RE: HOW CHINESE MAKE CHEAP ?

Dear  Shri  Kant ,

Many thanks for your kind words

Yesterday , I have couriered to you , a folder titled " Transforming India " .  It should reach you today

That folder carries my suggestions ( my past blogs ) , as listed in attachment

With so much talk / action about DIGITAL INDIA , you may want to forward my suggested Mobile Apps ( listed in the folder , as * VotesApp /  * I SIN > < U SIN ) , to the concerned officers , for examination , and  implementation , if considered feasible

In the meantime , I hope you find some time to read my today's blog , reproduced below

with regards ,

hemen  parekh

Mumbai ( 0-98,67,55,08,08 )

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A   CASE   FOR   ZERO   PERSONAL   INCOME   TAX

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For past two years , I have been advocating total abolition of Personal Income Tax

Not because , a few countries such as Saudi Arabia , UAE , Qatar , Oman , Kuwait , Bahrain etc , have NIL personal income tax

But , even for a less developed country like ours , it makes a lot of sense

Here is why :

* Today's Hindustan Times reports following study by Price Water-house Coopers ( PWC ) :

" Average take-home salary as a % age of total salary " - are :

>   Saudi Arabia................ 98.86

>   China.......................    62.05

>   Germany...................   60.61

>   USA..........................   60.45

>   UK...........................    57.28

>   India.........................   54.90

>   Italy.........................    50.59

*   It is obvious that Saudi Arabian citizens take home more because there is NO      personal Income Tax there

*   In India , our " Take home Salary " is only 54.90 % , because we pay a very

     high personal income tax

*   Of the total revenue receipt of Central Government ( 2013-14 est ) ,Personal      Income Tax contributes only 23 % ( approx Rs 12.4 lakh crore )

*   If personal income tax were to be abolished , this revenue will be lost

But , here is the Upside :

*   India's current Household Saving Rate = 30.1 % of GDP

*   That means our total Household Savings = Rs 24.72 lakh crore

*   Of these , 

     >  Rs 16 lakh crore are tied up in unproductive Physical Assets (Gold/Land)

     >  Rs   8 lakh crore are invested in Financial Assets (Bank / Mutual Funds)

*   If Personal Income tax is abolished , it is possible that our Household 

     Savings Rate may go up from 30.1 % to 45% of GDP (it was 40% in past)

*   That would add Rs 12.36 lakh crores , raising total to Rs 37 lakh crore !

*   And most likely , the proportion of investments would be ,

    >   Rs 7    lakh crore in Physical Assets , and

    >   Rs 30  lakh crore in Financial Assets ( Productive use )

And that's not all  !

*  With NIL personal tax to pay , all the cash ( black money , no doubt ! ) ,

    lying in bank lockers , will get deposited in official bank accounts , within

    one year

Now , couple this BOLD & IMAGINATIVE step with :

*  Creation of  SPVs , dedicated for building Infrastructure . No questions asked

   for amounts invested in these SPVs . No dividend tax for 10 years 

If implemented , there will be no reason for us to go begging China / Japan / USA for investments in Infrastructure / Manufacturing etc !

*   hemen  parekh  /  12  Nov  2014

From: amitabh.kant@nic.in [mailto:amitabh.kant@nic.in]
Sent: Tuesday, November 11, 2014 5:55 PM
To: Hemen Parekh
Subject: Re: HOW CHINESE MAKE CHEAP ?

Dear Hemen Parekh,
Excellent Piece! Congratulations!
Warm Regards,

Amitabh Kant

----- Original Message -----
From: Hemen Parekh <hcp@recruitguru.com>
Date: Sunday, November 9, 2014 8:51 am
Subject: HOW CHINESE MAKE CHEAP ?
To: nsitharaman@nic.in
Cc: amitabh.kant@nic.in, singh.shailen@nic.in

> Dear Team India : >   > Here is my latest blog : > --------------------------------------------------------------------- >   > A few days back , I heard , Government of India banned imports of cheap Chinese fire-crackers ; presumably to protect the jobs of thousands of workers , working in the fire-cracker factories of Shivkashi and elsewhere > > This morning newspapers carry headlines : > > " Lakhs of poor women working in Agarbatti factories thrown out of jobs , due to imports of cheap Chinese Agarbatties " > > Soon expect a ban on imports of Chinese Agarbatties  ! > > It is the same story with big manufacturers of , > > >   Power Generation equipment > > >   Solar panels > > >   Machine Tools > > >   Construction Materials........etc > > Indian manufacturers of these equipment want India Government either to ban imports of such equipment altogether or impose huge import duties to discourage its imports > > They are telling Government : > > " If you don't , thousands of workers will lose jobs " > > In turn , the Indian Government is telling the Chinese : > > "  We already have a negative trade balance with you , of about $ 35 BILLION. >    You must help us correct it by buying from us MORE ( of those expensive goods that we manufacture ) , > > and, > > Stop exporting to us all of those CHEAP Chinese goods " > > Question is : > > How many Chinese goods can we stop importing ? > > No one seems to be asking : > > "  What enables the Chinese Manufacturers to make those goods so cheap ? " > > May be - just may be - India Government , and those Indian manufacturers , need to find answers to this question  ! > > May be , we need to IMPORT those Chinese Labor Policies /  Government Procedures / Manufacturing Practices / Bank Interests /  Tax rates  / Land Usage laws / Single Window clearances and a hundred other things that have enabled China to become , the " Workshop of the World "  ! > > That is the only way to save - and create - JOBS , in India > > --------------------------------------------------------------- > > hemen  parekh  /  09  Nov  2014 >   > www.B2BmessageBlaster.com >

Amitabh Kant
Secretary to Govt. of India
Ministry of Commerce and Industry,
Department of Industrial Policy and Promotion,
157, Udyog Bhawan,
New Delhi-110 107
Tel: 23061667 / 23061815
Fax: 23061598
email: amitabh.kant@nic.in