Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

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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