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Cell 901 592 9130 4th August 2007
The reforms I expect in India – The next Generation The ways to curb black money
The purpose of my sending the articles through th is mailing system to all of you, is only that, at least one amongst you can seriously take these problems to heart and those who are close to the Government may try to get the suggestions implemented. The presentation is not meant for any reward or remuneration, nor for appreciation. I consider this as my duty as a proud citizen and I look forward for reforms keeping in view of the The Next Generation.
Black Money, that is unaccounted money and Corruption or corrupt practices, is interlinked. Unless there is a change in the attitude of the political parties, corruption cannot be controlled and as long as corruption is not controlled, growth of black money becomes inevitable. Then, within these parameters the best solution for this challenging problem should be planned out. Sometime ago, may be, twenty five years back when I was designing “Common Universally Acceptable Paper Currency” with a different ideology, the “Black Money” problem was also to my attention and then I drafted a note and sent it to the News Papers for publication. Interestingly there was response from different sectors including Planning Commission and nothing could presumably be the ultimate result. However, the subject relating to Universally Acceptable Paper Currency was taken by the University of Economic Sciences, Berlin and the result is the present EURO CURRENCY.
Back to the subject, on account of hard cash in the form of Black Money, not coming to the account, the Government is losing a lot of revenue and it is not in a position to deliver the goods expected of it. Due to falling short of resources, the deficit between revenue and expenditure, has become another problem every year resulting into additional taxes only on the legitimate tax payers while non-tax payers particularly money hoarders are indirectly gaining support. Added to this, money hoarders or holders of “Black Money” are controlling political parties, there upon diluting the values. The country is not gaining progress in the lines expected of it due to mixing up of all this. I believe,the next Generation is aiming highly on it with lot of demands and expectations, therefore a solution to this burning problem has become a must.
Accounting of a transaction will help the Government to find a solution to this ever growing problem. The business establishments are not accepting accounting of the transaction due to “complicated tax system”. There is a saying – “if you cannot convince, confuse”, perhaps this is being followed by the Government. The confusion that the Government has created this year by introducing new tax returns is really a mess and even the Accounts Experts and the Tax Consultants broke their heads to understand and realize what it is. Fundamentally, a simple system – an understandable system – an easy return, will encourage the tax payer to accept the Policy of the Government. I do not know why the Government disowned the simple returns which we planned long back – I am also one of the participants in the tax return designs. That was considered to be most appropriate and simple, and now why the Government did changed the simplest form to this complicated return, perhaps they too may not know. All the same, a simple tax return system will encourage the tax paper to come into the tax structure and a portion of the money remains accounted.
In the direct tax system, instead of complicated slabs, there should be only one uniform slab for all salaried irrespective of the salary drawn while the existing savings pattern continue. This will help the Government to improve the total savings of the salaried by giving the salaried enough retirement protection.
The next major issue is “Billing”. Billing is not done in many establishments thus the transactions are not routing through the accounting system, thereby giving scope for tax evasion. I suggest the Government to amend the laws in such a manner that all transactions beyond, say, Rs.1000/ or so must be through credit card or cheque. These days almost everyone is possessing “PAN CARD” for some reason or the other, as it became a must for certain transactions. Likewise, usage of Credit Card has also increased and this will be an excellent tool in the hands of the Government.
The basic principles to curb black money are 1) making people to accept the Tax System through simple return and simplification of the procedure, 2) making the transactions routed through proper accounting system, 3) elimination of Cash based transactions, 4) creating an unavoidable situation so that everyone has to remain in the structural formation of the system.
When we accept “credit card payment” for transactions beyond Rs.1000/, naturally money starts entering into the cycle. The second advantage of this is elimination of hard cash which alone is the route cause for “hoarding or Black Money or Unaccounted money”.
An unavoidable situation is such, today, for any transaction beyond Rs.50000/, presentation of a Pan Card has become a must in any bank. Thus people have come to the “Pan Card” circle; interestingly we can find long queues in the counters where “Pan Card” applications are accepted.
In the similar fashion, any bank should take address proof through the Ration Card or Voters Card, before granting a Credit Card. If either of these is made mandatory for the bank, everyone is naturally monitored to become a voter thus giving scope for the quality of voting over a period of time, and furthermore, through Ration Card system, population census becomes easy, besides monitoring flow of essential goods.
Andhra Pradesh Government has done well in this regard, where every ration card contains the LPG connection number, number of residents, and such other fundamental details needed of a household, and this is further guarded by “Finger Print Bio” system to prevent misuse. This is also interlinked with the issue of passport.
Similar exercises are already done by the Government over the past few years and a base is already available, like voter card etc. Therefore there is no loss of time in implementation of a new procedure, in this regard, and we can safely plan out the future for regulating the transactions through this base system.
Thus Credit Card shall become the tool for payments, directly making the transactions start entering into the accounting cycle. The ceiling should be as low as Rs.1000 so that a majority of the transactions enter into the procedural aspect of the accounting system.
Rome is not built in one day, so also economic reforms in India cannot be done overnight. But certain steps – which are practicable and suits implementation, are needed absolutely.
This is a long term plan but short term strategies are needed with a clear set of mind, and this is only solution that suits India. When a system is habituated, it naturally keeps the doors open for curbing of black money and proper increase of the revenue to the Government.
Let us build up a better and healthy economic atmosphere and that is the only primary and fundamental responsibility we have, in front of us. This mailing system does not permit me to write the modalities more than this, but surely I have good modalities that are conveniently suited. If the basic principle is accepted, perhaps, we can do well in a via media mode, let the likeminded people join together to bring reforms in building a great future for Mother India.
Dr P V Sesha Sai Aswamedhayaaji
The purpose of my sending the articles through th is mailing system to all of you, is only that, at least one amongst you can seriously take these problems to heart and those who are close to the Government may try to get the suggestions implemented. The presentation is not meant for any reward or remuneration, nor for appreciation. I consider this as my duty as a proud citizen and I look forward for reforms keeping in view of the The Next Generation.
Black Money, that is unaccounted money and Corruption or corrupt practices, is interlinked. Unless there is a change in the attitude of the political parties, corruption cannot be controlled and as long as corruption is not controlled, growth of black money becomes inevitable. Then, within these parameters the best solution for this challenging problem should be planned out. Sometime ago, may be, twenty five years back when I was designing “Common Universally Acceptable Paper Currency” with a different ideology, the “Black Money” problem was also to my attention and then I drafted a note and sent it to the News Papers for publication. Interestingly there was response from different sectors including Planning Commission and nothing could presumably be the ultimate result. However, the subject relating to Universally Acceptable Paper Currency was taken by the University of Economic Sciences, Berlin and the result is the present EURO CURRENCY.
Back to the subject, on account of hard cash in the form of Black Money, not coming to the account, the Government is losing a lot of revenue and it is not in a position to deliver the goods expected of it. Due to falling short of resources, the deficit between revenue and expenditure, has become another problem every year resulting into additional taxes only on the legitimate tax payers while non-tax payers particularly money hoarders are indirectly gaining support. Added to this, money hoarders or holders of “Black Money” are controlling political parties, there upon diluting the values. The country is not gaining progress in the lines expected of it due to mixing up of all this. I believe,the next Generation is aiming highly on it with lot of demands and expectations, therefore a solution to this burning problem has become a must.
Accounting of a transaction will help the Government to find a solution to this ever growing problem. The business establishments are not accepting accounting of the transaction due to “complicated tax system”. There is a saying – “if you cannot convince, confuse”, perhaps this is being followed by the Government. The confusion that the Government has created this year by introducing new tax returns is really a mess and even the Accounts Experts and the Tax Consultants broke their heads to understand and realize what it is. Fundamentally, a simple system – an understandable system – an easy return, will encourage the tax payer to accept the Policy of the Government. I do not know why the Government disowned the simple returns which we planned long back – I am also one of the participants in the tax return designs. That was considered to be most appropriate and simple, and now why the Government did changed the simplest form to this complicated return, perhaps they too may not know. All the same, a simple tax return system will encourage the tax paper to come into the tax structure and a portion of the money remains accounted.
In the direct tax system, instead of complicated slabs, there should be only one uniform slab for all salaried irrespective of the salary drawn while the existing savings pattern continue. This will help the Government to improve the total savings of the salaried by giving the salaried enough retirement protection.
The next major issue is “Billing”. Billing is not done in many establishments thus the transactions are not routing through the accounting system, thereby giving scope for tax evasion. I suggest the Government to amend the laws in such a manner that all transactions beyond, say, Rs.1000/ or so must be through credit card or cheque. These days almost everyone is possessing “PAN CARD” for some reason or the other, as it became a must for certain transactions. Likewise, usage of Credit Card has also increased and this will be an excellent tool in the hands of the Government.
The basic principles to curb black money are 1) making people to accept the Tax System through simple return and simplification of the procedure, 2) making the transactions routed through proper accounting system, 3) elimination of Cash based transactions, 4) creating an unavoidable situation so that everyone has to remain in the structural formation of the system.
When we accept “credit card payment” for transactions beyond Rs.1000/, naturally money starts entering into the cycle. The second advantage of this is elimination of hard cash which alone is the route cause for “hoarding or Black Money or Unaccounted money”.
An unavoidable situation is such, today, for any transaction beyond Rs.50000/, presentation of a Pan Card has become a must in any bank. Thus people have come to the “Pan Card” circle; interestingly we can find long queues in the counters where “Pan Card” applications are accepted.
In the similar fashion, any bank should take address proof through the Ration Card or Voters Card, before granting a Credit Card. If either of these is made mandatory for the bank, everyone is naturally monitored to become a voter thus giving scope for the quality of voting over a period of time, and furthermore, through Ration Card system, population census becomes easy, besides monitoring flow of essential goods.
Andhra Pradesh Government has done well in this regard, where every ration card contains the LPG connection number, number of residents, and such other fundamental details needed of a household, and this is further guarded by “Finger Print Bio” system to prevent misuse. This is also interlinked with the issue of passport.
Similar exercises are already done by the Government over the past few years and a base is already available, like voter card etc. Therefore there is no loss of time in implementation of a new procedure, in this regard, and we can safely plan out the future for regulating the transactions through this base system.
Thus Credit Card shall become the tool for payments, directly making the transactions start entering into the accounting cycle. The ceiling should be as low as Rs.1000 so that a majority of the transactions enter into the procedural aspect of the accounting system.
Rome is not built in one day, so also economic reforms in India cannot be done overnight. But certain steps – which are practicable and suits implementation, are needed absolutely.
This is a long term plan but short term strategies are needed with a clear set of mind, and this is only solution that suits India. When a system is habituated, it naturally keeps the doors open for curbing of black money and proper increase of the revenue to the Government.
Let us build up a better and healthy economic atmosphere and that is the only primary and fundamental responsibility we have, in front of us. This mailing system does not permit me to write the modalities more than this, but surely I have good modalities that are conveniently suited. If the basic principle is accepted, perhaps, we can do well in a via media mode, let the likeminded people join together to bring reforms in building a great future for Mother India.
Dr P V Sesha Sai Aswamedhayaaji
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