But , Where is the Money ?

Yesterday ( 01 Dec ) , following news reports appeared :

Business Line

“ By 2030, India may offer green investment potential of $ 3 trillion, says IFC report “

Highlights of the funds required :

·         Housing Sector……………………………….. $  1400  Billion

·         Electric Vehicle………………………………   $    667  Billion ( between 2018-2030 )

·         Renewable Energy…………………………   $    448  Billion

·         Transport Infrastructure…………………..$    250  Billion

·         Agriculture……………………………………….$    198  Billion

·         Urban Water Supply………………………   $    128  Billion

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·         TOTAL………………………………………………$   3091  ( in 12 years = $ 250 Billion per year )

DNA

“ India needs Rs 50 lakh*crore investment in next five years “

While delivering 5^th Annual Defence Estates Day lecture , FM Shri Arun Jaitleyji said :

“ Inadequate infrastructure is a major hindrance in growth and the funding requirement for infrastructure in the country is huge

There is a requirement of a whooping Rs 50 Lakh*Crore investment in the sector over the next five years “ ( approx. $  750  Billion in 5 years = $ 150  Billion per year  )

I believe , if anything , these figures are gross under-estimates , even if we have a modest ambition to become a “ Middle Income Economy “ by 2030 !

But the question is not so much about the accuracy of these estimates

The question is :

From where are we going to find these monies ?

No amount of increasing the coverage of our tax-base , will suffice

And government is committed to lowering the tax rates ( for both , individuals and corporate )

Then there is a limit beyond which we must not increase Foreign Investment ( Direct or Indirect )

And whatever Foreign Investment does flow in, has compulsion of earning a 10 % return ! ( - there is no way we could get foreign loans @ 0.1 % interest , for more than 1 % of our funds requirement ! )

There is only ONE WAY to raise all these funds

And that is :

BLACK MONEY AMNESTY scheme like the one which Indonesia introduced (July 2016-Mar 2017 ) and raised $ 342  BILLION { One third of its GDP } , from 745,000 tax payers , by levying  2 % - 4 % tax ( as against 50 % in our case ) /  NO PENALTY /  NO QUESTIONS  asked  / NO SCRUTINY  !

The Scheme yielded $ 2.3 Billion by way of tax

Now consider the following :

·         India’s BLACK MONEY is estimated to be $ 460  Billion ( apx. 20 % of our GDP )

     Our own recent Amnesty Scheme yielded approx. $ 10  Billion ( 2 % of GDP )

     Indonesia managed $ 342 Billion which amounted to nearly ONE THIRD of its GDP

     If we too could bring out Black Money @ 33 % of our GDP , that would amount to

    nearly $ 800 Billion !

    

·         Indonesia’s BLACK MONEY is estimated to be $ 851  Billion ( parked overseas ) – which means , Indonesia managed to garner nearly 40 % of hidden Black Money !

·         The Indonesian government has estimated 5,500tn rupiah ( = $ 407 Trillion ) will be needed through 2019 for infrastructure; the state budget can probably cover a quarter of that.

   { https://www.ft.com/content/28141116-c841-11e6-8f29-9445cac8966f }

·         At the end of the third quarter of 2017, Bank Indonesia (BI), the country’s central bank, announced an interest rate cut down to 4.50 per cent from previous 4.75 per cent.

References :

https://myblogepage.blogspot.com/2016/12/indonesia-shows-way.html

https://myblogepage.blogspot.com/2017/03/innovative-financing.html

https://myblogepage.blogspot.com/2017/05/why-begging-bowl.html

https://myblogepage.blogspot.com/2017/08/nibbling-on-crumbs.html

Did I hear someone say :  “  It is time to look  east-wards “  ?

02  Dec  2017

www.hemenparekh.in / blogs 

Discovering the Obvious ?

Following is a reort that appeared in Times of India ( 13 Nov ) :

Employer expectations are better met by apprentices than freshers, report says

Corporates find apprentices better than freshers, says a report by staffing company TeamLeaseServices.

"MOOC in Apprenticeship for Employment and Employability," a detailed study about the effectiveness of apprenticeship in conjunction with MOOCs (massive open online courses) in bridging the employability gap, reveals that apprentices are doing exceedingly well on all the three key parameters -- productivity, time to turn and return on investment.

Over 50% of the employers reported that apprentices are giving them more than 100%-150% return on their investment. Further, from a productivity point of view also employers found apprentices to be efficient.

Around 50% of the respondents mentioned that apprentices turned productive within 45 days of joining work which is much faster than an average employee.

India Inc also felt that the productivity of apprentices is around 90%, indicating learning by doing to be an effective formula to create productive workforce.

According to the report, while apprentices perceived their employability quotient to be a modest 5.3 on a scale of 10, employers gave them a rating of eight indicating high ability to perform a job.

From a region wise perspective, though apprentices from the northern region felt they were better equipped for job, corporates had a difference of opinion. They rated apprentices from the eastern region to be better suited for work.

Sumit Kumar, vice-president- NETAP (National Employability Through Apprenticeship Program), TeamLease Services said, "Apprenticeships is the most effective skilling / employability / employment tool which could help India get closer to its ambitious targets of skilling 500 million and filling 120 million jobs in 24 key sectors (including construction, retail, transportation logistics, automobile, and handloom) over the next 6 years. While we may be able to create jobs, the biggest challenge is matching the jobs to our talent. Though we add millions of youth every year to the workforce, they are not equipped to take advantage of the possibilities."

=================================

These findings should not come as a surprise to anyone

It is a simple case of “ Cause “ and “ Effect “

The report lists following “ Effects “ :

·         Productivity of apprentices was found to be high and they turned productive within 45 days

·         Their “ Employability Quotient “ was 8 out of 10

·         Apprentices gave a “ Return on Investment “ , as high as 100 % to 150 %

·         Apprentices were very “ Efficient “

And the “ Causes “ are as follows :

·         A Technician ( Vocational ) Apprentice is paid a monthly stipend of Rs 2100 / 2400 / 2800 / 3100 , during 1^st / 2^nd / 3^rd / 4^th year resp

These amounts are less than 25 % of the minimum wages paid to Semi-Skilled workers !

 

And while learning a new “ Skill “ on-the-job , these apprentices are actually performing , regular “ work “ on the shop-floor , producing saleable goods

No wonder , return on investment is very high !

·         Although ,on part of the Employer , there is no obligation to “ Absorb “ these apprentices upon completion of their training , some 5 % - 10 % do get offered regular employment

Obviously , these “ Successful “ ones are those which are “ Top Rated “ , in terms of the skills acquired and their productivity ( output / hour )

This carrot ( of getting absorbed ) ensures that , from day one , apprentices work very hard to impress the Employer with the QUANTITY / QUALITY of their work !

To drive home this message , Employers make sure that their “ Expectations “ are made amply known to the Apprentices from day one !

In factory after factory , it is an established fact that the apprentices routinely “ Out-perform “ regular employees with years of experience ( - and , very likely drawing wages which are TEN TIMES the stipend paid to apprentices )

·         Apprentices are NOT protected by Labour Laws and their apprenticeship can be terminated by the Employer by providing to the Apprenticeship Advisor , proof of misconduct or poor productivity

By and large , Labour Unions do not defend such cases

There is no way , we can create 120 million jobs , even in 10 years  !

But , can we at least, introduce some more “ Causes “ , which would create that “ Desired Effect “ of training 500 million persons in 10 years ? – train them sufficient enough to become “ Self Employed “  ?

I urge the Policy Makers to consider the following ‘ triggers ‘ :

·         Revise Apprenticeship Act to enable employers to engage ANY NUMBER of ( eligible ) youth as apprentices and allow employers to devise “ Training Structure “ as per their needs

Any Employer wanting to engage apprentices under this revised APPRENTICESHIP ACT , would need to be registered online on the web site of Labour Ministry and must have installed a Biometric Attendance system , as described in :

From  BAD to  MAD

 

https://myblogepage.blogspot.com/2016/06/from-bad-to-mad.html

·         An eligible youth can serve his apprenticeship period with only one employer

·         A person who has successfully completed his apprenticeship cannot be accepted as apprentice , a second time , in same or any other company

·         Remove :

     #  concept of 5 different “ categories “ of apprentices

     #  concept of “ Shop-floor Trades “ for engaging Apprentices

     #  concept of “ Trade-wise Ratios “ of apprentices

     #  distinction between “ Shop floor “ and “ Office “ , and just say “ Work Place “

     #  the stipulation concerning “ different years of training for different trades “ .

         Just make all training for 4 years 

    #  the concept of “ Contract Approval “ by Apprentice Advisor

·         Fix stipends payable to apprentices as follows :

Starting Stipend…………….. Minimum wage as per Min Wage Act

Annual Increase……………… Linked to rise in CPI

·         Reimbursement of Training Cost incurred by the Employers

25 % of the Stipend cost to be borne by the Central Government and this amount to be transferred to the Jan Dhan Account of the concerned apprentice ( as DBT )

This provision will reduce our “ Cost of Manufacture “ and help to make India a “ Low Cost Economy “ , without calling this a “ Subsidy “ and violating WTO rules

This would be far better than controversial Universal Basic Income ( UBI )

·         It shall not be obligatory on the part of the employer to offer any employment to any apprentice who has completed the period of his apprenticeship training in his establishment, nor shall it be obligatory on the part of the apprentice to accept an employment under the employer.

·         To encourage PRIVATE SECTOR to come forward in a BIG WAY , to set up Industrial Training Institutions ( ITI ) , implement my earlier suggestion , as follows :

          SkillCapital of the World ?  [  06  June  2016  ]

            https://myblogepage.blogspot.com/2016/06/skill-capital-of-world.html

01     Dec  2017

www.hemenparekh.in / blogs

Nami or Benami ? Why Differentiate ?

Following report appears in today’s Hindustan Times :

“ PM Narendra Modi says Aadhaar will be used to track benami properties “

Prime Minister Narendra Modi said on Thursday the 12-digit biometric Aadhaar number would be used to track assets bought with slush funds in a proxy’s name, better known as “benami property”, reaffirming his government’s resolve to crack down on corruption.

Modi’s statement at the inaugural session of the 15th edition of the Hindustan Times Leadership Summit confirms reports of the government’s plan to use the unique identity number for property transactions, a sector where the use of black money is rampant.

The move to clamp down on benami transactions follows a series of measures the government has taken to combat corruption. Modi said measures such as demonetisation and a new goods and services tax had left the corrupt scared and brought black money into the formal economy.

Dear Shri Narendrabhai :

When it comes to linking Aadhar with a person , race / region / religion / creed / caste etc do not form a basis

In same way , linking Aadhar with a given property , must not depend upon whether it is a “ Nami Property “ or a “ Benami Property “

And why wait for a “ Property Transaction “ to take place , in order to uncover a “ Benami Property “ ?

Why not insist that ALL properties must be linked with the Aadhar Number of its owner ?

As to how this can be done , please refer to my following earlier emails :

https://myblogepage.blogspot.com/2017/11/benamiproperty-bitcoin-blackmoney.html

https://myblogepage.blogspot.com/2017/11/aadhar-property-benami.html

Then mandate that ALL property transactions must be registered online ( on some Govt portal ) , in the following form :

·         

Name of the Seller / his Aadhar Number / PAN Number

·         Address ( as per www.What3Words.com ) of the property

·         Selling Price / Bank Account in which amount deposited

·         Name of the Buyer / his Aadhar Number / PAN Number

*    Buyer’s Bank Account Number from which payment made

This will ensure that no property will remain Benami  !

01    Dec  2017

www.hemenparekh.in / blogs