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Regulation of Virtual Currencies Would Be A Cat-&-Mouse Game
- Published on 02 August 2018
(Edited Image. Courtesy: Deloitte)
Legitimatization of Virtual /crypto-currencies (VCCs) is set to gather pace with G20 lauding their benefits while seeking regulations to prevent their misuse.
Tax authorities in developed countries and emerging economies including India have legitimized VCCs by taxing VCC-based transactions. They look for new opportunities to widen the tax net on VCCs. There anonymous ownership makes them easy option for tax evasion.
As put US Internal Revenue Service (IRS) in a reminder dated 23March2018 to taxpayers, “Virtual currency (VC), as generally defined, is a “digital representation of value that functions in the same manner as a country’s traditional currency. There are currently more than 1,500 known virtual currencies. Because transactions in virtual currencies can be difficult to trace and have an inherently pseudo-anonymous aspect, some taxpayers may be tempted to hide taxable income from the IRS”.
International Monetary Fund (IMF) has also pointed out that VCs have a high potential as a means for tax evasion. It notes: “This is particularly the case with cryptocurrencies, where participants need not disclose their identity, and transactions are peer-to-peer and can take place across borders. Given that tax evasion is already illegal in most jurisdictions, the key problems in this area relate to developing effective means of enforcement”.
Monetary authorities, on the other hand, have not formally recognized VCCs as legal means for commercial transactions in most countries. Many have, however, allowed them to mushroom and flourish. A few jurisdictions such as the ones in Indonesia, Iran and India have frowned upon them.
Central Banks know decentralized VCCs might pose a challenge to sovereign currencies in the long run. Some of them are thus themselves considering launching their own digital currencies.
The tone for guarded promotion of VCCs has been set by G20 Meeting of Finance Ministers and Central Bank Governors (FMs-CBGs), who met in Buenos Aires for two-day conference ending 22th July 2018.
Railways Caught in Vortex of Troubles
- Published on 23 July 2018
(Image courtesy: narendramodi.in)
The Railways’ cup of financial woes is brimming. It does not expect turnaround in the situation over a couple of years. The merger of Rail budget into Union Budget has not facilitated any operational improvement in its working.
Missed revenue targets, expenditure overshoots and revenue leakages, including digital payment of salaries to ghost employees, have put the Railways Ministry on the edge.
It is also rattled by pension backlogs & excess payments, accounting discrepancies, digital slippages and GST accounting errors. The list of challenges is long and daunting.
Today, even the Railway Board (RB) does not have full grasp over the magnitude and diversity of the problems. Such irritants flow & grow seamlessly through Railways’ gargantuan network. In the current financial year, RB has thus embarked on a journey to discover true picture of State of Railways.
To facilitate “truthful reporting of asset failures & train punctuality” by 17 zonal railways (ZRs), RB is treating current financial year as “Zero Year”. It means RB would make no comparison of any ZR’s performance in 2018-19 with past record of failure indicators such as diesel loco failure, wagon detachment and signal failure. Such failures & safety indicators are specified in the annual memorandum of understanding between RB and ZRs.
As put by RB in an internal communication, “this move should encourage zonal railways to report truthfully and not worry about adverse comparisons with last year’s figures. It may be appreciated that until and unless an honest and realistic picture of the present state of affairs prevailing on the system is generated, any kind of improvement will not be possible”.
Farmer Strike: Arousing India’s Collective Conscience
- Published on 16 July 2018
Farming and farmers’protests are as intertwined as oxygen and hydrogen atoms in the water molecule. This is because the road to agriculture is paved with potholes and ditches of policy failures; inadvertent and some deliberate. Friction, jerks and, at time, big jolts in form of mass agitations seem inevitable.India’s latest tryst with a farmers’ strike was far more significant: it was about taking the voice of the farmer to the people, not to political leaders or policy makers; it was about exposing the core of a critical crisis that will hit the aam aadmi, even if it leaves the politician unscathed, save at the hustings perhaps.
Farmers in Madhya Pradesh, Gujarat,Maharashtra, Rajasthan, Punjab and Haryana put together a united front for a 10-day “gaon bandh” starting Friday, June 1, sending a message to urban India about what it would be like not to have their supplies of essential items like milk and vegetables. Their demands were many, from loan waiver to right price for their crops and the implementation of the Swaminathan Commission recommendations. In Madhya Pradesh, the farmers declared a complete shutdown of supplies to cities.
Farmers wage periodic fights for their rights across the world. The struggle ranges over the right to get inputs including water; to the right to save crops and livestock, farmland and life. No wonder certain states such as Michigan in the United States have enacted the Right to Farm Act to protect farming and farms. Modern and medieval histories are replete with instances of farmers’ resentment that at times have exploded into uprisings. In current times, one witnesses more of agrarian grudges venting themselves in frequent street protests.
Drumming Strong Fundamentals with ‘Missing Fundamentals’
- Published on 08 July 2018
(Image courtesy: narendramodi.in)
“India’s macro fundamentals strong, asserts Modi at AIIB meet”. “India’s macroeconomic fundamentals remain strong: Arun Jaitley”.
Should such headlines be accepted at the face value? No. Put chest-thumping claims through prism of multi-dimensionalism. And one would see patches of opacity and blur for want of clarity on fundamentals.
This jarring image is due to the fact that definitions, that form basis of flaunted statistics, are either missing or are outdated/nebulous.It is a fundamental problem with Government’s fundamental claims.
It exists in several domains extending from lack of definition of black money to shell companies. ‘Poverty’ and ‘out of school children’ (OOSC) also suffer from want of functional/standard definitions. Similar is the case with certain other aspects of economy such as varying definitions of formal worker followed by official agencies.
Add to this limitation the fact that Government does not collect statistics on certain aspects of economy such as how citizens’ use time. This is important indicator for unemployment, underemployment and ease of living in certain countries notably the United States.
Reckon also the fact that certain data are mere calculations/estimates made on paper work with certain assumptions.