Monday, 6 July 2015

Lessons From Greek Tragedy

amitabh.kant@nic.in




Dear Amitabh ,


It won't take long for Greeks to realize that " No " vote , is merely a state of denial

Even a " Yes " vote could not have made matters , much better - except , perhaps in the short term

In the long term , only thing that could become a true " bail out " for the Greek economy , is : 

" Spend less than what you earn ; increase Domestic Savings  Rate to take care of the rainy day "

In light of this , you may like my following blog


Regards,

hemen

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A   Gordian   Knot   ?


Is black money issue a Gordian Knot that cannot be unraveled  ?


One gets that feeling while observing the NDA governments attempts, viz:


>   Setting up of SIT


>   Signing bi-lateral treaties with foreign countries for exchange of info on bank
     accounts held by Indian citizens in these countries


>   90 day window for declaring assets held illegally in foreign banks


>   Proposal to grant minor tax-concessions if payments for petrol / diesel etc is
     made using credit cards


>   Legislating that sundry kinds of payments are to be made thru banking system


>   Introduction of Gold Bonds


>   Introduction of stringent laws for punishing tax-evaders with jail terms, etc



Could not UPA government have done all of these in the past 15 years ?

And , if they could , why did they not ?


I could think of only 2 reasons , viz :


>   Either UPA government did not think that any of such measures could solve the
     black money problem , which is in the nature of a Gordian Knot


OR ,


>   UPA did not want to solve this problem  !


After one year of NDA rule , people are asking :


"  Why is this government , which has within one year , launched some epoch-making economic and governance reforms , continuing to tinker with the black money issue ?


Why is it focusing on unearthing black money stashed away in foreign banks, which constitute no more than 5 % of the black money hiding within the country ?


Why is all the emphasis on " past " black money declaration rather than on prevention of " future " black money generation - which goes on unabated  ?  "



I sincerely believe that NDA wants to put a permanent stop to black money generation


But , it just cannot think " out-of-the-box " as Alexander the Great did when he simply cut the Gordian Knot with his sword rather than try to untie it  !


It is still not late for NDA to do the following :


>  In the first instance , instead of increasing the personal Income Tax rates with
     each higher slab , reduce these ( eg : 10 % > 9% > 8% > 7% ..... )


>  If this " Inverse Taxation Regime " makes people want to declare more and
     more income , in order to get into higher tax slab , then next consider total
     abolition of Personal Income Tax !



In a nutshell :


>   Take away incentive to hide income


>   Motivate people to declare ALL income


>   Celebrate Wealth Creation


>   With no Personal Income Tax to be paid , everyone will insist on making /
     receiving all payments officially thru banking channels


>   Do not tax people at the point of income generation ( Source )


>   Tax them at the point of income expenditure ( Destination ) eg: GST


>   Boost national " Domestic Savings Rate " to 40 % ( never a Greek Tragedy ? )


>   Enable savings to flow into Infrastructure Bonds ( Railway / Ports / Airports /
     Smart Cities / Highways / River Linking / Solar Power etc ) , rather than into
     non-productive assets


This is NDA's " Moment of Opportunity " - an opportunity to re-write history !


There is no surer / simpler / faster way to bring India's 400 million poor people
out of abysmal poverty .


---------------------------------------------------------------------------------------------

hemen  parekh

05 July , 2015

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