What is new
Plug Chinks in Monetary Security by Reinventing Rupee-Making Biz
- Published on 12 December 2016
(A Security Feature of Plastic Note. Image Courtesy: innoviasecurity.com)
Demonetization has turned torchlight on alarming loopholes in India’s currency defences. This calls for a thorough check of successive Governments’ failure in producing secure, easily authenticable and forgery-resistant currency.
The independent probe should also study mismanagement of demand and supply of currency as evidenced by serpentine queue of citizens outside banks/ATMs and associated tragedies.
The review should serve as foundation for launch of a ‘Make In India’ mission to indigenize the entire value chain from developing bank note design software to detection of counterfeit notes.
Forgers have repeatedly certified the Government’s failure on the currency front, which has a direct bearing on the national security. They have produced and pumped into market fake Rs 2000 notes, even as countless citizens were praying for an opportunity to touch and feel the new notes.
The new notes are akin to old wine in new bottle as they are bereft of new security features, which are the key to keep counterfeiters at bay. As admitted by the Government in Parliament, the new series bank notes are merely “different from the old ones in terms of look, design, size and colour”.
Facts are too strong to shatter the myth that demonetization is essential to fight counterfeiting of high denomination notes and their usage by terrorists.
Bring Legal Clarity to Demonetization-masked Compulsory Deposits
- Published on 25 November 2016
(Image Courtesy: DAVP)
Provide 100% Insurance Cover for Bank Deposits
“The Scheme of compulsory deposit is somewhat novel and unorthodox, which we have had to undertake in the situation created by the Emergency.”
This is not a peek from our beloved Prime Minister Narendra Modi’s wished-for reply to Rajya Sabha debate on demonetization. This quote is from the speech given by Late Morarji Desai, Finance Minister, in Lok Sabha during April 1963 while moving the Compulsory Deposit Scheme (CDS) Bill.
The difference between the previous CDS’ (1963 & 1974 ones), and the present one, is as big as the gulf between democracy-cum-cooperative federalism and dictatorship-cum-State trickery.
Demonetization of Rs 500 and Rs 1000 notes is a fig leaf for unannounced compulsory deposit of citizens’ all savings, implemented without imposing emergency of any type. This open-ended CDS is not provided for by any law, unlike the two previous ones for which specific laws were enacted.
Moreover, the Government has inflicted a surgical strike of austerity that has left millions underfed. It has rendered millions jobless. It has reduced vibrant life to a battle for survival. The Demonetization-induced deaths and injuries has no parallels in the modern history.
The cumbersome procedure for withdrawal of Rs 2.5 lakh for meeting marriage expenditure by either groom or bride family reeks of Guest Control Order of the sixties & seventies.
Imposition of austerity on masses under the garb of fighting black money is a masterstroke. It has enabled Government to abdicate its responsibility to cut its own expenditure and delay further disclosure of reports of Expenditure Management Commission (EMC).
OECD/G20 Should Standardize Emerging Tax Transparency Code (TTC)
- Published on 24 November 2016
European Union (EU), Australia and the United Kingdom (in Brexit mode) are pitching for BEPS+ initiative in the realm of tax transparency. This marks a new milestone in enhanced corporate governance.
They have separately unveiled plans to goad large multinational corporations/enterprises (MNCs/MNEs) to disclose to public a big & complete picture about taxes they pay in different countries. And MNCs in Australia are already queuing up to declare their resolve to write annual ‘taxes paid’ report for public consideration.
MNCs would also have to disclose certain other information about their operations such as how many persons they employ in each country and their accumulated earnings.
This transparency initiative is bound to enliven public vigil. It would enrich public discourse on aggressive tax planning and tax avoidance resorted to by MNCs – an issue that has been probed, re-probed and analyzed intensely in the West over the last five years.
As put by Craig Marston of KPMG, “The global tax transparency agenda now appears unstoppable. Australia has embraced this agenda. Fuelled by Australia’s BEPS leadership aspirations, poorly informed Senators and the Panama Papers and other revelations, this agenda will continue to be pushed. Existing norms of taxpayer confidentiality and commercial-in-confidence will continue to be overtaken by the public’s demand for confidence that companies are paying their ‘fair share’.”
Jettison Flaws in Doing Business Ranking business
- Published on 11 November 2016
(Edited Image Courtesy: artnet.unescap.org)
“Many important policy areas are not covered by Doing Business; even within the areas it covers its scope is narrow. Doing Business does not measure the full range of factors, policies and institutions that affect the quality of an economy’s business environment or its national competitiveness. It does not, for example, capture aspects of macroeconomic stability, development of the financial system, market size, the incidence of bribery and corruption or the quality of the labor force,” says Doing Business (DB) Report 2017.
This observation aptly applies to India. And this is far more important than the 130th rank that India has got among 190 economies on 11 parameters of business regulation assessed in DB 2017.
This annual flagship report of World Bank (WB) group gives an over-simplistic image of doing business in India. It can thus mislead prospective investors. It also does not help policy makers undertake holistic reforms that can make India a more credible business place. WB should revise certain parameters and add new ones to its DB methodology to make cross-country comparison more realistic and inclusive.
Moreover, the domain of information on which DB report is based does not encompass a lot of valuable information. DB report banks on four main sources of information: the relevant laws and regulations; DB’s 39,000 respondents in 190 countries; the governments of the economies covered and the WB Group regional staff.
DB report should factor in all information that does not flow through these four channels for varied reasons.
India’s ranking, in all probability, would be much lower if DB methodology is widened by including vital parameters that bedevil business and economic growth in India and elsewhere.
DB methodology is of bygone era. It is devoid of ground reality about business challenges/regulations faced by all stakeholders including Government organizations, public sector undertakings (PSUs), organized private enterprises and informal business sector.
We can substantiate this contention by taking up specific cases.