Dear Guillaume,
Many thanks for your prompt reply and for those compelling
arguments against tagging high denomination currency notes with RFID
I await to read the full report on 12 April
No doubt , privacy / anonymity are valid concerns but my
suggestion is limited to :
* Tagging only Rs 500 / 1000 currency notes
* Tracking these ONLY in cases where there is a
Concentration of Rs 10 Million worth of such high denomination
notes within 1 Sq Meter area
Even this ( tagging ) will not help locate and bring back , $
182 / $ 500 Billion worth of undisclosed assets that
Indians have illegally stashed abroad
But possibly TEN times as much Black Money gets generated in
India's Parallel Economy , each year !
My idea is to STOP that future generation
Of course , a much better - and universally welcome -
alternative , would be :
" Abolish Personal Income Tax , thereby totally eliminating all
incentive to generate Black Money through tax evasion .
All payments will get made
through official channels .
Within 6 months , all Black
Money will become WHITE and flow into the productive mainstream of the
economy
Revenue loss of Rs 2.5
lakh*crore but GDP will go up to 10 % !
Warm Regards,
Hemen Parekh (M)=91 – 98,67,55,08,08
Dear Hemen,
Thank you do for
your kind e-mail. I am delighted you enjoyed the article.
If I understand
correctly you are suggesting to incorporate RFID into high-denomination
banknotes in order to avoid tax evasion.
This idea is not
new; let me point out why I personally believe it would not work.
- There is
a need for an anonymous payment instrument
In a democracy, it
is perfectly legitimate to have the freedom to make a transaction, or to store
money without the monitoring of the State. And this anonymity is not
synonymous with tax evasion. One may wish to buy a present for his wife,
without her seeing the transaction on a bank receipt. People who are ill have
the right to purchase medicine in a confidential way. I recently spoke to a
pharmacist in France, who mentioned that many young people purchase
contraceptives in cash.
- Cash is
anonymous but the anonymity is limited.
The anonymity of
cash is limited by regulation, technology and bulk. Regulations include for
instance imposing a cap for cash transactions; many countries in Europe have
implemented this. Internationally, the transportation of cash across borders is
limited to $ 10,000. Technology, includes for instance inks used in banknotes
which can be detected by sniffer dogs. Also, forensic taggants are used in some
countries and are sprayed on a banknote in the case of a robbery; when the
taggant is detected, the banknote can ve traced back to the robbery. Lastly,
cash is heavy and bulky to store and transport.
- Other
anonymous payment instruments pose a far bigger threat
During the recent
terrorist attacks in Europe, it has appeared that the terrorists have used
anonymous pre-paid cards to fund the activities. Virtual currencies also offer
a cheap alternative to make perfectly anonymous transactions with a simple
click.
- Using
electronic tags in banknotes poses operational challenges
Firstly, it would increase
significantly the cost of the banknote. But what happens if the tag is
deactivated? There are stories where consumers have deactivated chips in ID
documents by ‘frying’ them in a micro-wave. Would deactivated banknotes still
be legal tender? Also,a real fraudster would simply shift to another
payment method and in the example you present, he would use lower denominations
that do not carry electronic tags.
I hope this helps.
I invite you to
visit www.cashesentials.com. The
full report which was mentioned in the Business Line article will be available
as of April 12.
With kind regards,
Guillaume Lepecq
Dear Guillaume ,
Just read your very interesting interview ( The rustle of notes, clink of coins ) in Business
Line ( 21 March ), where, in relation to the role played by cash in
tax evasion, you say :
" Cash is not the only way to do private
transactions...... Billions of people are using cash the right way, a few may
not be "
To solve the problem of use of cash
for tax evasion, do you think my following suggestion will work ?
I have sent this to the Central Government and to the Reserve Bank
of India
I will appreciate your views
hemen parekh
Marol , Mumbai , India
( M ) +91 - 98,67,55,08,08
----------------------------------------------------------------
Saturday, 23 January 2016
Government is encouraging use
of Credit / Debit cards , in order to reduce cash payments , which , currently
account for nearly 80 % of all payments
Measures ( Positive and Negative
), being considered / announced , include :
* Elimination of
transaction charges on purchases of Petrol , using Credit Cards
* Income Tax benefits
for individuals making payments thru Debit / Credit Cards
* Disclosure of PAN for
# cash
transactions above Rs 2 Lakhs
#
settling hotel bills that exceed Rs 50,000
#
booking air tickets / tour packages , exceeding Rs 50,000
#
opening a bank account ( except for Jan Dhan Yojana a/c )
* Incentives to shop keepers
and traders to accept electronic payments
While announcing these
measures , revenue secretary , Shri Hasmukh Adhia said :
" ...to
collect information on certain types of transactions from third parties in a
non-intrusive manner , the income-tax rules require quoting of PAN where the
transactions exceed a specified limit "
Are we missing the woods for
the tree ?
What can be more "
non-intrusive " than embedding Rs 500 / 1,000 currency notes with RFID
micro-chips , thinner than a hair ? Each sensor, continuously broadcasting its
location to the Income Tax Authorities , even as it moves from one hand to
another ?
And " shouting from the
rooftop " each physical location, where there is an accumulation of Rs ONE
CRORE( 10 million ) worth of such notes !
And assigning a UNIQUE
Internet Protocol ( IP V 6.0 ) Address to each and every such high
denomination currency notes ? - which could , even be its Currency Note Number
?
Why bother to "
incentivize " citizens to use electronic payments ?
Why bother to introduce rules
/ regulations and make life difficult for everyone - including for those
officers responsible for enforcement ?
Just implement this and watch
90 % payments being made thru electronic means / devices , within 6 months !
I had sent my above mentioned
suggestion to Shri Arun Jaitleyji , when Govt had put out a paper ,
" Draft Proposals For
Facilitating Electronic Transactions " ,
and sought public comments
Implementing this does not
require passing any bill in Rajya Sabha !
If you have a better idea to
dramatically reduce the menace of BLACK MONEY
and CORRUPTION , in a single stroke , I request you to rush it to Shri
Jaitley-ji , before 29 Feb 2016 ( Budget date ) at...
Or ,
just forward this to him
A recent news report spoke of
printing of 30 Crore notes of Rs 1,000 denomination
, WITHOUT that identifying
silver thread
Some of these defective notes
even went into circulation ! Rest had to be destroyed
This would never happen if a
RFID micro-chip ( much thinner than that Silver thread ) were to be embedded in
each note
A Inspection device , costing
no more than a few thousands of rupees and sitting on the Printing Line
would immediately detect any note WITHOUT the RFID
A bell will ring and a
robotic arm would pick up and set aside such a defective note
And if this was to happen to
10 notes in a row , the printing press will automatically shut down !
This technology is already
working in hundreds of factories around the World
And embedding a RFID chip is
much simpler than inserting that Silver thread !
-----------------------------------------------------------------------------------------
hemen parekh
24 Jan 2016
