1. Tracking Gold imports.We have been writing to Finance Minister, Government of India, RBI, CBDT and other departments for the last few years requesting them to track import of gold, diamonds, platinum etc., into India. We contended that huge quantities of gold, diamonds, and other precious metals are imported into India and there is no proper system to track them thereafter. We highlighted how these imports are putting enormous pressure on nation’s foreign exchange reserves (India imports each year 1000 tones of gold alone). We also brought to the notice of Finance Minister why it is unfair not to track these imports while insisting on KYC compliance for investors, say in Mutual Funds, even for Rs.1000. We never received any reply. However either due to our letters or otherwise government has come up, half heartedly, with a rule effective from Jan, 1st 2016 demanding furnishing PAN details for buying gold beyond Rs.2 lakhs (diamonds etc., are not mentioned). We want to pursue this matter further, if necessary, through Public Interest Litigation.
Status as on 22nd September, 2017 :We understand from media that Government of India has brought the bullion industry under the Prevention of Money Laundering Act (PMLA) effective from 1st September, 2017. Apparently the Government was rudely jolted and forced to take note of murky dealings in bullion (precious metals and stones) industry after its role came to light on the eve of demonetization. We are yet to see the relevant notifications. However there are few interesting takeaways from this episode. They are:
- Our rulers are ‘future blind’ : Essential prerequisite of an effective leader is the leader should be able to see-the- future. Effective leader should be able to see ‘what others could not see’. When leaders lack these skills disasters are assured. Classic example of this is India’s partition in 1947. Rulers/Leaders of the day had no idea about what was coming their way and millions of Indians, mostly the proletariat, paid very heavy price.
- Our bureaucrats are ‘full of themselves’ : Our bureaucrats are so full of themselves that there is no room for any alternate ideas. They do not take, they do not care ideas/suggestions from anyone (Including the ones who are educated/trained at world renowned Business Schools).
- Watch out : your watch dog may have lost its sense of smell : Government has many economic-intelligence agencies. Funny, they had no idea of murky dealings in bullion industry for decades (In Spite of bullion being second biggest import item after crude).
Status as on 10th, October, 2017 :We understand, again from media, that the Government has withdrawn its above notifications. Any reason? None that we know. May be some lobby - Jewellers, Politicians, HNIs - brought pressure. We do not know. Interesting.
2.Preventing Farm suicides.Thousands of farmers are committing suicide across India each year. Ironically Government of India and various State Governments are spending mind boggling amounts on irrigation projects, apparently not benefiting the farmers. We know farmers / public have little say about allocation of funds by the governments. That does not mean that you and we can not do anything. Recently we have come up with a scheme to prevent farm suicides at least partially. The scheme, which is in the development stage at present and expected to be implemented soon, is given hereunder:
The Scheme: (draft - to be refined):
- A society is formed with a 5/7 years term (medium to long term)
- There will be two categories of members. One, farmers, ideally tenant/marginal farmers. Two, risk capital providers/investors.
- The society lease suitable land for the full term of the society.
- The farmers work on the land and get wages as per the prevailing rates (wages are guaranteed - livelihood is taken care of).
- Risk capital providers/investors get interest at the rate slightly above the prevailing risk free interest rate (this is indicative rate only not guaranteed).
- On harvesting the crop, value of the produce is determined in a transparent manner at ‘arm's length’ basis.
- The society may dispose the produce in the market and distribute surplus (after netting wages and interest), if any, among the farmers and capital providers on the basis of their contribution.
- Alternatively the society may distribute the produce (raw or processed) among the farmers and capital providers on the basis of their contribution.
- Proper monitoring and ‘dispute resolution’ mechanism should be in place.
- Suitable expert(s) is identified to provide necessary technology for organic farming (organic farming is preferred).
- Reasonable restrictions are imposed like member farmers should not consume alcohol, tobacco etc.,
- Society should give preference to process the produce and distribute among the stakeholders.
What to expect:
- First and foremost marginal/tenant farmers, the most vulnerable segment, are assured of income to take care of basic needs.
- Risk capital providers are, as the name suggests, taking the risk but are also suitably rewarded by way of higher interest (than prevailing risk free interest) rate and also cheaper as well as quality food grains - organically grown/chemical free.
- If implemented properly, farmers and consumers are connected directly without intermediaries (who exploit farmers) - Risk capital providers double up as consumers.
- As a group, the society is placed in a better position to balance traditional knowledge and modern technology (say, for processing the grain).
- Once the society stabilizes and farmers earn reasonable income, the economy of the village should get benefited too.
- Crops do not fail every year.
- Even during the year of crop failure, damage can be contained with proper advice from the expert/consultant appointed in this connection.
- Risk capital providers, over a period of time, gain in many ways (as a reward for taking risk) viz., alternate investment opportunity (diversification), quality, organic/chemical free food (for self consumption).
- Traditional crops are not capital intensive. Thus they do not require large amounts.
3.Shri: Money - a Proletariat’s currency
To empower/support the proletariat in certain way we are working on creating a new currency. What is it and what to expect out of it is explained briefly hereunder
Shri: Money - What is it?
- Shri: Money is an additional currency, a currency available to the people in addition to Indian Rupee (INR).
- Shri: Money is not a substitute to INR. It is to complement INR.
- Shri: Money is not a cryptocurrency.
- Shri: Money is not a fiat money (obviously).
- Shri: Money is for the proletariat. It would be created and consumed by the proletariat.
- Some of the features of Shri: Money are given hereunder
- It comes with an expiry date - each unit is time stamped and has an expiry date.
- However it does not age when it goes into hibernation (explained later)
- It does not earn interest. It has no ‘time value’ in conventional sense. (In any case ‘time value of money’ seems to be a dying concept)
- It is freely transferable
- It can be converted into INR (conditions apply) but not vice versa.
- A central authority would be in place to implement and monitor the scheme in a transparent way.
- Hibernation is a period when Shri: Money is invested in ‘eligible projects’ to meet the project cost.
- In sum Shri: Money is a currency of the proletariat, by the proletariat and for the proletariat.
What is the purpose?
- It is to protect the proletariat, people at the bottom of the pyramid.
- It is to empower the proletariat.
- It is to create opportunities for the proletariat.
- It is to insulate the proletariat from sudden, unpredictable shocks that may arise in the macroeconomic environment for whatever reason. (There are plenty of reasons to worry about and there are plenty of imponderables both domestic and international).
- It is to check the exploitation of the proletariat by the rich, influential, powerful and well connected.
- It is to take care of the very basic needs of the proletariat like health, hygiene, nutrition, shelter and education.
- It is to check migration of poor people from villages to the cities for economic reasons.
- It is to make Indian economy more stable - a bicycle is more stable than a monocycle, right? (If one takes into account forex reserves it becomes a tricycle, even more stable)
- It would focus both rural and urban poor.
- Though unintended, it can check counterfeit currency. The idea is in development stage right now and we will come out with the specifics pretty soon.
4.Demonetization : Did the Government of India accept our suggestion ?Way back in 2011 we wrote to the Finance Minister, Government of India how black money can be controlled/contained by taking few steps. One of the suggestion we made was demonetization of higher denomination notes. We also marked the copy of this letter to RBI, CBDT, ICAI etc. We never received any response or acknowledgement from any of them. While we are not alone who made such suggestion, we have this feeling that essential features of our suggestion are incorporated in the demonetization scheme declared by the Government of India on November 8th, 2016. The essential features we are talking about are :
- Demonetization of higher denomination notes viz., Rs.500 and Rs. 1,000.
- Simultaneous remonetization with higher denomination notes.
- Imposing reasonable restrictions on cash withdrawals for some time.
Please click here to see copy of our letter - Our suggestion regarding demonetization is highlighted.
While we firmly believed (and still believe) that demonetization of higher denomination notes was long overdue, we were aghast looking the way it was implemented. It only confirmed our belief that bureaucracy in India is unprofessional and mediocre. We wonder whether Government achieved anything tangible from this exercise (and we have reasons to worry about too).