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, 25 July 2016

Silver Lining Vs Missing Perspective


Hindustan Times ( 26 July 2016 ) carries a report with headline :

" In 6 years, cash will no longer be king for most Indians "

It goes on to say :


Silver Lining :

Non-cash transactions will grow from current 22 % to 40 % by 2020 and to 59 % by 2025


#  Cash in Circulation in India is 18 % of GDP ( For USA / UK , this is about 3.5 % to 8 % )


#  Currently there are 80-85 million active mobile wallets in India


#  In 2015-16, number of wallets / pre-paid card transactions stood at 747 million


#  Total value of transactions was Rs 46,200 crores with average transaction being Rs 618

    ( For this amount , these days , one cannot even buy enough grocery or vegetables ! )


Number of merchants on various mobile wallet platforms :

    *  Mobikwik........... 1 lakh

    *  Paytm..............  4 lakh



Missing  Perspective :

#  India's GDP ( 2015 )...........$  2 Trillion ( approx Rs 134 lakh*crore )

    That means Cash in Circulation ( @ 18 % of GDP ) , is approx Rs 24 lakh*crore ; so Rs 46,200 crore worth of Non-Cash transactions in 2015 , amounted to , barely 1.9 % of Cash in Circulation ( where am I going wrong ? )


#  Altogether , there are over 50 million MSME ( including retail shops ) ; I suspect that all the mobile wallet platforms , may have , by now , covered only 1 million of these - just 2 % ! So a long way to go there as well !


# As per different estimates , India's Black Money Economy equals 23 % of its GDP ie: Rs 30 lakh*crore

  Believe me , all of these CASH transactions are for purchase of land / flats / gold / expensive clothes / electronics  etc and use only Rs 500 / 1000 currency notes

These transactions are NEVER going to be through mobile wallets / banking channels and never in Rs 100 notes !


#  Latest available figures for currency notes in India :

   *  Total number of notes ( Rs 1 onwards )........ 76.5 Billion pieces ( = Rs 12468 Billion in Value )

   *  Of the above , share of Rs 1000 notes...........39 % ( ie : Rs 4862 Billion , by Value )

   *  And the share of Rs 500 notes....................  45 % ( ie : Rs 5610 Billion , by Value )

   * Share of Rs 1/2/5/10/20/50 / 100 notes........ 16 % ( ie : Rs 1995 Billion , by Value )


   Therefore , it stands to reason that the predicted increase in those NON-CASH transactions ( going up to 59 % by 2025 ) , will mostly eliminate just 16 % of the TOTAL currency-value in circulation !


There does not seem to be any likelihood of Mobile Wallets , encroaching on the balance 84 % of the currency !


#  Then there is the matter of Indians having siphoned out some Rs 34.5 lakh*crore ( $ 500 Billion ) of BLACK MONEY , abroad , during 2005-15
There is just NO WAY , Indian mobile wallets will get used for spending / using this money !


Whereas I am all for the efforts of mobile wallet platforms ( private or even NDA government's proposed UPI - Universal Payment Interface : a truly revolutionary idea ) , to usher India towards a Non-Cash economy , I feel these steps , by themselves , are woefully " Inadequate " !


For India to permanently get rid of BLACK MONEY and its root cause CORRUPTION , I urge NDA government once again , to implement my following suggestion ( repeatedly sent to the Policy Makers , over past 2 years ) :


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

 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


 *  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 15 Lakh within an area of ONE square meter


Not only this IT-enabled Technology Platform show up all cabinets / lockers having such accumulations ( on the

GPS maps of IT Department's mobile app - BLACK-MAIL ) but it will also provide irrefutable proof of violation of the

 proposed limit of Rs 15 lakh worth of currency which can be held by a person at any time


And , a frugal extension of this technology will even create a dynamic CURRENCY MAP of entire country by tracking

the movement of each and every currency note ( Rs 500 / 1000 ) , throughout its life !


And the CURRENCY DENSITY of any State / City / Street  !


No need for an army of inspectors , additional administrative machinery , search-warrants , " Panch-Nama "  !


No chance of frivolous litigations on part of the so-called " Aggrieved " !


I do hope , our policy makers will cease this opportunity of a life time ( especially in view of forthcoming elections )

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

26  July  2016

www.hemenparekh.in / blogs

   


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