Blog: January 2016

Saturday, 30 January 2016

STRUCTURAL REFORMS ?

Speaking at the Global Business Summit yesterday , Shri Arun Jaitley said :

" We will introduce Structural Reforms in the forthcoming Union Budget "

What is the current structure of Union Budget ?

# SOURCES of REVENUE

* Taxes ( Direct + Indirect )

* Borrowings ( Domestic + Foreign )

* Sale / Leasing of Assets ( PSUs + Natural National Resources )

# DEPLOYMENT of REVENUE

* Administrative Expenses ( Salaries / Pensions / Maintenance / Subsidies , etc )

* Interest ( + Principal Amount ) on borrowings

* Developmental Expenses ( Creation of new Assets / Infrastructure )

* Lending

Broadly speaking , this is the current structure

Most of the time , all that the successive Finance Ministers have done is to slightly " Increase / Decrease " the " Sources and / or Deployment " of the funds , here and there

Once in a while , some Finance Minister , even introduced altogether NEW source or a NEW way to spend the revenue !

But so far , no one has attempted to change the FUNDAMENTAL STRUCTURE !

I wonder whether Shri Jaitleyji's BUDGETARY REFORMS would incorporate the following Structural Changes for which , I have sent to him ( and to most of his cabinet colleagues ), dozens of emails ? :

* Total abolition of Personal Income Tax ( Revenue Loss of approx Rs 2.5 lakh*crores )

* Introduction of 2% Bank Transaction Tax - BTT ( Revenue Gain of Rs 15 lakh*crores )

* Decreasing Corporate tax slab-rates based on No of permanent employees ( to encourage job creation )

* Perpetual Amnesty Scheme ( no questions asked as to the source for CASH deposits in Jan Dhan Accounts , if

funds from these Accounts are invested in Govt approved INFRASTRUCTURE SPVs )

So far , Rs 30,000 Crores have been deposited in Jan Dhan Accounts . With introduction of this REFORM ,

that figure will rise a thousand times to Rs 30,000,000 Crores , within one year !

These investments will generate 10 million jobs each year and raise our GDP to 10 % in 2016-17 !

* Transferring 10% of GST ( ie 1.8 % out of 18 % ) to PPF accounts of the buyers ( increase Domestic Savings )

* Embedding of RFID chips in Currency Note ( read Kurzweilai.net ) to solve twin problems of BLACK MONEY and CORRUPTION

* Introducing " Budgeting By Objectives " ( instead of Monetary Allocations, setting Physical Targets for Ministers )

* Quarterly Performance Review of " Targets vs Actual Achievements " to be published on Govt web sites

* Thru an Online Opinion Poll , involving citizens in framing of the Ministry-wise Physical Targets before the budget

After second World War , German Economy was in shambles

68 years later , Germans are still thanking their then finance minister , Ludwig Erhard , for the miracle ("Wirtschaftswunder," German for "economic miracle")

he brought through his " Out of the Box " reforms to revive the German Economy

I hope Shri Jaitley displays similar courage on 29 Feb 2016 - even if he is not bothered being remembered or not !

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hemenparekh.in / blogs

31 Jan 2016

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Friday, 29 January 2016

GLOBAL CORRUPTION INDEX

Global Corruption watchdog , Transparency International , just released its report for year 2015

Out of 168 countries surveyed , India ranked at position 76

That was an improvement from position 85 in year 2014

Jose Ugaz , Chair , Transparency International , made following remarks ,

" Corruption can be beaten if we work together to stamp out the abuse of power bribery and shed light on secret deals .

Citizens must together tell their governments , they have had enough !

Leaders in India and Sri Lanka had fallen short of the bold promises they made to combat corruption "

QUESTION

Can India leapfrog 75 positions to rank # 1 in 2016 ?

ANSWER

Yes , it can - and with very little Judicial / Administrative / Legislative effort !

HOW ?

By implementing following suggestion which I have been making for past one year :

# INTERNET OF THINGS ( IoT )

As each currency note of Rs 500 / 1000 , is getting printed , embed it with microscopic RFID chips

( with this , current cost of a RFID chip will fall from 50 paise to 5 paise )

Besides communicating with each other , these chips will also transmit their existence location , through internet

( to cloud-based servers of Income Tax Department )

This will form a " NETWORK OF CURRENCY NOTES ( NoC ) "

You may like to call this Internet of Currency ( IoC ) , a sub-set of IoT !

# IP ADDRESS SYSTEM ( IP V 6.0 )

Each Rs 500 / 1000 currency note must be assigned(at the time of printing ) , its own unique Internet Address , using IP V 6.0

This IP address should be linked with the unique Serial Number printed on each note.

Since IP V 6.0 , will be capable of assigning " 2 * 10 to the power of 128 ", no of IP addresses , there is no danger of running out of addresses , even if we decide to extend this idea to Rs 100 currency notes !

Here are the most important BYE - PRODUCT :

* No more possibility of FAKE / FORGED / COUNTERFEIT , currency notes ( currently estimated @Rs 2500 Cr )

* No thief would ever want to steal such currency notes which continuously announce their location

* No one would want to make any " Cash Deal " . All payments will become official only !

* Plastic currency notes will last 10 times longer !

* Who will buy GOLD biscuits , using RFID embedded notes ? No need for PAN card !

* No giving / No receiving of bribes ! No disproportionate assets ! THE END of CORRUPTION !

This reform will enable the Central Government / Income Tax Department , to :

* Continuously trace the movement of each of these higher denomination currency notes

* Instantly locate any place ( using Google Map based GPS ) , where there is an accumulation of more than Rs 1 Crore worth of currency notes

Such accumulation will be made to appear as a TAG CLOUD on the web site of IT Dept,

like thousands of balloons floating on a map of India , capable of being drilled down to within 1 Sq Meter

Of course , visible only to IT officers ; not to general public !

On each balloon , will appear a number announcing , " Amount of Cash here - Rs " !

This will vastly simplify the task of Anti Corruption Dept / Enforcement Dept etc

Of course , RBI will need to allow 6 month's time to the owners of current paper currency notes of Rs 500 / 1000 , to get these exchanged with new plastic notes before withdrawal of the old notes from circulation

Implementation of this suggestion , does NOT require passing of any BILL in Lok Sabha or being held to ransom in Rajya Sabha !

And it can be implemented in India , within ONE YEAR

But if Chinese President Xi Jinping comes to know about the practicality of this suggestion , he might implement it in 6 months , to enable China to jump 82 positions and get rank # 1 !

How come ?

Simple ! Xi Jinping has the political will to take such bold decisions

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hemen parekh

30 Jan 2016

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Saturday, 23 January 2016

GOING CASHLESS ?

Government is encouraging use of Credit / Debit cards , in order to reduce cash payments , which , currently account for nearly 80 % of all payments

Measures ( Positive and Negative ), being considered / announced , include :

* Elimination of transaction charges on purchases of Petrol , using Credit Cards

* Income Tax benefits for individuals making payments thru Debit / Credit Cards

* Disclosure of PAN for

# cash transactions above Rs 2 Lakhs

# settling hotel bills that exceed Rs 50,000

# booking air tickets / tour packages , exceeding Rs 50,000

# opening a bank account ( except for Jan Dhan Yojana a/c )

* Incentives to shop keepers and traders to accept electronic payments

While announcing these measures , revenue secretary , Shri Hasmukh Adhia said :

" ...to collect information on certain types of transactions from third parties in a non-intrusive manner , the income-tax rules require quoting of PAN where the transactions exceed a specified limit "

Are we missing the woods for the tree ?

What can be more " non-intrusive " than embedding Rs 500 / 1,000 currency notes with RFID micro-chips , thinner than a hair ? Each sensor, continuously broadcasting its location to the Income Tax Authorities , even as it moves from one hand to another ?

And " shouting from the rooftop " each physical location, where there is an accumulation of Rs ONE CRORE worth of such notes !

And assigning a UNIQUE Internet Protocol ( IP V 6.0 ) Address to each and every such high denomination currency notes ? - which could , even be its Currency Note Number ?

Why bother to " incentivize " citizens to use electronic payments ?

Why bother to introduce rules / regulations and make life difficult for everyone - including for those officers responsible for enforcement ?

Just implement this and watch 90 % payments being made thru electronic means / devices , within 6 months !

I had sent my above mentioned suggestion to Shri Arun Jaitleyji , when Govt had put out a paper ,

" Draft Proposals For Facilitating Electronic Transactions " ,

and sought public comments

Implementing this does not require passing any bill in Rajya Sabha !

If you have a better idea to dramatically reduce the menace of BLACK MONEY and CORRUPTION , in a single stroke , I request you to rush it to Shri Jaitley-ji , before 29 Feb 2016 ( Budget date ) at...

* 'ajaitley@del5.vsnl.net.in' / 'ajaitley@sansad.nic.in'

Or , just forward this to him

A recent news report spoke of printing of 30 Crore notes of Rs 1,000 denomination , WITHOUT that identifying silver thread

Some of these defective notes even went into circulation ! Rest had to be destroyed

This would never happen if a RFID micro-chip ( much thinner than that Silver thread ) were to be embedded in each note

A Inspection device , costing no more than a few thousands of rupees and sitting on the Printing Line would immediately detect any note WITHOUT the RFID

A bell will ring and a robotic arm would pick up and set aside such a defective note

And if this was to happen to 10 notes in a row , the printing press will automatically shut down !

This technology is already working in hundreds of factories around the World

And embedding a RFID chip is much simpler than inserting that Silver thread !

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hemen parekh

24 Jan 2016

www.hemenparekh.in

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Friday, 22 January 2016

HAVE A DEGREE : WILL SWEEP

Some 19,000 graduates / post graduates who have applied for the job of sweepers in Amroha Nagar Palika , seem to be saying just that !

But only 114 of these BA / B Sc / MA / MBA / M Tech grads will get those jobs !

Rest will join the rank of 3.5 million graduates who join our work force each year - to remain jobless

Now , I am not saying that the job of sweeping streets is " below the dignity " of anyone

Why , even our Netas do it , if there is a TV camera around !

But take a look at the following news ( DNA / 11 Sept 2015 ) :

Against 368 vacancies of " Peons " advertized by UP Govt , applications received were as follows :

* Total Number of applicants.............. 20 lakh

{ 5,435 applicants for each post ! }

* No of PhDs.................................... 201

* No of Master Degree holders............ 20,056

* No of Bachelor Degree holders.......... 1,23,000

* No of 12th Standard pass................. 6,00,000

* No of 10th Standard pass................. 8,20,000

{ Minimum prescribed Edu Qualification = 10th Standard }

This scenario repeats , month after month , year after year !

The only hope for these millions of Graduates / Post Graduates, is to apply for admission to some 15,000 Industrial Training Institutes ( ITIs ) for getting " trained " as Electricians / Plumbers / Carpenters / Masons etc ,in order to acquire " skills " which will enable them to get " Self Employed "

But the problem is :

* None of these " re-skilled " jobless will qualify as a " START UP ", under Start Up Action

Plan announced on 16 Jan 2016

* To start " Self Employment " , no bank will give them a loan of Rs 1 Million, with ZERO

interest for first 10 years , and without requiring any securities

For turning 10 million jobless into 10 million " Self Employed "(@ loan of Rs 10 lakh each ) , would require EACH YEAR , disbursement of :

Rs 10 LAKH*CRORES !

Government just does not have that kind of money

But BLACK MONEY hoarders have !

All we need to do is to " INCENTIVIZE " them to help start a " NEW ECONOMIC ORDER " , where Self Employment is not merely encouraged but it is CELEBRATED !

It does not require passing of any bill in Rajya Sabha to declare :

* No questions asked , as to the source , for any CASH deposited in Jan Dhan Bank A/C ,

provided that account holder , first registers on Income Tax Department web site as a "

Self Employed " person

* All payments made out from such " Self Employed " accounts , must be by Cheques /

Credit - Debit Cards / RuPay Cards / Mobile Wallets / Electronic Transfers etc

* Levy of a 2% Bank Transaction Tax ( BTT ) on all such payments

* Total abolition of Personal Income Tax for these " Self Employed "

* Self Employed barred from any loans from banking system

* Self Employed not eligible for any incentive / subsidy from Center / States

If it does not sound politically correct to call this initiative an " AMNESTY SCHEME ",

then call it , " SELF CAPITAL SCHEME " / " ECONOMY KICK-START SCHEME "

When ,

* The entire World is set to lose 11 million jobs in next 5 years

* World Economy is in a downward spiral

* International Trade is shrinking

* Jobless / Economic migrants are marching onto Europe / Australia

* Resentment / Intolerance are mere manifestation of jobless poverty ,

This is the ONLY WAY , India can make 21st Century , an Indian Century !

I hope Shri Narendra Modiji - and his colleagues in Cabinet - has the political will to introduce this in the forthcoming budget on 29 Feb 2016 !

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hemen parekh

23 Jan 2016

www.hemenparekh.in / blogs

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Make Yourself Heard

Dear Visitor :

It is time for YOU to speak up - and demand that YOU are heard

By emailing this suggestion - incorporating your OWN improvements - to the following Policy Makers

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Thursday, 21 January 2016

TRACK THE BLACK

After staying in a US prison for 18 months, Rajat Gupta , former MD of McKinsey , is at home

Confined to his apartment and required to wear an ankle bracelet that monitors his movements

Some years back , a few Indian students studying in US , were also forced to wear such bracelets - ostensibly for tracking their movements

Last week , there was a news report that all foreigners entering India , will be given special SIM cards that they must install in their smart phones - enabling Indian Authorities to track their movements and to quickly locate a foreigner who overstays his stay

GPS satellites of USA / Russia / China enable their militaries to locate objects on earth , just ONE CENTIMETER apart !

Medical technology will soon enable doctors to insert into brain , dissolvable sensors , which broadcast the firing of the neurons

But , it seems , Economists / Bankers / Politicians are slow to accept my suggestion to embed all Rs 500 / 1000 currency notes with RFID micro-chips which constantly broadcast those locations to Income Tax Authorities , wherever there is an accumulation of such currency notes , exceeding an aggregate of Rs ONE CRORE ( or whatever )

This is the ONLY / PRACTICAL / SIMPLE answer to kill two birds with one stone

The bird of BLACK MONEY

And the bird of CORRUPTION

Read my full suggestion at :

www.hemenparekh.in / Blogs

* How to Conquer Corruption

* A Network of Currency Notes

And let no one doubt the capability of Indian Technologists to implement this in 6 months , if Shri Narendra Modi-ji was to mandate it

And this does NOT require begging the opposition to help pass any bill in Rajya Sabha !

Will any political party dare to oppose it , even outside the Parliament ?

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hemen parekh

22 Jan 2016

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Make Yourself Heard

Dear Visitor :

It is time for YOU to speak up - and demand that YOU are heard

By emailing this suggestion - incorporating your OWN improvements - to the following Policy Makers

( Just multiple copy all the following Email IDs into the Recipient column of your Outlook and Copy / paste this suggestion in the Message Box ) :