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, 5 July 2015

A Gordian Knot ?

   


Is black money issue a Gordian Knot that cannot be unraveled  ?

One gets that feeling while observing the NDA governments attempts, viz:

>   Setting up of SIT

>   Signing bi-lateral treaties with foreign countries for exchange of info on bank
     accounts held by Indian citizens in these countries

>   90 day window for declaring assets held illegally in foreign banks

>   Proposal to grant minor tax-concessions if payments for petrol / diesel etc is
     made using credit cards

>   Legislating that sundry kinds of payments are to be made thru banking system

>   Introduction of Gold Bonds

>   Introduction of stringent laws for punishing tax-evaders with jail terms, etc


Could not UPA government have done all of these in the past 15 years ?

And , if they could , why did they not ?


I could think of only 2 reasons , viz :


>   Either UPA government did not think that any of such measures could solve the
     black money problem , which is in the nature of a Gordian Knot


OR ,


>   UPA did not want to solve this problem  !


After one year of NDA rule , people are asking :


"  Why is this government , which has within one year , launched some epoch-making economic and governance reforms , continuing to tinker with the black money issue ?

Why is it focusing on unearthing black money stashed away in foreign banks, which constitute no more than 5 % of the black money hiding within the country ?

Why is all the emphasis on " past " black money declaration rather than on prevention of " future " black money generation - which goes on unabated  ?  "



I sincerely believe that NDA wants to put a permanent stop to black money generation


But , it just cannot think " Out-of-the-box " as Alexander the Great did when he simply cut the Gordian Knot with his sword rather than try to untie it  !


It is still not late for NDA to do the following :


>  In the first instance , instead of increasing the personal Income Tax rates with
     each higher slab , reduce these ( eg : 10 % > 9% > 8% > 7% ..... )


>  If this " Inverse Taxation Regime " makes people want to declare more and
     more income , in order to get into higher tax slab , then next consider total
     abolition of Personal Income Tax !


In a nutshell :


>   Take away incentive to hide income

>   Motivate people to declare ALL income

>   Celebrate Wealth Creation

>   With no Personal Income Tax to be paid , everyone will insist on making /
     receiving all payments officially thru banking channels

>   Do not tax people at the point of income generation ( Source )

>   Tax them at the point of income expenditure ( Destination ) eg: GST

>   Boost national " Savings Rate " to 40 % ( never a Greek Tragedy ? )

>   Enable savings to flow into Infrastructure Bonds ( Railway / Ports / Airports /
     Smart Cities / Highways / River Linking / Solar Power etc ) , rather than into
     non-productive assets


This is NDA's " Moment of Opportunity " - an opportunity to re-write history !


There is no surer / simpler / faster way to bring India's 400 million poor people
out of abysmal poverty .

---------------------------------------------------------------------------------------------

hemen  parekh

05 July , 2015


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