President’s Message
My December newsletteris unfortunately written ina difficult situation which
has to be overcome. The
sad news of passing awayof Chief Minister of Tamil
Nadu Dr. J. Jayalalithaa
is unfortunate but has tobe reckoned with. In
addition, cyclone Vardah
hascausedgreat
hardships to the people of Tamil Nadu & Andhra Pradesh.
IJCCI hopes that the succession process which isunderway, will be hastened and Tamil Nadu will continue
to get leadership from this government which has
another 4 years to go. The excellent relief measures
undertaken by the Government in the wake of thecyclone, I am sure, will reduce the strains of the people
in the days to come.

Long Live Emperor Akihito
His Majesty theEmperor of Japan Mr.
Akihito was born on
December 23, 1933.
He is the 125th
Emperor of Japan. The
Emperor and the
Empress, Madame
Michiko visited Tamil His Majesty the Emperor of Japan
Nadu in 2013. The Mr. Akihito.
Birthday of the Emperor of Japan is celebrated by the Japanese
Diplomatic Missions in December every year. In Chennai
Consul-General of Japan Mr. Seiji Baba and Madame Atsuko
Baba organised a nice function to celebrate the birthday ofEmperor Akihito on December 1, 2016. A large number ofJapan-India well wishers gathered at the function to wish theEmperor a Happy and Long Life. IJCCI wishes a long, happy
and healthy life to the Emperor and the Empress and tostrengthen Japan-India relations.

During this period, the Central Government also
implemented the demonetisation policy. I believe it will,in the short run, be a dampener to the GDP growth.
However, in the long run, due to digitalisation, India
and Indian industry will be the beneficiaries. This
combined with the GST should be a good way forward
for a company with pan India operations.
The Chamber is continuing to work with the Consulate
General of Japan in Chennai and we are happy that a
new project has been initiated. This will help to assess,and more importantly, to propagate better relationshipbetween the two countries.
On the Chamber’s front, I wish to place on record the
support I have received from members on my request
for donations. I am happy to state that a sum of almost`25 lakhs has been received so far. I would like toappeal to other members as well through this message.
It is the contribution of the members that will go a longway in sustaining the Chamber’s future plans.

Consul-General of Japan Mr. Seiji Baba and Madame Atsuko Baba
at the birthday celebration function in Chennai.

I take this opportunity to wish every one of you a grandfestive season and more importantly, a very profitableand enjoyable 2017!
With warm regards,
N. KumarThree cheers to the Emperor.

Successstoriesin Japan
Farewellto Former
Chief Minister Dr. J. Jayalalithaa
Dr. J. Jayalalithaa was born on February 24, 1948 at Melukote,Pandavapura taluka, Mandya district, then in Mysore State (nowHinduja Tech Success Story in Japan
Karnataka) to Jayaram and Vedavalli.
Her paternal grandfather, Narasimhan Rengachary, was in the serviceof the Mysore kingdom as a surgeon, and served as the court
physician to Maharaja Krishna Raja Wadiyar IV of Mysore. Her
maternal grandfather, Rangasamy Iyengar, moved to Mysore from
Srirangam to work with Hindustan Aeronautics Limited. He had
one son and three daughters – Ambujavalli, Vedavalli and Padmavalli.
Jayalalithaa was born to Vedavalli andJayaram. Mr. Jayaram was a lawyer
who passed away when Jayalalithaa age of 15. Jayalalithaa
D r. J a y a l a l i t h a a w i t h P r i m e M i n i s t e r
was 2 years old. Jayalalithaa’s mother had a successful career in
Mr. Narendra Modi. (Courtesy: Indian Express.)
Vedavalli relocated to Madras and the Tamil film industry as
stayed with her sister from 1952. an actress. She was proficient
Vedavalli began dabbling in acting in many languages – she spoke due to her proficiency in many
andexcellentfrom 1953 under the screen name English, Tamil, Telugu, Kannada l a n g u a g e s
and
Hindi
fluently.
Jayalalithaa
communication skills.
Sandhya. Jayalalithaa remained under
also
sang
several
songs
in
her
the care of her mother’s sister
After the death of MGR, Jayalalithaa
Padmavalliandm a t e r n a l own films. She also acted in an
took over the All India Anna Dravida
grandparents from 1950 to 1958 in English film titled Epistle that
Munnetra Kazhagham (AIADMK).
Mysore. While still in Bengaluru, was released in 1961.
Jayalalithaa attended Bishop Cotton
Jayalalithaa was a voracious reader
The DMK was the only
Girls’ School, visiting her motherand read practically everything. Her
dominant force in Tamil Nadu’s
during summer holidays.
favourite authors were Charles
politics at that time andDickens, Jane Austen and, among
After her aunt Padmavalli’s marriage
Jayalalithaa ensured that sheothers, Oscar Wilde, Bernard Shaw,in 1958, Jayalalithaa moved to
Sidney Sheldon, Danielle Steel and became a force to reckon with.
Madras and began to live with her
Drawing on her massive
Pearl S Buck.
mother. She completed her school
popularity, in 1989, she won thee d u c a t i o n a t C h u r c h P a r k Mr. M.G. Ramachandran (late),elections to the Tamil Nadu
Presentation Convent. She excelled popularly known as MGR, former
Legislative Assembly –a t s c h o o l a n d w a s o ff e re d a Chief Minister of Tamil Nadu initiatedbecoming the first woman togovernment scholarship to pursue her in Tamil Nadu politics andfurther education. She won the deputed her to the Upper House of b e e l e c t e d L e a d e r o f t h eState Gold Award for coming first Indian Parliament – the Rajya Sabha Opposition.
in 10th standard in the state of Tamil
Nadu. Her brother Jayakumar, hiswife Vijayalakshmi and theirdaughter Deepa lived in T.Nagar
Chennai. Her brother died in 1995
in an accident.
Trained in classical dance forms like
Bharat Natyam, Mohini Attam,
Kathak and Manipuri, Jayalalithaa
gave hundreds of performances allover India. She also started learning
Carnatic Music from the age of 4.
With the guidance of her
mother and aunt, young
Jayalalithaa soon forayed into
films and began acting at theDr. J. Jayalalithaa inaugurates Metro Rail service from Chennai Airport to Little Mount.
Mr. Seiji Baba, Consul General of Japan looks on.

In 1991, following the assassination of
Rajiv Gandhi in Tamil Nadu, her alliancewith the Congress party propelled thecoalition to a massive victory. She was
re-elected to the Legislative Assemblyand became the first elected woman
Chief Minister of Tamil Nadu, serving
the full tenure.
She lost power to the DMK in 1996.
However, she returned to power with ahuge majority in the 2001 elections
defying many pre-poll predictions. She
lost in the 2006 elections, only to return
to power in 2011 and the subsequentterm in 2016.

Amma Unavagam – one of the popular schemes where food is made available
at subsidised rates.

Some highlights of Tamil Nadu-Japan Cooperation
IJCCI Salutes Dr. J. Jayalalithaa for all her efforts
in strengthening Japan-Tamil Nadu cooperation.
 The Tamil Nadu Govt. supported the Indo-Japan Chamber of Commerce and Industry (IJCCI)in promoting Tamil Nadu-Japan economic cooperation

 A number of economic seminars

organised by IJCCI received the full support of the Tamil Nadu Govt. during her tenure

 Dr.

J. Jayalalithaa nominated two senior IAS officials to participate in the IJCCI maiden Industrial
Delegation Mission to Japan in 2005

 Dr. J. Jayalalithaa nominated two senior Ministers

from the Industry Department to actively involve themselves and participate in the JapanIndia SME Conference organised by IJCCI in 2013 in Chennai

 Visit of the Governor of

Hiroshima Prefecture to Chennai and the MoU between the Prefecture and Tamil Nadu
(2010)

 MoU Between Tamil Nadu Guidance Bureau and Japan Chamber of Commerce andIndustry to facilitate bilateral trade and investment (2011)

 Visit of Mr. Yuki Edano, Ministryof Economy, Trade and Industry, Govt. of Japan (2012) and the establishment JETRO (Japan
External Trade Orgn.) to facilitate Tamil Nadu-Japan trade and investments.  MoU between
Tamil Nadu Guidance Bureau and JETRO (2012)

 Visit of His Majesty the Emperor of Japan

Mr. Akihito and the Empress Madame Michiko to Tamil Nadu (2013)

 Visit of the Governorof Kanagawa Prefecture to Chennai and the MoU between the Prefecture and Tamil Nadu
(2014)

 Invest Tamil Nadu Seminar in Tokyo (2015)

participation as a Partner Country (2015)

 Tamil Nadu Investment Programme TNIPP by

JICA, Japan International Cooperation Agency (2015)
Bengaluru Industrial Corridor by JICA

 Global Investors Meet – Japan’s A high-speed rail link Chennai-

 Japanese business establishments in Tamil Nadu asof October 2015 is 577 (from 286 in 2011)

A Yokohama based business enterprise is keen to
establish business links in India for their Jet Recycle
System – ‘Oil Contaminants Treatment’ – mobile
type.
Visit IJCCI web page: http://www.ijcci.com/businessopportunities.php for details. Interested Indian companies canemail their interest with details of the company to indo-japan@ijcci.com for B2B facilitation service.

Demonetisation in India
Demonetisation is an act of stripping acurrency unit of its status as legal tender.
On November 8, 2016, the Hon’ble Prime
Minister of India, Mr. Narendra Modi
announced the demonetisation of `500
and `1,000 notes. Though public opinion
on this action has been sharply divided,
curbing black money and choking terrorist
financing channels seem to be the reason
for this action.

CausesIn 1999, the Cash to GDP ratio was 9.4%
in India. With more number of people
having access to the banking system today,with credit cards, debit cards and digital
payment, there should have been a
reduction in this Cash to GDP ratio. But
on the contrary, it has increased to 12%
today. In 2004, 34% of cash in hand wasin the form of `500 and `1000 notes,
and it has risen to 87% today. Only 1/3rdof Rs 1000 notes and 2/3rd of the Rs 500
notes come back to the banks, resulting
in reduced circulation of notes and risingdemand for organised funds.
GDP growth between 1999 and 2004 was
5.5%, inflation was at 4.6%, interest rates
were lower and 60 million jobs werecreated. GDP growth between 2004 and2010 was 8.9% but only 2.7 million jobs
were created. The Current Account deficit
increased to $101B. There was a surge inunmonitored cash leading to higher goldand property prices. India, which is thedriver of world gold prices, saw a surge ingold prices by more than 300%. Between
1999 and 2004 in Chennai, property prices
just rose by 33%, lower than the rise of
GDP by 40%. Later, property prices shot
up by 400%, stock market rose by 400%
due to Inflow of funds through hawalaroute and through participatory notes,
leading to asset inflation causing a wealtheffect reflecting in the GDP growth – thiswas not people-oriented. The quality oflife was reduced with a rise in rural poverty
and the gover nment had to makehandouts to people for survival. Earlier, thequality of economy took care of people
by creating jobs but today after 5 years it
may not be possible leading to internal
meltdown and anarchy

from 0.25 lakh crores in Banking Systemvs 16 lakh crores as cash in circulation.

A surge of imports between 2004 and2014, the highest import being of capital
goods and this was more than oil, leading
to destruction of local capital goods. Zerorated import duty was allowed in power
projects and steel projects, leading to a
trade deficit with China of $175B,
equalling 3 years of their defence budget.
Govt had to buy dollars to pay people sucha huge amount of money, leading to
inflation. Large outflow of money wasallowed to buy capital goods and local
capital goods remained idle.

Contraction will happen in various sectors.
C e m e n t I n d u s t r i e s u s e d t o re d u c e
production to increase price. Now they will
have to increase production to remaincompetitive. Correction was done aftercrisis in 1991 and 2008, but now
correction is being done ahead of the crisis,
because after 5 years it will beunmanageable. Gold price will moderate
in the world because India is the buyer of
1/3rd of the World’s gold production.

Concerns
In spite of short term challenges, long term
growth is inevitable. Most people standing
in queue agree that it is good for thecountry because India is being transformed
with the right appeal. The system isrebooting and settling down. Managing
the economy through NBFC in addition to
Banks is required. Financial intermediationis needed to reach the segment which thebank cannot reach in remote areas. Fall ininterest rate without fall in inflation will
hit the middle class. Now 8% is the interest
rate with 5.5% as inflation rate. Inflation
will reduce once black money is eradicated.
Contract-based societies like construction
sectors will be affected. The biggest
challenge will be to fund SMEs (hitherto
in cash) which can be done only by coopting NBFCs. Liquidity will dog the
economy. Slower growth rate will occur
but it will be real growth rate and not
artificial growth.

Consequences
Once cash is recorded and ownership isknown, money will become traceable.
Cash economy is being organised now.
Banking system is Fractional Resource
System with deposits of 96 lakh crores

Contraction in gold, stock and real estatemarket will be effected.

Terrorist funding will be eliminated. Bribery
and corruption will be eliminated.
It is expected that flight of capital throughhawala will be stopped. Anti-dumping duty
has been imposed on Steel from China
and in the last 8 months, 2 lakh crores
NPA had turned into good debt now.
One method of handling excess cash issuspension which is demonetisation.
On the one side, it is debated that
demonetisation is a bold and a welcome
measure needed for a big democracy
grabbing all the attention and on the other
hand the national security measures andpolicy changes needed for a strong India
is being taken easy.
It is also felt that economic difficulties
clearly have to be resolved before thegovernment could think of pursuing otherobjectives. It is of utmost importance toevolve strategies to combat security
challenges and without giving greater care
and attention to the latter, the former’s
result will not be able to bear fruit.
Demonetisation may be a part of theprocess of combating the financing ofterrorism but is not an encompassing end
in itself. The time has come for crucial
introspection of transparency of decision
making at the highest level of policy tothe lowest level in the execution process.

EDITORIAL BOARD: N Kumar, President, IJCCI; N Krishnaswami, Chairman, IJCCI; Krishna Prasad, Managing Director, Mot Juste Communication
S e r v i c e s P v t . L t d . ; P S S u m a n , Pa r t n e r, A K M y l s a m y & A s s o c i a t e s L L P ; H u f r i z Wa d i a , Pa r t n e r, Ko c h h a r & C o. ;Suguna Ramamoorthy, Secretary-General, IJCCI. For Private Circulation Only.
Editor: Suguna Ramamoorthy; Publisher: IJCCI; Designing & Printing: Mot Juste Communication Services Private Limited, 98410 15081.
Indo-Japan Chamber of Commerce & Industry (IJCCI): No. 21, Kavignar Bharathidasan Road, Teynampet, Chennai 600 018, Tamil Nadu, India.
Phone: 044-24352010 / 044-24354779. Email: indo-japan@ijcci.com. Web: ijcci.com