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Tuesday 12 April 2016

Election Season is Rumour Season

You may also call it a season for cash-distribution !

Business Line ( 06 April ) quotes RBI Governor Raghuram Rajan as follows :

" Money in people's hands has gone up by over Rs 60,000 crore which is not normal and needs to be looked into

Around election time , cash with the public does normally increase ... You can guess as to reasons why ; we can also guess

You see some ( spike ) not just in the State going to elections , but also in the neighbouring states . There is something..We need to understand it better "

According to the latest data released by the RBI, there was a 48 % increase in the currency in circulation at Rs 2 lakh crore for the fortnight ended March 18

Now Times of India ( 08 April ) talks of a report released by the State Bank of India , which says :

" It is rumours of demonetization of Rs 500 and Rs 1000 notes that is possibly driving people to withdraw cash in order to deploy them in safe assets

There are suggestions in public domain and even analysis that are suggesting that higher denomination notes may be replaced

Demonetizing Rs 500 and Rs 1000 currency notes will bring a huge amount of funds kept in these denominations into the banking channels and will facilitate a reduction in domestic black money transactions

But this would also be a headache when it comes to logistics "

MY TAKE :

* It is much better to have a headache than a heart attack !

* You can have the pie and eat it too , if , instead of outright

" Demonetization ", we just replace the existing paper notes ( of Rs 500

and Rs 1000 ) , with PLASTIC notes of same denomination , but embedded

with RFID micro-sensors ( 50th of a hair thickness ) , which can be tracked

through a GPS enabled technology platform ( consisting of a Mobile App )

* Any accumulation of Rs 10 lakh worth of such notes , within an area of

ONE square meter , will show up on a Google Map on the mobile app !

* This will not only allow people the convenience to continue using Rs 500 /

Rs 1000 plastic notes for their daily usage / purchases but it will, at same

time ensure that goods / services valued at a few thousands of rupees ,

will always get paid thru banking channels , since no seller of goods or

service would want an accumulation of even 1000 note of Rs 1000 , in his

table drawer / bank locker !

* And which candidate contesting any election would want his brief-case or

car trunk to show up on the Mobile App of ACB / ED / IT , as a red

balloon , with caption, " Find Five Crore Here " ?

What do experts have to say about CASH ?

* Mark Barnett, the boss of MasterCard ( UK ), believes that in five years cash will be practically extinct in Britain . At the Money 2020 conference in Copenhagen last week , he said :

" By the time we get to another generation , 30 years down the track, will there be any cash ? I very much doubt it . It will seem as antediluvian as carrying a pouch full of gold "

Marching towards the goal of a " less cash " society , yesterday , Shri Raghuram Rajan launched United Payment Interface ( UPI ) , which is independent of any payment platform ,bank or telecom service provider

One can use mobile based ( just one click ) UPI app for :

* Paying for delivery of goods from online shopping web sites

* Paying of utility bills

* Over the counter payments

* Bar code based payments

* Donations / School fees

* Any type of payment ! All without revealing your bank details !

But if Shri Raghuram Rajan wants UPI to catch like wild fire , all that he has to do is to replace existing notes ( not demonetize ) as suggested above

Sanjay Sarma ( MIT ) who has written 75 research papers on RFID sensors,

wrote to me :

" I think it is a matter of time before it happens

I do agree with your idea "

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hemenparekh.in / blogs

12 April 2016

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Sunday 10 April 2016

Robots Robots Everywhere , not a Soul to See !

This may not happen anytime soon in India , it could soon be a reality in Japan

If in doubt , look at the following figures for Robot Population :

* Japan............... 310,508

* USA................. 168,623

* Germany.......... 161,988

* South Korea....... 138,883

* China............. 96,924

* Canada............ 18,387

* UK................ .. 15,046

* India............... 7,840

* Brazil................ 7,576

Read these figures in following context :

# In last 10 years , Japan's population shrunk by 1 MILLION people

# Last week , in New York and California , minimum wage for unskilled

labor was raised to $ 15 per hour ( approx Rs 1000 per HOUR ! )

# A fresh Civil Engineering graduate in India gets paid Rs 15,000 / month

( Rs 75 per hour ! )

# There are demonstrations by citizens in most European countries which

are trying to introduce " Austerity Measures "(aka " Employee Benefits ")

# My following blog :

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Monday, 21 September 2015

SECOND INDUSTRIAL REVOLUTION ?

The First Industrial Revolution started in Britain , with the invention of steam engine , which multiplied human power many times

With help of steam engine power , one man could do the job of ten men

Human productivity went up sharply , enabling production of ten times more goods , in ten times less time

Thousands of factories came up ; first in Britain , then in USA and gradually spreading to rest of Europe

But it took over a century to reach the poor countries of Asia / Africa / China

Under colonial rule , these countries were forced to export own raw materials to industrialized countries at a very cheap price and import their factory-made finished goods at very high prices

But as poor countries started catching up on factory-based manufacturing using its cheap labour , the developed countries are now worried !

One time importers of finished goods are now exporting those very products to the developed countries , which are finding it difficult to compete with the emerging markets

An outstanding example of this is the rise of China , in the past 25 years as the , " Factory of the World "

But Western countries are not resigned to their fate of a lowered

" Standard of Living "

They are gearing up to usher :

The Second Industrial Revolution !

In the form of Robots :

Robots manufacturing cars / appliances / machinery / anything

Robots 3 D printing products from designs downloaded from Net

Robots managing health care in hospitals

Robots serving food in restaurants

Robots carrying out office jobs

Robots teaching in schools

Robots entertaining

Robots everywhere !

And these are :

Robots which work 24 hours/day and do not ask for a salary

Robots that do not " go slow "or go on a strike

Robots that do not demand " Quotas / Reservations "

Robots that do not take holidays or take " Sick Leave "

Robots that do not resign / demand promotion

Robots that neither envy other robots nor sabotage

Robots that do not complain against unpleasant work

Robots that do not get tired and need rest

Robots whose production does not drop after working for 8 hours

Robots that do not demand " Overtime Pay " @ 200 % of normal

Robots that perfectly co-ordinate their tasks with other robots

Robots that willingly " retire " at any age , whenever required

Robots that do not demand Unemployment/Retirement Benefits

Robots which may , some day , provide you with emotional support when you are sick / depressed !

And this Second Industrial Revolution is NOT going to take a hundred years to reach the shores of India

With spread of DIGITAL INDIA / Internet / Mobile Apps , it may take , no more than 20 years !

Question :

Fearing that it will create further unemployment , shall we try to stall its arrival ?

OR ,

Will our Self-Employed and Start Ups expedite its arrival and imaginatively use it to create 100 new jobs for each lost job ?

Let us stop tinkering with ,

* The India Aspiration Fund

* The MakeinIndia Soft Loan Fund

* The MUDRA Bank

Converting millions of Job-seekers into Job - Creators , would entirely depend upon Union Government quickly passing , what I earlier advocated as :

Start Up Act - 2015

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hemenparekh.in / blogs

11 April 2016

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Friday 8 April 2016

Water Wars ?

Long time back , someone had said :

The third World War will be fought over water

I don't know about World War 3 , but I have a dreadful feeling that , soon enough , a Civil War may get fought over water in our country !

For decades , our Southern States have been fighting over the waters of Krishna , Kaveri , Godavari etc

Recently , Punjab has stopped supplying water to Haryana thru SYL ( Sutlej - Yamuna Link canal )

In the meantime , 10 States are declared " Drought Affected "

Section 144 has been imposed in Latur and other cities

Armed police are deployed to protect water-stealing from dams in Bundelkhand

Thousands of farmers in Maharashtra / Rajasthan are committing suicide because of crop failures , leading to starvation

Lakhs of drought-affected villagers are migrating to city-slums / railway platforms / under the city-bridges

Villagers are refusing to marry their daughters to youth in drought affected villages

Lakhs of women are trudging 10 KM in 40* C temperature to fetch a bucketful of water

Even children ( under age of 10 ) are leaving studies and waiting with pots , for the arrival of water tanker

Maharashtra CM , Fadnavis says : You may shift the IPL outside Maharashtra , if you wish ! We are not supplying POTABLE WATER to stadiums !

What is holding him back to say : Sorry , potable or not , I will not allow IPL

to WASTE , 60 Lakh liters of water , under any circumstance !

Several World Bodies have forecast that by 2050 , millions will die in India due to water shortage

WHAT IS THE PERMANENT SOLUTION ?

# At the level of Central Government

* Make " Water Conservation / Usage " , a CENTRAL SUBJECT in our

Constitution . Remove it from the list of STATE SUBJECTS

* Declare all existing sources of water ( Rivers and Lakes ) , as National

Resources belonging to entire Nation and not to the particular State

where these are located

* Make it Center's responsibility to decide which State shall use how

much of each of these resource ( allocation / rationing )

* Center will also be responsible for developing of future resources by

digging lakes & ponds / building dams / interlinking rivers & lakes etc

Use MNREGA funds for creating such assets

* Center will not need permission of any State to implement such projects

* Center will implement " River Interlinking " Project by 2025 , and for this,

it will not require permission of any State

As repeatedly lobbied by me , please find a way to divert BLACK MONEY

to this Infrastructure SPV ( Tax haven or local - which is 100 times ! )

* Mercilessly , shut down all factories dumping polluting effluents in rivers

# At the level of State Governments

* Make following mandatory for ALL buildings ( existing or future )

+ Rain water harvesting system ( this tank to supply toilets / sinks etc )

+ Recycling of water from Kitchen / Shower / Wash Basins, for use in

toilets , by installing a simple sand filtering tank in society compounds

+ Installation of water flow restricting devices in all taps

+ Mechanism which stops water flow when hands are removed under tap

+ Water Supply Cut of 25 % , round the year

Do not raise Water Charges . The higher the charges , more ways will

be found to evade ( as in case of Personal Income Tax ! )

Water meters will get tempered or bypassed !

Note the following :

* Of all the water that rains bring , 99 % flows out to seas, leaving 1 %

on land

* Out of this 1% , 99 % percolates into the ground , leaving 1 % ( of that

1 % ) , into lakes above the ground !

* 75 % of earth's surface is covered with seas / oceans . So , really , there

is PLENTY of water

* Nature ( Sun ) has gifted the Earth with evaporation / condensation cycle

which converts the salty sea water into distilled potable water,

automatically / continuously , and deliver onto the land masses

Amount of water falling as rain on land each year is 2.4 trillion meter cube ,
more than 10 times the annual requirement of 7 billion earthlings , at the
rate of 100 litres per person per day !

As far as India is concerned , all that is required , is to dig 700,000

ponds / lakes ( one in each village ) , where we capture / store rain water

* These 700,000 ponds must be lined with Geo-Synthetic Fabrics to ensure

that the captured water does not seep underground - a simple technology

* Capturing most of rain water in these ponds , will raise the water table in

bore wells

* None of the above suggestions require Rocket Science ! But , even if it

does , our Scientists who have sent Mars Orbital Mission , are quite

capable of finding appropriate solutions !

I hope the Center / the State Governments and all the political parties , rise

above their differences and join hands , to avoid a CIVIL WATER WAR !

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www.hemenparekh.in / blogs

09 April 2016

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Thursday 7 April 2016

Short-Circuiting of Round-Tripping !

# What is Round Tripping ?

Black Money sent to tax havens ( eg: Panama ) for laundering and which returns to the country of origin as White Money , in the form of investments

# What is the Global Amount ?

Approx $ 23 Trillion ( China's GDP is about $ 17 Trillion )

# What is the mechanism ?

In India , it is LRS ( Liberalized Remittance Scheme ), under which any Indian ( including minors ! ) can remit abroad officially / legally , EVERY YEAR , $ 250,000 for any of the following reasons (and without prior RBI permission ! ) :

* Under Current Account

# Medical Treatment

# Education

* Under Capital Account

# Buying Property overseas

# Holding shares in an overseas company

# Combination of these two

# What is the safeguard ?

Details of foreign assets have to be declared in the Income Tax Returns

# How black money gets sent to tax havens ?

Some amount by Hawala route but most by legitimate banking channels !

You don't see plane-loads of cash landing in Panama !

# Does that mean Indian Banks are party to these ?

Without doubt ! They will advise you how to do this ! Of course, legally !

# If these remittances are legal, will 500 Indians get jail ?

Forget it !

Most legal experts say , they will be let off with some fines , if they have failed to declare these assets in IT returns

# Are laws designed so as to prevent Round Tripping ?

Far from that ! Here is what President Obama said yesterday :

" There is no doubt that the problem of global tax avoidance generally is a huge problem

The problem is that a lot of this stuff is legal , not illegal

We shouldn't make it legal to engage in transactions just to avoid taxes

A lot of these loopholes come at the expense of middle class families

Alternatively , it means that we are not investing as much as we should in schools , in making college more affordable, in putting people back to work rebuilding roads, our bridges, our infrastructure , creating more opportunities for our children "

# What is the best SOLUTION ?

* Make it unnecessary for our Black Money to first travel abroad ( to tax havens ) , before returning ( as White Money ) and getting invested in capital market

* Short-circuit the Round Trip by enabling our Black Money to become White Money , HERE itself ( no need for help from Mossack Fonseca ! )

* As suggested in my recent blog ( Make India a Tax Haven ? ), abolish Personal Income Tax ( remove incentive for tax evasion )

* Enable direct investment of " Black-turned-White " money into government approved INFRASTRUCTURE BONDS , thru creation of designated bank accounts where Black Money can be deposited , without any questions asked

* Obviously , interest / dividend earned from such investments will be tax

free , being Personal Income !

# Is this a practical solution ?

Not if you ask the Economists / Bankers etc

Just ask the man on the street !

This is too serious matter to be left to the Experts !

# Will such a bill pass the legislative muster ?

Rahul Gandhi promised to pass the GST bill in 15 minutes if amendments proposed by Congress get incorporated

" Short-circuiting of Round-Tripping Bill " will get passed in 5 minutes - and unanimously too ! You know why !

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www.hemenparekh.in / blogs

08 April 2016

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Make Yourself Heard

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