Look beyond GST - Make it less "taxing"

A common Goods and Service tax that Government of India trying to implement is a great step in the right direction. However, I would like authorities to see beyond it.

The entire process of tax imposition, tax collection, tax payment and tax returns, etc is really "taxing" the resources of the country. When I say resources here, I mean human capital. Too much of corporate time goes into maintaining tax related accounts, audits and compliances. Similarly a lot of government machinery is wasted in ensuring compliance.

And this activity is totally non-value adding. Businesses should spend most of the time in value addition and creating wealth. Not wasting countless hours in book keeping and compliance.

I propose a simpler solution, instead.

Just have one single tax. I call it a transaction tax. There will be no separate excise tax, sales tax, income tax, octroi, etc. Keep this transaction tax not more than 1%. Impose this tax on every transaction.

How do you define a transaction and how do you monitor every transaction?

In any business money is exchanged when a sale is made, or service is utilized or salary is paid.

Now the person or a business which receives this money, what do they do with it. They have to deposit the cheque or cash in the bank.

Now when that happens tax it at that point of time. Charge 0.5% for a cheque deposit and 1% for cash deposit. It is like TDS - Tax deduction at source.

For transfer of money within the same company accounts do not apply this transaction tax. Companies have to declare to banks where all they have their bank accounts.

By implementing this transaction tax, you can totally do away with 80% of tax machinery and you can deploy them for more value added activities this country badly needs. You free up around 10% of businesses' time that goes into these.

You may ask what's so big deal about it. This 10% of additional time that is available to businesses can result in 20% increase in country's GDP. A freed up mind can be doubly productive. A good percentage of top management's time in any company goes in tax compliance.

One may argue that the proposed transaction tax is too low. Yes, it is too low. A low tax always results in better compliance.

And other associated benefits too will be there such as no black money, no under reporting of assets like lands, houses, etc. And the freed up black money will come into mainstream and will help in growth of country's GDP.

This may also free up a significant amount of judiciary's time too. A good amount of cases in courts are related to tax disputes or wrong interpretations of our ambiguous tax laws.

One may ask if this is going to be fall in tax collections. It should not as TDS is done at every transaction.

Let us not make it easier for terrorists

I just returned from watching the movie A Wednesday. The movie prompted me to express my ideas on containing the terror.
To carry out terrorist activities logistics are crucial. Cut them and you can minimize the terrorist activity to a great extent.
Two things that are needed for any terrorist activity is a place to stay and movement of men and material.

As far as a place to stay is concerned, pass on this responsibility to house owners who lent their houses.
Make them responsible to know about their tenants. Before letting out, let them verify the bonafides of their tenants.
This is not very cumbersome. When you apply for a loan, telephone connection, bank account, these are asked.

We are already used to it. So I am not suggesting any new thing that is not already in practice.

Let them get the following details:

Where do they work, their business, etc? (They can make calls to them to verify)
To get identity proofs such as permanent address details, bank statements, PAN card, etc
To get references from two people known to them (They actually should make calls to them)
It would take not more than 15 minutes to actually get these done.
And also make owners to keep a tab on tenants. Any suspicious activity should be reported to Police.

Hotel Stay

Let hotels also ask for identity proof and two references checks from every guest of theirs.

Don't brush this off. We are living in extraordinary situations. We need to respond keeping that in view.


Now to movement and material:

For all practical purposes people use Road, Train and Air.
Have identity proofs checked at all entry points and their bags.
We are already doing this in Malls and Cinema Theatres.
Same thing can be applied here too.

Similarly let people produce their bonafides while booking material at Road or Train transport.
Similarly when vehicles are sold either new or used, get bonafides checked.

We can succeed if we make it difficult. Let them not plan and strike at their will.

US succeeded by proactively making it tough. After Sep 11, there is not even one single terrorist incident that happened. Quite an achievement for such a big country. Even except for few stray incidents none of their consulates in other countries got attacked too. Even if they got attacked it is mostly others who died.

An alternate idea to prevent floods, let less water in to the sea and increase the water table.

Suggestion 1

What I am proposing here is not for storing water for agriculture or generating electricity. And certainly my proposal does not involve big dams. In fact, it is quite the opposite. Instead of raising the water level to a great degree and submerging the surrounding areas as it happens with big dams, I propose to go lower.

Have small check type of dams on small streams and rivulets which join a major river.

In the vicinity of this dam (it may range from few a hundred metres to 1-2 kilometres depending on the gradient) and at a suitable place dig a lake. Digging a lake is less costly and very, very feasible. Lakes can be anywhere from 50 - 200 acres.At the time of abundant rains, channel the water through an intake into this lake instead of letting all the water downstream. How to utilize this water is a choice that can be left to people living nearby.
They can use it for drinking, irrigation or just to increase the ground water table.

Digging thousands of such lakes need not be a costly affair. It is certainly cheaper than several other methods adopted so far. By not letting all the rain water run into rivers and then the seas, we are also doing a better job of conserving water. More importantly, the impact of floods in downstream regions is reduced.

The investment in digging lakes can be recovered very quickly through savings that result from prevention of annual loss of property worth crores of rupees alone. Approximately 12000 K litres of water (a tanker is usally 10 KL)can be stored in an area of one acre 10 ft depth and the cost of digging an acre would be Rs. 15 lakhs. Digging of such lakes can be a part of Rural Employment Guarantee Scheme.

Suggestion 2

Increase the capacity of our rivers, streams, canals and lakes.
Because of excessive deforestation and occupation of floodplains over the past 100 years, our rivers, streams, canals and lakes have become heavily silted thereby reducing their water-bearing capacity drastically

As a result one week of rain is enough to cause most of the rivers in India to flood. If a massive desilting operation is undertaken during summer season , it could double the water-bearing capacity of these water bodies. Then it will take that many more days for these water bodies to swell.

The few extra days are enough to limit the damage caused by floods to a great extent. A river of length of 500 KM can be dug deeper by another 10 ft at an approximate cost of Rs.1000 crore. The cost for the same is estimated at Rs.40 for one cubic yard of material dug out.

I agree these two ideas are nothing new. People have been advocating these ideas in one form of or the other. Here, I am suggesting these ideas solely with the aim of preventing floods. Irrigation and increase of ground water table are added benefits of these measures. It is worth spending some money on preventing floods than incurring heavy losses later because of them.

Freeing our City Roads from water Logging

Have you ever wondered why our city roads get filled with water the moment it rains for however short duration it may be?
And why the roads in our villages are never filled with water?
The answer is simple.
In the villages flow of water is not restricted. Rainwater just drains out to the sides.
Moreover, water from surrounding houses or buildings does not flow on to the roads unlike in cities.

If you ask an experienced city planner why roads flood in the cities, he or she will say that each city should have a storm drainage system.
Sure, that is one of the solutions. But this is again an idea that originated from London and some European cities in 17th - 18th century.
They felt this need when they already had existing cities.
But for new cities, we need not go for this solution.
If you analyze each of our cities is growing at 10-15% a year. We can plan better for new areas that are coming up.
But in Hyderabad, where I reside, it is not happening.

I would like to propose a very simple solution which does not require any storm drainage planning.
Plan wide roads and leave enough space on either side of the road. This is quite feasible for all the new areas that are coming up in spite of the huge real estate cost that is associated. Have a trench dug at 20 metres on each side of the road along the length of the road. This trench can be deep enough to accommodate one day's rain water.
Have drain points all along the side of the road and lay a pipe from there to these trenches.
All the water that gets collected on the road will run through these pipes into the trenches. Trenches can be much better looking than the one shown. You can have trees planted in these trenches. The water that is collected in these trenches will be absorbed by the soil very quickly and will not lead to any stagnation of water.

Advantages of no water logging on roads are many:
1) Roads will look clean.
2) Roads will last longer. Water is the main reason why our roads get damaged so quickly.
3) No traffic jams when it rains.
4) No siltage or sand accumulating on roads.
5) No overflowing of drains.
6) No missing man-holes.
7) No embarassement before foreigners as to why we can't get such simple things right.
You may ask what about the water that is collected in the buildings. Every building should compulsorily have water harvesting pits and sumps. This water can be used for watering the plants etc

Standardizing School Curriculum and Delivery

The greatest challenge that India faces is lack of quality teachers .
To aggravate the problem, each State pursues its own curriculum for the students. Even Central Government of India has ICSE and CBSE.
Does this mean that students in AP are different from those of Punjab?
Or is it just that we would like to have more diversity than we already have.

I think standardizing education and its delivery can be thought of in the following ways.
1. Having same curriculum throughout India except for vernacular languages.
2. To pool the best brains in India to devise this curriculum.
3. To make the curriculum interesting to students.
4. To utilize the TV, Internet and CDs to deliver the education. TV is far more effective than any other delivery. It engages the kids the most.

5. Identifying the best teachers in India, pooling them and letting them research on each topic and come up with the best way to explain it. Did you ever wonder why students get a few concepts right and fail to get the others?This is because they were taught those few concepts in a way they could understand easily. Good teachers know this trick. But all students don't get good teachers. Even in the best of schools, all teachers are not good.
6. Recording the delivery of this best method on a Video by the best teachers. Using as many examples and illustrations as possible.I always felt the UGC programmes that I used to watch on TV when I was a student are the right way to teach.
8. Delivering these programs through TV, Internet and Pre-recorded DVDs/CDS
9. The teachers in the schools will just facilitate the process of learning at the time of delivery.
10. Even the tests can be standardized. They can be delivered through emails on the test day to schools.
Imagine the immense advantages that this will bring for a country like India.
1. Lack of quality teachers is no longer a problem.
2. All students get exposed to the same quality education. Be it a rich kid or a poor kid.
3. Students will get their concepts right.
4. India will get a great advantage in the world with their students getting their concepts right.
5. Countless teachers, educators et al are saved from devising separate curriculums and delivery.
6. Standardizing education saves a lot of time.
7. Saved time can be put to a better use to increase productivity and thereby GDP.
8. What more, We can have a standard method of training teachers too on facilitating the students on getting the concepts right.
9. Even if students miss a few classes they can always catch up from DVDs / CDs.
10. Students and parents are freed from the big dilemma they face when they have to change from a school with one curriculum to a different school with a different curriculum.

It is unfortunate that mass education is the only area which did not take advantage of the new technologies that came in the last 80 years. It is high time we use these for everybody's good.

The Cashless Society Need Not Be A Sign Of Times...It Can Be A Panacea..

I am not talking here about reducing the risk of your money being stolen or the convenience of non-cash transactions. I am talking about how a cashless society can get rid of the usual crime or fraud prevalent in the society.

Imagine a situation where governments go ahead and decide not to print cash or mint coins any more. I will come back to the point how this is possible. But, before that let me list out the advantages.

1. No more black money. Imagine what can happen if all the black money is routed into the economy again
2. Elimination of corruption to a great extent.
- No longer easy to evade taxes - For example, companies will find it difficult to supply goods or services without bills and get paid for that by their customers.
- No longer easy to grease your way through in getting favors, big or small.
- No longer easy to buy your seat through to an assembly or the parliament.
3. Choking out the organized crime:
- No more kidnappings for ransom.
- No more hired goons for murder or anything else.
- No longer easy to finance terror.
4. No longer easy to run drug, organ or human trafficking mafias.
5. No more ATMs. No more bank robberies.

The list is endless. There are so many advantages of this system that it far outweighs the few disadvantages. I will address the disadvantages and how they are not important a little later.

Let me quickly debate how this idea is possible to implement before it is brushed off as non-practicable.

Already the cheque, wire and plastic have made most of the transactions non-cash. RFID has made contactless payment possible. The advent of internet and mobiles offers tremendous scope to make cash redundant. We can embrace smart cards or go all out for mobile banking. Let me tell you, mobile banking can be made really, really simple. It can be even more simpler than using a TV remote. All banks accounts can have unique number more or less on the lines of telephone numbers. If somebody wants to transfer funds from his account to a sellers account all he needs to do is to punch the sellers account, then his account followed by a password and then the amount. That is all he needs to do. We can build enough safeguards into the system to prevent somebody from cheating this system. To start with, each individual can have a cash account in which he can limit the amount of transactions.

We need not worry what will happen to illiterates in this new order. Anyway, we do not intend to keep them illterate. We want them to get educated too. Why not educate them first on the usage of mobile banking. Don't insult the ingenuity of a man, by saying this is not possible. If properly explained they can use them. When illiterates are able to use telephones I do not see a difficulty in their using this technology. The trick is to keep the technology user friendly. Mobile banking is already an in-thing in Japan.
Mobiles have really become affordable. Even if they are still out of reach of a poor man, we can donate them these. Much on the lines of TVs being donated by Governments.

Nothing is difficult to the willing. We got to really toss out the old when the time comes, and embrace the new. It may take 5 years for this to happen. That is fine. It is worth the effort to have this panacea implemented.

The only disadvantage people may express about this system is lack of privacy. What privacy are we talking about? Are we asking for a system where we can hide our misdemeanours from others? Or we talking privacy about our medical records? Each of these is different and can be addressed differently.
In the first case just be discreet. Don't get involved in something where money exchange is involved. Governments world over have acts in place for privacy of medical records. They can be fine tuned as necessary.

I feel privacy objections to a cashless society are misplaced. We are being monitored everywhere. Your emails can be tracked to its source. The calls you have made are no longer secret. In fact your mobiles have become the single most valuable source of information to an investigator, since the diary. Law agencies had always a right to search your house whenever required. So the ability to transact in cash will not in anyway help you protect your privacy. You lost it a long time ago.
I think we can compromise on not having freedom to do certain things without the "Big Brother" watching in the larger interest of the society. If the technology is facilitating us to help have a much cleaner and safer society, we should push for it.

We owe a safer society to our children.

Democracy is a 12th century idea..

The whole idea is so archaic. The idea was good when the world was simple. Unfortunately, world is no longer simple. Democracy worked when governance required common sense and fairness.
Present day world requires experts at the helm. 'Yuva' style propositions do not work in today's world. Often in discussions and articles on the problems facing India, it is proposed, as a solution that country requires educated, clean and young people in politics. This solution does not take us anywhere other than removing corruption at the top.
What we require is experts governing us. If the board of a 100 crore company is so careful in choosing its CEO, how careful should be the people of India be in choosing the heads of its Ministries. An aviation or a shipping minister has to be much more knowledgeable than the CEO of the biggest aviation or a shipping company in India.
These ministers should have spent their life time in these Industries before they become eligible to don these posts.

So how do you elect these people?
Simple. Don't elect. Select.
We don't elect our cricketers, our CEOs or our IAS officers. Then, why in that case we need to elect people who govern us.

This is what I am proposing:

1) Let us have a selection board of 200 eminent people. These people will be drawn from various walks of life. Big industrialists, ex-bureaucrats, ex-RBI Governors, sportsmen, ex-armed forces chiefs, vice chancellors of universities, award winning doctors, writers, singers, film actors, etc. These people can be most recent award winners or the most recent retirees as VC of a top university or as a Governor from RBI, etc. We can define the whole framework as to from which sectors we will draw these people from and the exact basis for their selection.
2) Term of the people in this board will be only for 5 years and that too once in their life time.
3) Every 5 years they will advertise the jobs for all the ministerial posts with a pay that is 5 times higher than the best paying job in India.
4) The applications will be reviewed by these eminent people and the applicants will be interviewed and chosen in the most transparent manner possible. During interviews each applicant has to showcase a business plan on how they are going to go about doing their job.

These ministers who know what job requires can get going from day one and can execute their jobs in the best manner possible.

Imagine what this idea could do to this country. Without politics and such a great governance India can leap ahead.
No elections means no parties. And everybody can heave a sigh of relief.


Think over!