Urgency for Action

There is another cause for great urgency in this matter of getting Investment into India from Abroad and either converting it all into Indian Rupees or using it to acquire essential assets abroad.

This urgency arises because:

1. In view of the ongoing financial crisis, the U.S Government is very liberal with printing additional Dollars.
2. All Western Governments and their Banks and Financial Institutions, which so far had been issuing Financial Instruments and Currency against stated reserves of Gold / Silver / Platinum / Chromium / Rare Earths and other such valuable metals are now indicating that such reserves DO NOT exist to the extent stated. This has presently resulted in a quiet and desperate effort by all of them to buy up as much of such reserves as possible. We too need to build up our reserves of such strategic materials.
3. Please note that today many commodities have a premium of even upto 100 percent if one insists on physical delivery. This portends a fall of the Dollar in purchasing terms (high inflation)
4. In view of both these facts it is essential that we get as much Investment into India as possible, especially the so called Indian Money abroad, at the earliest.
5. It is also, essential that we ensure that we hold, or contract for, adequate reserves of such precious metals and other essential items such as Phosphate (an essential input for Fertilizer with very limited availability) and for Oil. We may even consider purchasing a share in respective mines and Oil fields in other countries to enable us to weather the coming crisis.
6. The short term pressure to prevent the Rupee from strengthening should be resisted as far as possible. Looking only at the effect on Exports and not at the effect on Imports of more important and essential items for the growth of our Economy (Capital goods and Petroleum products) would be very short sighted. A strong rupee will benefit the much larger community of consumers more than what a few exporters and traders might lose, resulting in a net gain to the Country. (See – ‘Interse valuation of currency & Monetization of Private & Temples Gold and Silver holdings).

Exports can be further encouraged by permitting the exporters to either themselves use or sell to others, their foreign exchange earnings to allow them to then import essential inputs like petroleum products and freely sell them with in India in competition with the Public Sector companies (See ‘Pricing and Taxation Policy – For Fuels and Other Enablers’)

Action Points

1. 1. Make it attractive, as suggested above, for those holding Indian money in Foreign Banks to voluntarily bring such money back into India.

   Alternately, to avoid all the hassle of whether it is fair or unfair etc, the inflow could be allowed through existing channels from countries with which we have Double Taxation Avoidance Treaties (eg: Mauritius) into corporations and for purposes as given above. Participatory notes are not transparent and should be done away with.

   2. Act to prevent such money transfers in future by;
      • Ensuring a broad based and equitable Tax Regime (See “Equity in TAXATION & Comments on I.T &G.S.T”). Preferably consider having a purely Consumption / Goods and Services Tax (GST) based system.
      • Encouraging and incentivizing domestic entrepreneurship (See “Wealth, Market Economy & Entrepreneurship – The Case For” and also doing away with the printing of more FIAT currency. (See- ‘Money, Financial Boom & Bust Cycles’).
      • Discourage Black Money transactions (See “Counterfeit Currency and Black Money – A Practical Response”)

Some this has already been done, but needs to be made more comprehensive and equitable (See – Equity in Taxation, Comments on GST and I.T.).

Conclusion

The aim is to put in place a methodology to incentivize Indians who have their monies abroad, to bring it into India to invest in infrastructure and other development Projects. also, act to discourage people from taking their monies abroad. A comprehensive and simplified GST can be the only tax needed. There is no need to have an Income Tax.

Seek not selective retribution. Seek common prosperity.

JAI BHARAT! – JAI HIND!

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