Monday, 29 February 2016

Quantum Jump ?



While inaugurating the " Make in India " week in Mumbai on 13th Feb , Shri Narendra Modiji told the industrialists :

" Incremental changes will not suffice . We need a quantum jump "

Perhaps doubling of outlay on Agriculture / Rural Development / Highways / Railways etc, in the budget which Shri Jaitley announced yesterday , was what Shri Modi had in mind when he said this

But what about the issue of unearthing of BLACK MONEY ?

Do you consider the following announcements as a QUANTUM  JUMP  ?

#   BUDGET  2015

    " Declaration of Undisclosed Foreign Assets  Scheme "

      Restricted to " foreign assets " only 

      30 % tax + 30 % penalty

      Yield : Rs 10,000 crore



#   BUDGET  2016


    " Income Disclosure Scheme "


     What is that QUANTUM JUMP  ?


    *  Chance to declare " Domestic " undisclosed assets

    *  4 month window / pay within 2 months

    *  30 % tax + 7.5% surcharge + 7.5% penalty

    *  No scrutiny or inquiry under Income Tax Act / Wealth Tax Act

    *  Immunity from prosecution / benami transactions

    *  Yield ?  Rs 20,000 crore   ( my guess )



If past is any indication of the future , expect following ( incremental ? ) jumps in :

#   BUDGET  2017

     *  " Voluntary Disclosure Scheme "

     *  Will cover , both foreign as well as domestic undeclared assets

     *  No penalty / Just pay 30% tax / No prosecution / 6 month window

     *  Yield  :  Rs  100,000 Cr

   

#  BUDGET  2018 


     *  "  Perpetual Amnesty Scheme "

     *   No tax / no penalty / no scrutiny / no prosecution / no questions / no window

     *   Cash deposited in ATM ( Automatic Taker Machines ) will be used for Infrastructure SPV

     *   Depositors will get tax free interest of 5 % , directly credited in their Jan Dhan Bank Accounts

     *   Yield  :  Rs 340 lakh*crores ( all the BLACK MONEY stashed in bank lockers / locked up in gold / land etc )

        (  details at  w..w...hemenparekh...in )



Remember , 2018 will be the last budget for the present NDA government , before the 2019 General Elections  !

But then , waiting till 2018 may prove to be a political harakiri for BJP  !

Announcing this " Perpetual Amnesty Scheme " in 2017 Budget will ensure that BJP gets 400 seats in Lok Sabha in 2019 elections  !


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hemenparekh.in / blogs

01  March  2016

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Sunday, 28 February 2016

Don't Expect This in Budget




Don't expect my following suggestion to figure in the Budget speech which, Shri Jaitleyji will read in Lok Sabha , a few hours from now

 
But then it does not have to be !


First break the unwritten rule :  " If a reform was not announced in Budget , then it cannot be implemented "


My suggestion is about ATM V 2.0


Many decades ago , ATM were first introduced in America when banks found long lines of customers waiting to withdraw cash at the CASH COUNTER


In America , cashiers are called TELLERS . So these CASH DISPENSING machines came to be called AUTOMATIC TELLER MACHINE ( ATM )


In India , we call these ANY  TIME ( cash ) MACHINE , which give out cash upon

*  entering a few  details / code numbers into ATM screen

*  amount of cash you want to withdraw  and

*  inserting your ATM Card in the machine


ATM prints out a slip of paper incorporating full details of the transaction / customer name etc


I believe , nowadays , any ATM accepts ATM card issued by any bank , so you need not worry to find a ATM belonging to YOUR bank ( where you have YOUR bank account )


MY  SUGGESTION  :


*  Come out with ATM V 2.0 ( call it , " Automatic Taker Machine " ? )

*  Install one in every bank branch and at 145,000 post offices ( India Post's Payment Banks )

*  ATM V 2.0 does  NOT  " dispense" cash . It only " accepts " cash  !

*  Cash depositor will enter personal details ( Aadhar No / Jan Dhan Bank A/C No etc ) and amount being deposited

*  ATM V 2.0 will count the cash ( much like currently used CASH COUNTERS at most bank branches )

*  It will print out a RECEIPT , giving full details

*  All ATMs ( V 2.0 ) will be inter-connected in a Network having a CENTRAL server

*  All cash deposited ( by every user ) will be used for Infrastructure SPV

*  Depositor will earn annual interest @ 5 % on CASH deposited ( Receipt wise )

*  Cash Receipts can be en-cashed upon maturity of 10 years ( like FIXED DEPOSIT receipts )

*  Interest will be TAX FREE and get directly deposited in depositor's Jan Dhan Bank A/c

*  No questions ( as to the source of the cash deposited ) will be asked ( Perpetual Amnesty Scheme )



I understand , Jan Dhan Yojana managed to garner deposits of approx Rs 30 thousand crores in 18 months

ATM V 2.0 , will bring back those Rs 34.4 lakh*crores of undisclosed assets that are lying in foreign banks ,

AND

Rs 340 lakh*crores of unaccounted BLACK MONEY lying in domestic bank lockers ( or locked up as gold / land )


In deep space , there are BLACK HOLES which suck in all matter . Even light cannot escape from a black hole

ATM V 2.0 will be our WHITE HOLES which will suck in all black money Indians have stashed anywhere  !

Let us use this INNOVATION , which is simply re-configuring  well-established and straight forward HW / SW !



Dear Shri Jaitleyji ,


There is no need to worry about how to raise revenue to fund those Infrastructure Projects to generate jobs


No need to widen tax net ( from 4 % to 23 % ) or borrow money from market or abroad

No need to announce in your budget speech this morning  ! No passing of any BILL in Rajya Sabha !


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hemenparekh.in / blogs

29  Feb  2016

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Saturday, 27 February 2016

A Tale of Two Tracking !


State of Maharashtra has a total of 50 prisons , of which 9 are Central jails


Between them , they house 25,000-30,000 inmates


The country as a whole, has some 1,387 prisons , housing approx 356,000 prisoners


Maharashtra government has decided to introduce " chip or bracelet " tracking system for prisoners and is in the process of signing an agreement with the Israeli Government under which , private Israeli companies will implement this " tracking " project


Why all this rush for a technology driven reform  ?


Because , in March 2015 , five criminals had fled from the Nagpur jail after climbing boundary wall  !


But no one in government seems to be really bothered with the following :


*  There are billions of high currency notes ( Rs 500 / 1000 ) in circulations

*  A whole lot of these are unaccounted BLACK MONEY income, on which no tax got paid

*  Many more billions are stashed in secret bank lockers , which occasionally "escape" for purchase of gold/land etc

*  High currency notes worth Rs 34.4 lakh*crore have "climbed" national boundaries and escaped without "trace" !

*  Today , Government has absolutely no mechanism to " track / trace " such escapes

*  In India more than 90% of all payments ( for goods and services ) are in CASH , quite a few , using these high
    currency notes

*  If payments are made in CASH , no GST / Service Tax can be collected


*  But if the payments get made through official channels ( ECS / Bank Transfers / Credit Cards / Mobile Wallets
    etc ) , then GST can be collected ( or a BTT - Bank Transaction Tax , can be levied )


Now , instead of " dehumanizing " 30,000 prisoners with a RFID-embedded collar around their necks ( as it
happened with Rajat Gupta of McKinsey fame , a few weeks back in New York ) , just so that you can track some
5 prisoners , would it not be much better / wiser to :


*  Discontinue paper-based currency notes of Rs 500 and Rs 1,000 ( and withdraw in 6 months , with advance notice )


*  Introduce plastic currency notes of Rs 500 / 1,000 which are embedded with RFID sensors ( far thinner than a human hair  ! ) , always broadcasting their presence to Internet of Things ( IoT )


I believe Govt is launching ONE BILLION plastic currency notes of Rs 10 denomination , later this year


Let us make this a PILOT PROJECT , by embedding these with RFID sensors .

We will learn a lot in " tracking " !  


*  Assign to each such note, a IP V 6.0 address , linked to its unique note number


*  Set up a IT-enabled Technology Platform which will constantly monitor any accumulation of Rs 500 / 1000
    RFID embedded notes in excess of Rs ONE CRORE within an area of ONE square meter



Why waste time in tracking a few escaped prisoners ?



Why not leverage technology to track those billions of notes and their criminal owners who are destroying our economy ?



Mr Arvind Subramanian ( Chief Economic Adviser ) should have recommended this in his ECONOMY SURVEY , instead of suggesting to expand tax net to cover 23 % of the Indian citizens , against current 4 %



I believe , humble RFID sensor can get ten times more tax revenue than expanding tax-net to 23 % of citizens !



Incidentally :


Should Shri Jaitley-ji propose expanding the tax-net as suggested , in his budget speech tomorrow , do you know what would happen ?



You don't need to be a Nostradamus to foresee BJP losing ALL state and central elections for the next 10 years !


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hemenparekh.in / blogs

28  Feb  2016

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Friday, 26 February 2016

Putting Cart before the Horse ?


An article in Hindustan Times ( 24 Feb 2016 ) reports :

" ...the government has now asked Industrial Corridors to award infrastructure and manufacturing projects only after the bidding companies show they have acquired the land needed "


I presume that , at this stage , based on the bid amount ( and other qualifying criteria ) , one bidder has been selected from among those who submitted bids , for a specific project to be located on a given piece of land , close to the Industrial Corridor


But the order ( award ) will not be placed till such time he produces " proof " of having acquired the land , which could , well belong to a dozen farmers !


Obviously , no industrialist will buy a specific piece of land in advance , from a dozen farmers , not knowing whether his bid will succeed or not !


But now that he has won the bid , he must approach those 12 farmers for the purchase of the land and enter into serious negotiations


Since the farmers " know " that an industrialist will approach them , ONLY if he has won the bid , they are in a much better bargaining position !


They can bargain collectively and quote a very high price - may be a price far in excess of what the winning industrialist had budgeted for , in his bid !


The negotiations can take weeks or months to conclude an agreement or may even fail , forcing the industrialist to back out of his commitment


That may require selecting the next ( highest ? ) bidder and repeat the process all over !


The whole idea of awarding only AFTER acquisition of required land was to speed up the project implementation


But in this idea, I see a danger of endless going in circles !



WHAT  IS  THE  SOLUTION  ? 

 Consider following excerpt from my email to Shri Nitin Gadkariji , on 23 March  2015  :


[  I think there is a simple solution to the concerns expressed by the farmers . Please consider the following :


*     Each project will be tied to a specific SPV , created for that purpose only

*    In the first instance , affected farmers will create a " Cooperative Society " 

*   Co-operative Society will issue shares to each land-donor farmer , in proportion to the QUANTITY / VALUE of the land donated by him

      
*   In turn , Co-operative Society will receive shares in the SPV , equal to the value of the land + a cash compensation equal to 4 times the value of the land


      
*  Farmer's shares of Cooperative Society cannot be sold in open market before 5 years but can be gifted to wife / Children

     
*  Shares of Cooperative Society in the SPV itself cannot be sold for next 10 years

*  The " Cash-Value Compensation " received by the Co-operative Society ( ie 4 times the land value ),  will be deployed as follows :

     
   *  To be immediately paid in cash to the farmers............ 2 times

   *  To be deposited in the Jan-Dhan Account of each farmer as FIXED DEPOSIT ( with 10 @ interest )....2 times  ]



Since each State is in serious - and healthy - competition with other States to attract investments , those which offer an equitable and just solution to the farmers as well as to the industrialists , will succeed

And there will be no need to pass any Land Acquisition Bill in Rajya Sabha  !

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hemenparekh.in / blogs

27  Feb  2016

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Thursday, 25 February 2016

TRASH the CASH ?

A report in Business Line ( 25 Feb 2016 ) , reads :

"  Centre wants Indians to abandon cash and make digital payments "

The report lists following measures announced by NDA govt on 24 Feb :

*  Withdrawal of surcharge / service charge / convenience fee on card / digital
   
    payments , currently imposed by govt departments

*  Payments beyond a prescribed threshold only in card / digital mode

*  Rationalize telecom service charges for digital financial transactions

*  Promote mobile banking

*  Create assurance mechanisms for quick resolution of fraudulent transactions

*  Review payment ecosystem in the country


To make it easy for people to make digital payments , Government has already installed :

*  Electronic Clearing Service Scheme

*  National Electronic Funds Transfer

*  Real Time Gross Settlement Scheme

*  Direct transfer of Subsidies to bank accounts of benefeciaries

*  Providing RuPay debit cards

*  Allowing setting up of Payment Banks

Surely , all of these steps will make it EASY for people to GRADUALLY switch over to making digital payments


But , if the HIDDEN AGENDA of the Government behind all of these initiatives , is to reduce / eliminate the scourge of BLACK MONEY ( always and entirely CASH ) , then the only initiative which will COMPEL people to  " TRASH the CASH " and move over to digital payments in a HURRY, is my oft-repeated suggestion as follows :


*  Discontinue paper-based currency notes of Rs 500 and Rs 1,000


*  Introduce plastic currency notes of Rs 500 / 1,000 which are embedded with RFID sensors ( far thinner than a human hair  ! ) , always broadcasting their presence to Internet of Things ( IoT )


*  Assign to each such note, a IP V 6.0 address , linked to its unique note number


*  Set up a IT-enabled Technology Platform which will constantly monitor any accumulation of Rs 500 / 1000
    RFID embedded notes in excess of Rs ONE CRORE within an area of ONE square meter


If there is a political will , technology can bring this revolution in 6 months  !


Can we expect Shri Jaitley-ji to conclude his Budget speech on 29 Feb , with this announcement ?

The applause that follows will be heard around the World  !

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hemenparekh.in / blogs

26  Feb  2016 

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