Love in the time of demonetization


This was always considered one of the plus points of the Nehruvian legacy of building higher educational institutions and so forth, but Abraham echoed what I had said in Goa: “If you don’t pay tax, you cannot be properly counted and hence this is one of the reasons that we have such poor or unreliable data of the book publishing industry in India.” And indeed, of the Indian printing industry, notwithstanding the huge research assets of IPPStar based on more than 5,000 face-to-face interviews over the last 15 years.

In a discussion that I had with Frank Romano after the IPPStar research presentation at drupa 2012, Romano said that print businesses everywhere (including the United States) tend to be owner managed. They make a 15% profit but tend to expense many personal purchases to the company to defray outgoing taxes. I think this is generally true of Indian print businesses as well.

In the Mint of 9 December 2016, there was a story about the Kolkata book industry that said that the entire book supply chain from the purchase of paper, to the printing, distribution and retail sales of books is in cash. Hence, the book business in the great city of writers and artists has come to a halt with the recent demonetization of Rs. 500 and Rs. 1000 notes on 8 November 2016. Similarly, reports come of FMCG plants across the country halting production for a week or two at a time in the month of December to clear their stock of consumer products and confectionery before the distribution and retail cycle is greased again with cash.

We love and worship cash (and land and gold too), so why be bashful about it. This whole idea of paying tribute to corrupt governments that do not maintain the roads or the traffic lights and the general corruption of the bureaucrats who oversee a corrupt police and judicial system does not impress us with the idea that our tax contribution is being used for the general good.

Where is the electricity to power our printing presses? Are we not being compelled to buy generators to noisily and dirtily produce our own electricity in order to survive? It is a fact that every big printer has to have cash in his safe to give bribes no matter which government rises to power. Although they sometimes have logical and personal preferences, a leading printer says “it makes no difference to us who wins; we are in business”.

Of course government loyalists insist that the pain is temporary and that the gains will be permanent, even as the government has exempted political parties from accounting for their cash. Loyalists also predict that all will be well in one or two or three quarters—that the GDP will rise a point or two in 2017–18 because of the increasingly cashless, digital and accountable economy; and that India will be perceived as a better country to do business in. That interest rates will come down. I am hoping that all these predictions or wishes come true, just as I am rooting for Santa Claus to come calling a few days from now. But all Indian businesses are based mostly on hope—the most honest amongst us are willing to postpone whatever rewards there may be from quarter to quarter and year to year and sometimes from generation to generation. And for the rest of us, our sense of entitlement hones our creativity in all matters including cash generation.

Best wishes for the season and for the New Year, and I hope the economy improves in 2017–2018 in whichever Q you are waiting for.