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

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Sunday, 23 March 2014

LEGALIZE MONEY LAUNDERING ?




In Satyamevajayate TV episode ( 23 March 2014 ) , Amir Khan had one expert present the following fact :
Market value of ALL the fossil fuels + ALL the minerals , lying under Indian soil is ,


A  = Market Value =  Rs  5  *  Thousand  *  Lakh  *  Crores


If we were to extract all of these in the next 100 years , then


B  =  Annual Output  =  Rs  5  *  Ten  *  Lakh  *  Crores

   ( on dividing " Thousand "   by  " Hundred " )



But how much additional investment would we need to get such an output  ?


Let us assume that we need an additional investment of " Rs TEN " to raise an additional output of " Rs ONE "


That is an ICOR of 10 ( " Incremental Capital Output Ratio " , which is now close to 6  in our country )


So , let us divide B by 10 , to get ,



C  =  Additional Investment =  Rs 5  *  Lakh  *  Crores



Bingo  !


If we are to believe sundry Economists ( Baba Ramdev / Narendra Modi etc included ) , then that is exactly ,


D  =  Black Money =  Rs 5  *  Lakh  *  Crores


( Amount locked up / stashed away by Indians in Swiss + local banks + gold + land etc , by way of " Unproductive Assets " )


Now , all that we need to realize our underground resources is a " Magic Wand " that would convert this Black Money into White Money !

Turn our " Unproductive Assets " into " Productive Assets " (Rs 5 Lakh Crores )


And enable people to do so legally  !


Here is my oft-repeated suggestion ,



" Inverse " the Personal Tax slabs as follows :


>  Up to  Rs 2 lakhs..................... NIL

>  2.1 - 5.0 lakhs......................   10 %

>  5.1  - 10 lakhs.......................   8 %

>  10.1 - 20 lakhs......................   6 %

>  20.1  - 50 lakhs.....................   5 %

>  50.1 - 100 lakhs.....................  3 %

>  Above 100 lakhs...................... 1 %



What is likely to happen with such " INVERSE  TAXATION  " regime  ?


Following few things :


>  Total personal tax payer base will go up dramatically from current 4
     crores tax-payers


>  with this " INVERSE  TAX  REGIME " , there will be no incentive to  evade
    taxes and to generate " BLACK  MONEY  "

    There will be no resistance to accept ALL payments by cheque / electronic
    clearance

    The more you disclose as your income , the less you pay by way of taxes


>  For a change , we will learn to reward honesty / efficiency / productivity !
    No need to bribe those Income Tax officers  !


>  Suddenly , lakhs of crores of BLACK MONEY will become  WHITE MONEY
   

>  There will be a huge surge in bank deposits ( - even with , the inevitable
    lower interest rates )


>  Banks will be awash with funds to finance businesses / infrastructure
    projects etc , encouraging entrepreneurs / self-employed to set up new
   businesses ( at 2 % interest rates of loans ) and generate millions of jobs


Amir Khan said ,


" If we divide Rs 5 * Thousand * Lakh * Crores , by 1200 million Indian population , then each one of us , is the proud owner of Rs 40 lakhs  !  "



My suggested Magic Wand would eliminate poverty - something which Congress Governments have been trying to do for the past 60 years !


*  hemen  parekh  (  24  March  2014  /  Mumbai  )




  

  

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