy will not be enough to bring desired results. We may just have a cyclic recovery followed by a bust.

The time to act is now.

– See more at: https://www.myind.net/will-indias-economic-juggernaut-stall#.dpuf