Blog

Friday 5 February 2016

THIS CANNOT BE TRUE !

WHAT ?

* RBI recommending to Finance Ministry to introduce currency notes of Rs 5,000 and Rs 10,000 denominations

REASON GIVEN

* Inflation has left little value in notes of Rs 500 and Rs 1,000

* It will be easier to carry large sums of money in higher denomination notes

* Less cost since no of notes to be printed will come down by a factor of 10

CURRENT SCENARIO ELSEWHERE

Highest denomination notes in :

* USA....... 100 Dollars

* UK......... 100 Pounds

* EU........ 500 Euro

* China..... 100 Yuan

Of course , Japan does have a 10,000 Yen note which is rarely seen

And we all know how corruption has engulfed the Russian Economy with a 500,000 Ruble note !

WHY IS THIS A BAD RECOMMENDATION ?

* Because , by facilitating hoarding / carrying huge amount of CASH in a inconspicuous manner , it will encourage

CORRUPTION through BLACK MONEY transactions , without fear of being caught

* Funding of political parties with un-accounted money will become rampant

* More money will pour into non-productive assets such as LAND and GOLD

* Hawaala transactions will flourish

* More CASH will flow out of the country

* Counterfeiters will have a hay-day !

* Terror outfits will find it easy to fund themselves

* It will slow down change-over to a CASH-LESS economy through e-payments

WHAT IS THE CORRECT STEP ?

As I have repeatedly recommended over the past year ,

* 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 ONE CRORE within an area of ONE square meter

I hope what I heard last evening on a TV channel was merely a rumour !

But , even if there is a remote thinking in this direction , it must be nipped in the bud !

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hemenparekh.in / blogs

06 Feb 2016

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Wednesday 3 February 2016

SOLOMON HAS SPOKEN

Following was reported today , on NDTV web site :

Expressing anguish over growing corruption in government machinery and corporations, the Nagpur bench of Bombay High Court said that it's high time citizens come together to fight this menace and can refuse to pay taxes if this "hydra-headed monster" is not eliminated.

If the same loot continues, taxpayers may resort to a 'non-cooperation movement' and refuse to pay taxes," observed Justice Chaudhari of Nagpur bench of the Bombay High Court.

"Do taxpayers pay the money to the government for such kind of acrobatics? To eradicate the cancer of corruption, the "hydra-headed monster," it's now high time for citizens to come together to tell their governments that they have had enough of this miasma of corruption," the High Court observed.

Echoing public sentiment on the issue, the court observed "let the government as well as mandarins in corridors of power understand the excruciating pain and anguish of tax payers who have been suffering for over two decades in the state of Maharashtra. There is an onerous responsibility on those who govern to prove to taxpayers that eradication of corruption would not prove for them a forlorn hope."

I request Hon Justice Shri Chaudhari to take suo moto cognizance and treat my following suggestion for total elimination of CORRUPTION , as a Public Interest Litigation ( PIL ) and direct the Union Government as follows :

You shall ensure that , starting 01 Jan 2017 , all currency notes of Rs 500 and Rs 1000 , are made of suitable plastic material and are printed with a RFID sensor embedded into each

You shall further ensure that each such currency note is assigned its unique IP V 6.0 address , which is also linked to its own unique Currency Note Number

You shall further ensure that the current paper notes of Rs 500 and Rs 1000 , are withdrawn from the circulation from 01 July 2017 and considered illegal thereafter , making possession of such old paper notes , a non-bailable crime , punishable with a minimum imprisonment of 10 years

You shall design , install and commission , a suitable technological platform whereby the RFID sensors embedded into the plastic currency notes , shall communicate their physical location to the web servers of the Enforcement Directorate / Income Tax Department / Anti Corruption Bureau / Serious Fraud Investigation Office / Central Vigilance Commission / Economic Offence Wing / Central Bureau of Investigation / Department of Revenue Intelligence etc , in those instances where the combined value of such currency notes , within an area of ONE SQUARE METER , exceed Rs ONE CRORE

You shall also enact appropriate legislation under which the Enforcement Directorate shall have powers to cease and confiscate , any such accumulation of currency notes , which shall become the property of the State , notwithstanding the legitimate ownership of such seizure

Dear Hon Justice Chaudhari,

Even as I deeply share your anguish and sense of frustration , YOU have the power to cure the Cancer of Corruption , SINGLE - HANDED

There is no need to exhort people to stop paying taxes

Let this PIL be your JUDICIAL ACTIVISM to defeat the POLITICAL CYNICISM

Dear Ram Jethmalani / Subramaniam Swamy / Prashant Bhushan :

Will you please fight this PIL on my behalf ?

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hemenparekh.in / blogs

04 Feb 2016

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Tuesday 2 February 2016

TIME IS NOW !

Quoting from a news-report ( HT / 02 Feb 2016 ) :

At a recent World Economic Forum summit in Davos, Shri Arun Jaitley had said , India needs some additional growth engines , indicating that the focus would shift to reviving PRIVATE investments

Senior Govt officials said," The incentives could be in the nature of TAX CONCESSIONS "

DIPP Secretary , Amitabh Kant added , " For the Indian economy to continue to grow, it has to be on the back of DOMESTIC PRIVATE SECTOR investments ..... for a continuous robust growth , investments from the PRIVATE SECTOR , have to be ramped up "

Let us not keep fooling ourselves !

Prey ! From where do the so called PUBLIC SECTOR investments come from ?

It is PRIVATE MONEY ! Just re-routed by governments , using yours and mine tax money !

That is, whatever gets left ( of that tax money ) after expenses of running the government

Apart from that ,

* Re-routing tax money through PUBLIC SECTOR investments, is a very slow / cumbersome process

* Persons who manage those investments are rarely made " accountable " for profits / dividends

* Since tax-payers do not get immediate benefits from such re-routing , it gives rise to tax evasions

* Tax evasions lead to generation of BLACK MONEY and CORRUPTION

And no political party would advocate " raising of taxes " so that , on 29 Feb 2016 , Shri Jaitley could allocate

* ONE TRILLION DOLLARS ( Rs 70 lakh*crore ) each to , Piyush Goyal / Suresh Prabhu / Nitin Gadkari / Ravi

Shankar Prasad / Uma Bharati / Venkaiah Naidu / Rajiv Pratap Rudy etc

and

* TEN TRILLION DOLLARS each to , Manohar Parikar ( Defense ) and Nirmala Sitharaman ( Make in India )

WHERE CAN WE FIND THAT GROWTH-ENGINE ?

In my email ( 08 April 2014 ) , I wrote to Shri Narendra Modi :

* Create Infrastructure SPVs

* Allow people to invest in these directly and make " returns ( interests / dividends ) " , tax free

* Amnesty Scheme for funds invested in such SPVs ( no questions asked as to the source of funds invested )

* An " INVERSE TAX " regime for Personal Income Tax ( with decreasing tax-rates for each higher slab )

Later emails recommended :

* Encourage CREATION of WEALTH by total abolition of Personal Income Tax

* Decreasing Corporate Income Tax , linked to number of permanent employees

I hope Shri Jaitleyji does not treat these as POPULIST measures and keep tinkering with 80ccg / 80dd / 80ddb / 80e / 80g /80gg /80ggc / 80tta / 80u / 24b ....etc !

Time now is for embracing TRANSFORMATIONALIST measures

It is time for the Butterfly to emerge from its cocoon !

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hemenparekh.in / blogs

03 Feb 2016

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Monday 1 February 2016

NEVER MORE IMPORTANT

For BJP , winning the upcoming State Elections ( West Bengal - Tamilnadu - Assam - Kerala - Pondicherry ) in 2016 , is very important

Currently , these are all non-BJP states , with a combined total of :

* 825 MLAs ( of which , only 5 MLAs belong to BJP ! )

* 52 Rajya Sabha Members

For BJP , winning is important because of the Economic Reforms getting stalled in Rajya Sabha , where it lacks a majority

As far as the citizens of all these States are concerned , having a BJP government in their States can make a big difference to their economic progress , due to much better coordination with the BJP-led Central Government

But , while campaigning , BJP cannot use this argument to win a popular mandate ! We know why !

However , of all the political parties contesting , ONLY BJP hold a TRUMP CARD !

To win , all that Amitbhai Shah would like is for Shri Arun Jaitleyji to make following Budget announcement on 29 Feb 2016 ( before the Model Code of Conduct , kicks in ) :

" Starting 01 April 2016 , Personal Income Tax stands abolished for SC / ST / OBC / Dalit and other Economically Backward Communities ( EBC = persons with annual income below Rs 5 lakhs ) "

Now , which political party dare oppose such a Poor-Friendly measure ?

If any party does , it is bound to lose the votes of these communities !

And the beauty of this " Winning Strategy " is :

Hardly any adverse impact on revenues of the Central Government !

Of some 3 crore individual tax-payers , no more than 1 crore , may belong to such communities

And together, they might be contributing no more than 10 % of the Personal Tax Revenue of Rs 2.5 lakh*crores !

Now , very likely , Shri Jaitleyji will turn around and ask Amitbhai Shah :

" Would not this lead to similar demand ( total abolition of Personal Income Tax ) , from rest of the Voters ? "

Of course , it would !

But then , Amitbhai would say :

" Right now , we have a war to be won . In love and war , everything is fair !

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hemenparekh.in / blogs

02 Feb 2016

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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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Make Yourself Heard

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