Inclusive Growth, Cashless Society & Tax-free Regime, Eradication of Corruption & Black Money, Control on Terrorism, Universal Basic Income – in one go.
Thiruvananthapuram, Dated 02 December 2016
Short link: http://wp.me/p1ZsI2-XG
Introduction. Demonetization is Archaic and what hurts Economy most is not Black Money but large portion Money being guzzled up and converted into its virtual form by fast mushrooming e-money businesses creating parallel economy of a black hole of Virtual Economy draining Banks hurting liquidity and eventually disrupting Nation’s economy.
For sure, no one can stop advancement of Technology and the disruptive paths it create. However, there has to be a way to tackle it and half baked solutions like Demonetisatin are of no help. The way to go is to walk, and walk the full way with disruptive technology coverting it an advantage. Forewarned is forearmed.
Everyone, right from top, and strangely supposed to be renowned economists, and the Media 24/7 talk relentlessly mixing up disparate issues viz., #Demonetization, #BlackMoney and lately to forget Cash by moving over to #CashlessSociety by everyone using Credit/Debit Cards, e-wallets of Private e-Commerce companies, Mobile Wallets etc., without creating fuss about Cash, be it theirs or in their bank accounts.
But then what they all seem to forget is that Debit cards, Mobile wallets etc,. need to be filled and refilled with Money into it in the first place to get service, and from where people will get Money for that.
Simple, it can happen only if the income and earnings of everyone also paid and received as Money in Virtual form (e-money) through their usual sources.
Reserve Bank of India shall be the Sole Creator, Custodian, Controller, Distributer and Operator of all for of Virtual Money and its e-wallets in the Country.
Now, in order to make it happen who should create Money in Virtual form? Government’s Central Banks (Reserve Bank, in India) certainly not by any Private e-Commerce Companies. End of the day it simply means that in addition to printing and releasing currency notes, RBI shall also create Money in Virtual form and also create discrete open valued e-Wallets, tamper proof, fail proof, cannot be duplicated, hacked or disrupted in anyway by any one; each of it with parameters that can be programmed and altered individually and made available to every one as its Users; ie. every Citizen, every POS’s in every place where any form of e-Money transactions happen ie. Banks, Credit Card Companies, Money Exchangers, Institutions, Organizations, Vendors and Merchants, Shops and more importantly all Private & Public e-money managing Companies like Amazon, Alibaba, PayTm etc,.
These e-wallets each with discrete number and identification code linked with Aadhar (Indian UUID) of every Citizen will become part of a Real/Virtual bank account of their choice that can be filled Virtual Money as Data from One paisa to any amount and acquires one lump some value in the hands of the Creator, the Banks and every POSs and in the hands of every user. The lump some value of the e-wallets get altered as e-money received and spent from it thus making the denominations of Money also Virtual.
- Thus RBI will have an e-Wallet, its value in e-Money is the sum total value of e-Money at any point of time is the value of entire e-Wallets RBI has issued and in circulation. Thus the total sum of the Virtual Money plus Real Money in the Country always remains constant. It is thus RBI is made the sole Creator, Custodian, Operator and Controller of Virtual Money and its e-wallets in the country.
- All e-Money transactions shall happen only through the the Severs of Reserve Bank of India.
- The value of e-Money in the Users e-Wallets get modified every time a request for transaction by any User through their Bank or other Media.
1. Inclusive growth:
Please see a paper published by me many years back on “Exclusively Banked Universal Money Management using Phones” containing comprehensive and consolidated ideas and proposals to realize Financial Inclusion and Microfinance support to people especially in the lower social-economic strata in the link wp.me/p1ZsI2-4g
The above paper describes in detail how Money through Mobile (mTm) envisage wide range of products and service to cater for all sorts of payments in every Points of Sales & Services with money in digital form for everything, anywhere and everywhere, exchange of physical money to e-money and vice versa.
Further, Money through Mobile (mTm) can enable smooth changeover to Cashless Society using UUID for all purposes and to roll out various schemes such as DBT etc., with exclusive Virtual Banks as Payment Gateways, Universal, simple and easy to use applications, 24/7 service from anywhere any time, any amount and Digital Connectivity in remote areas with GPS via Satellites.
2. Power and Perils of Money going Virtual.
Please see a paper published by me on “Power and Perils of Money going Virtual” in the link wp.me/p1ZsI2-Ku in which I had explained in detail the urgent need to bring in regulation to prevent fast mushrooming Private e-money management companies guzzling liquid Money draining banks and create parallel economy of #VirtualMoney that will eventually disrupt Country’s economy.
As e-money has to be in virtual form, the way out is for the Banking Industry itself handle it so that liquidity is not lost. Please see in the following schematic a lay man’s idea how the Real and Virtual Money Cycle looks like with RBI becoming the Creator, Custodian, Operator and Controller of Money in its Real and Virtual forms.
As can be seen in my paper, to move over to Cashless society by using Debit cards, Mobile wallets etc., as of now people need Physical Money in hand or in Bank account in the first place to charge and recharge Debit cards, Mobile wallets etc,.
A presentation on this is in the link: wp.me/p1ZsI2-M6
In order to make it fully Cashless and also to regulate and harness huge amount of Virtual money involved, the way out is that RBI shall be the sole Creator, Custodian, Controller and Operator of all sorts of ‘Money in Virtual form’ and create open e-Wallets and make it available to all Citizens in India, like Aadhar.
Reserve bank of India shall generate Money in Virtual form instead of printing Currency so that everyone get all sort of income and earning in their e-Wallet in the form of Virtual Money through Banks and thereby the liquidity is maintained. This will also enable RBI to create even Billions worth of e-money in its e-Wallet and distribute it to e-Wallets of Banks within few hours without the sort of fuss seen now.
As RBI remain the custodian of e-money, every e-money transaction in the e-wallets everywhere can happen only with authentication of RBI like in the case of NEFT & RTGS. Hence, RBI will have full statistics of Money and its movement. Now Government is clueless where do all the Currency printed and released, primarily for Capitation of Public Banks, vanish. It is time Government seriously examine the effects of fast mushrooming Private FinTech Company’s Money chain, both Real and Virtual and its capitation at the start up stage and now.
3. How to make India Tax free regime.
With adoption of the above arrangement of Real and Virtual Money cycle, Governments Universally across the World can use Money as a commodity (an idea first of its kind ever) to generate much needed enough income for its needs by levying a small percent, say hypothetically at 2% on every money transactions, both Virtual and Real.
For example:- There are above Billion Mobile Phones in India. Say a modest amount of Rs.10000 transacted by every phone on an average per month makes it Rs.10 Trillion per month. Money is dynamic and get re-transacted about 10 times a month making it to Rs. 100 Trillion ie. Rs. 1200 Trillion annually. 2% of it is Rs. 24 Trillion which is more than the total outlay of India’s this FY’s Central budget.
This is just about with the income from Money through Mobile alone, and it will be hundreds of Trillion with 2% levy on all other forms of Money transactions, such as for Goods & Services, Real Estates etc,. both Physical and Virtual , Government will be able to generate revenue of ten fold of this, that is about Rs. 240 Trillion that can take care the entire need of the Central Government and that of the States in India.
Basically there will be no other form of Taxes, people have to pay, Direct, GST or else, thus making India a Tax free regime. Concepts are important, nut and bolts can be added by experts.
4. The efforts involved to move over to fully Cashless Society?
Naturally a question arise how will Government make everyone use ever payment in Cashless payment route. This can be realized by Government make it a rule ring that in every place Money transactions happen shall be treated as Point of Sales / Point of Service and Money transacted in both Physical and Virtual form shall be done only through that. Now if anyone transact Peer to Peer or Peer to Business or B to B in Physical Money other than through POS to avoid levy on its transaction, it has to ultimate reach a POS for getting Goods and Service and will come under levy payment in the hands of the receiver. This is ensured as the POS can be made to accept Money only in Virtual form.
However there shall be facility to accept Money in physical form and exchange it to Virtual form and vice versa to complete the transaction inviting levy twice. This will work as incentive to stick to Cashless mode.
4.1. Money in Physical and Virtual form can co-exist for some more time.
If someone want to use Physical Money at a POS, it has to be exchanged into Virtual Money first. Facility shall be always available to exchange Physical Money into Virtual Money and vice versa, always inviting levy in each transaction; thus Virtual Money transactions become cheaper and this incentive help enhance Cashless mode. Even the Black Money hoarded will have to go through a POS some where some time paying levy and get into the statistics of Government.
4.2. The base becomes broader like never before.
Thus as everyone everywhere, except those exempted, pay the levy on every money transactions both in its Physical and Virtual form; the, one who spend less pay less; the rich the other way around; the base is widened to entire population and revenue generated will be too huge to take care the needs of Central and State Governments together with no other Taxes, Direct or else, GST etc,. For common man it will be less what currently shell out in Direct/indirect Taxes.
As the levy rates are program controlled it can be varied as decided by Government from time to time according various parameters such as user based, location based, status based, special needs based etc.
4.3. Less dependency on FDI.
Once Governments developing countries are able to generate enough income to cater for all its needs, dependency on FDIs diminishes considerably.
4.4. Easy and quick to apply changes in emergent situations.
Another important aspect is that the income generated can be need based and can be varied as needed from time to time in case of national calamities, poor or failure of monsoon, famine, etc., and revert back at will just with the press of a button. in emergent
5. Eradication of Corruption and Black Money and Control on Terrorism activities.
As RBI being the creator and custodian of e-money entire statistics will be available and can be monitored to prevent Corruption and Black money. Same way flow of Money into wrong hands can be prevented the one and the only sure way to restrict terrorist activities in the Country.
India should have its own INTERNET CLOUD and INTERNET EXPLORER Servers.
6.1. India INTERNET CLOUD and indigenous Servers.
Last but not the least, in order to get all these done it is critical to have an INDIA INTERNET CLOUD and own Explorer servers sitting within the country are a must lest the entire economy can grind to halt if solely depend on Explorers abroad happened to be hacked or switched off due to any reason beyond our control.
6.2. Digital connectivity every where. Extending digital connectivity needed for this every where laying Optical cables will take time. The way to go is to implement these in places where digital connectivity available and remote areas are connected to Central Servers with GPS over Satellite links.
Hurrying to get these done without the perquisites such as above and others will be like putting the Cart before the Horse.
Please see my blog: “Universally Governments Operate Money As A Commodity” #UGOMAC in the link wp.me/p1ZsI2-11j and other related blogs wp.me/p1ZsI2-Yn, wp.me/p1ZsI2-Ku, wp.me-p1ZsI2-M6, wp.me/p1ZsI2-4g etc., in papaulsblog.wordpress.com
Please see my blogs on Digital India: Views, opinions, and new proposals on various Technology & Social and Community affairs. http://wp.me/p1ZsI2-J5
Author: Abraham Paul P.
Free lance Telecom and IT Consultant, Ex Owner FCOMNET India & UAE / Vice President Technical Sales, SPCNL SIEMENS ICN Germany / Director Trg. SC & TS SIEMENS ICN RHQ UAE / G. M & SMT TBG BPL Mobile India / Telecom Engineering Service, (A) DOT India.
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