Steps for Financial Inclusion and Formal Banking:
1) Indian Post Payment Bank
2) PM Jan Dhan Yojana and Aadhaar
3) Govt schemes for financial insurance
4) Govt's other financial inclusion schemes
5) Direct benefit transfer and non-cash payments
6) Demonetisation and GST
7) Closure of black money channels
8) Tax treaties and information exchange
9) Recovery of Bank fraud money
10) Funding capital requirement of Banks
11) Blockchain
12) Limiting discretion in govt policy implementation
Indian Post Payment Bank
---------------------------------------
https://www.livemint.com/Industry/0ZCVVXLyO8E9W3DPLodsqK/India-Post-Payments-Bank-launch-tomorrow-10-things-to-know.html
https://economictimes.indiatimes.com/wealth/personal-finance-news/india-post-payment-bank-to-scrap-debit-cards-use-qr-codes/articleshow/65620310.cms
PM Jan Dhan Yojana and Aadhaar
---------------------------------------------------
◙ India has shown remarkable progress in terms of bank accounts and financial inclusion -- and effectively utilised the power of mobile technology and biometric ID.
◙ 324m Jandhan bank a/c were opened. Coverage of adults (15+ years) rose sharply from 53% in 2014 to 80% in 2018. The gender gap is down from 20% to just 6%, and so is the income gap (from 15% to just 4.5%).
◙ Jan Dhan accounts seeded with Aadhaar (biometric ID) and Mobile phone (almost universally accessible digital ICT) allow digital payments. Currently, 85% Jandhan a/c are seeded with Aadhaar.
◙ Financial inclusion benefits are RuPay debit card, free overdraft facility and free accident insurance cover. Currently, 244m RuPay cards are attached to Jandhan accounts.
◙ Low-cost pension and micro-insurances were added in 2015. In August 2018, free accident insurance cover (for new a/cs) and overdraft limits were doubled to Rs 2lakh and Rs10,000 respectively.
◙ Now, every adult will be targeted, so that 190m unbanked adults are enroled. Previously Jan Dhan was focused on recruiting one adult in every household. A Banking Correspondent is deployed from 1.25 lakh Sub-Service Areas (in rural areas) to take care of btw 1000-1500 households.
Govt schemes for financial insurance or savings
--------------------------------------------
◙ Pradhan Mantri Jeevan Bima Yojana (life insurance via PMJDY bank account) has 54.7 million subscribers
◙ Pradhan Mantri Suraksha Bima Yojana (accident insurance via RuPay debit card) has 139.8 million subscribers
◙ Atal Pension Yojana (for informal workers in the unorganized sector) has over 11.1 million subscribers
◙ Pradhan Mantri Vyay Vandana Yojana (high-interest deposits for 60+ yrs) benefits 300,000
◙ Sukanya Samriddhi Yojana (small regular tax-free savings for the girl child, for min 15 years) has 12.6m subscribers and Rs 19,200cr as of Nov 2017. It started in 2015.
Govt's other financial inclusion schemes
--------------------------------------------
◙ PM MUDRA Yojana (small loans up to 10 lakh to non-corporate small & micro enterprises) has lent Rs 6.37 lakh crore to 134.7m beneficiaries. It continues to expand.
◙ Ayushman Bharat-NHPS or PMJAY (Rs 5lakh pa hospital cover for ~40% poorest households) covers 80.3m families in rural areas & 23.3m in urban areas. It is expected to shake-up the entire healthcare & allied sectors, increasing capacities, reducing prices and driving insurance penetration in the growing middle classes, beyond those covered under Ayushman Bharat.
Direct benefit transfer and non-cash payments
----------------------------
◙ Centre under PM Modi prefers to use DBT to make disbursements. As a result, DBT has taken off and accelerated in the last 4 years. Cumulatively DBTs amount to Rs 3.89 lakh crore (till May 2018).
◙ 437 Central schemes (from 56 ministeries) paid out Rs 190,800cr to 1,239m beneficiaries in 2017-18. This is a jump from 142 schemes paying out Rs 74,700cr to 357m beneficiaries in the preceding year. DBT payout in 2013-4 (last year of previous govt's term) was merely Rs 7,400cr.
◙ New DBT funds came from PAHAL (LPG cylinder subsidy) before 2014-15, MGNREGs in 2015-16, and PMAYG (affordable housing) & small schemes in 2017-18. Numerous small schemes were added btw 2015-18. Largest beneficiaries come from PDS (public food distribution), PAHAL and MGNREGs.
◙ Over 75m Jandhan a/c are receiving DBT
Demonetisation and GST
---------------------
◙ Direct and indirect tax compliance has soared. It has resulted in the lower GST rates and lower borrowing costs. It has also led to much higher inflows into savings and mutual funds.
◙ Data analytics is detecting undisclosed incomes and assets, helped by GST data from e-way bills and selective invoice matching. Sophisticated IT systems are also collating from diverse sources, incl tax departments (indirect, direct, customs), banking and digital payments, public or govt sectors, asset holdings (financial, RE, vehicle), air travel, etc.
◙ Digital payments for business and retail transactions have mushroomed and so have non-banking payment modes like wallet, UPI and Aadhaar based. Core banking is becoming widespread.
◙ Shell companies were found to be conduits for money laundering during demonetisation, which led to their mass cancellation. Banking systems were found wanting, and this led to greater use of technology and blockchain.
Closure of black money channels
-----------------------------------------
◙ Closure of lakhs of shell companies and barring of their directors.
◙ Tightening and closure of NGOs that don't file accounts and transgress
◙ The Banning of Unregulated Deposit Schemes Bill, 2018 deals with unregulated deposit schemes, or ponzi schemes that find loopholes in State laws. Promoters and directors are obliged to repay deposits in full, or risk attachment of assets, hefty fines and lengthy jail terms.
◙ The Benami Transactions (Prohibition) Amendment Act, 2016 should force people to simplify their holdings or risk hefty consequences. This should be coupled with proper registration of land & property titles (which has not happened).
◙ Insolvency and Bankruptcy Code 2016 should deter embezzlement of large sums of borrowed money, as lenders can take defaulting companies to bankruptcy and liquidation court. Govt is using Interpol and bilateral agreements to bring back wilful defaulters and their loot.
◙ Fugitive Economic Offenders Bill, 2018 deters defaulters from absconding abroad, as they will stand to lose their property in India. Govt could make it applicable overseas through bilateral agreements.
◙ Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 should curb foreign black money, as it attracts tax at over 100%, and a hefty 3-10 years in jail for willful offenders.
Tax treaties and information exchange
-------------------------------------------------
◙ Tax treaty revisions to reduce round-tripping of black money.
◙ Automatic real-time exchange of banking information with member countries
◙ Detailed financial reports of multinationals ("country-by-country reports") are obtained through automatic route (by bilateral agreements or via 72 nation MCAA). This improves risk-assessment to detect tax leakages (ie. selection for taking up tax audits) and subsequent transfer pricing audits.
Recovery of Bank fraud money
---------------------------------------
https://www.livemint.com/Industry/aTpgAeuR87Wp9Jj6FybcAM/Prime-Minister-Modi-launches-India-Post-Payments-Bank.html
Funding capital requirement of Banks
---------------------------------------------
Blockchain
---------------
Limiting discretion in govt policy implementation
-------------------------------------------------------
1) Indian Post Payment Bank
2) PM Jan Dhan Yojana and Aadhaar
3) Govt schemes for financial insurance
4) Govt's other financial inclusion schemes
5) Direct benefit transfer and non-cash payments
6) Demonetisation and GST
7) Closure of black money channels
8) Tax treaties and information exchange
9) Recovery of Bank fraud money
10) Funding capital requirement of Banks
11) Blockchain
12) Limiting discretion in govt policy implementation
Indian Post Payment Bank
https://www.livemint.com/Industry/0ZCVVXLyO8E9W3DPLodsqK/India-Post-Payments-Bank-launch-tomorrow-10-things-to-know.html
https://economictimes.indiatimes.com/wealth/personal-finance-news/india-post-payment-bank-to-scrap-debit-cards-use-qr-codes/articleshow/65620310.cms
PM Jan Dhan Yojana and Aadhaar
◙ India has shown remarkable progress in terms of bank accounts and financial inclusion -- and effectively utilised the power of mobile technology and biometric ID.
◙ 324m Jandhan bank a/c were opened. Coverage of adults (15+ years) rose sharply from 53% in 2014 to 80% in 2018. The gender gap is down from 20% to just 6%, and so is the income gap (from 15% to just 4.5%).
◙ Jan Dhan accounts seeded with Aadhaar (biometric ID) and Mobile phone (almost universally accessible digital ICT) allow digital payments. Currently, 85% Jandhan a/c are seeded with Aadhaar.
◙ Financial inclusion benefits are RuPay debit card, free overdraft facility and free accident insurance cover. Currently, 244m RuPay cards are attached to Jandhan accounts.
◙ Low-cost pension and micro-insurances were added in 2015. In August 2018, free accident insurance cover (for new a/cs) and overdraft limits were doubled to Rs 2lakh and Rs10,000 respectively.
◙ Now, every adult will be targeted, so that 190m unbanked adults are enroled. Previously Jan Dhan was focused on recruiting one adult in every household. A Banking Correspondent is deployed from 1.25 lakh Sub-Service Areas (in rural areas) to take care of btw 1000-1500 households.
Govt schemes for financial insurance or savings
◙ Pradhan Mantri Jeevan Bima Yojana (life insurance via PMJDY bank account) has 54.7 million subscribers
◙ Pradhan Mantri Suraksha Bima Yojana (accident insurance via RuPay debit card) has 139.8 million subscribers
◙ Atal Pension Yojana (for informal workers in the unorganized sector) has over 11.1 million subscribers
◙ Pradhan Mantri Vyay Vandana Yojana (high-interest deposits for 60+ yrs) benefits 300,000
◙ Sukanya Samriddhi Yojana (small regular tax-free savings for the girl child, for min 15 years) has 12.6m subscribers and Rs 19,200cr as of Nov 2017. It started in 2015.
Govt's other financial inclusion schemes
◙ PM MUDRA Yojana (small loans up to 10 lakh to non-corporate small & micro enterprises) has lent Rs 6.37 lakh crore to 134.7m beneficiaries. It continues to expand.
◙ Ayushman Bharat-NHPS or PMJAY (Rs 5lakh pa hospital cover for ~40% poorest households) covers 80.3m families in rural areas & 23.3m in urban areas. It is expected to shake-up the entire healthcare & allied sectors, increasing capacities, reducing prices and driving insurance penetration in the growing middle classes, beyond those covered under Ayushman Bharat.
Direct benefit transfer and non-cash payments
◙ Centre under PM Modi prefers to use DBT to make disbursements. As a result, DBT has taken off and accelerated in the last 4 years. Cumulatively DBTs amount to Rs 3.89 lakh crore (till May 2018).
◙ 437 Central schemes (from 56 ministeries) paid out Rs 190,800cr to 1,239m beneficiaries in 2017-18. This is a jump from 142 schemes paying out Rs 74,700cr to 357m beneficiaries in the preceding year. DBT payout in 2013-4 (last year of previous govt's term) was merely Rs 7,400cr.
◙ New DBT funds came from PAHAL (LPG cylinder subsidy) before 2014-15, MGNREGs in 2015-16, and PMAYG (affordable housing) & small schemes in 2017-18. Numerous small schemes were added btw 2015-18. Largest beneficiaries come from PDS (public food distribution), PAHAL and MGNREGs.
◙ Over 75m Jandhan a/c are receiving DBT
Demonetisation and GST
◙ Direct and indirect tax compliance has soared. It has resulted in the lower GST rates and lower borrowing costs. It has also led to much higher inflows into savings and mutual funds.
◙ Data analytics is detecting undisclosed incomes and assets, helped by GST data from e-way bills and selective invoice matching. Sophisticated IT systems are also collating from diverse sources, incl tax departments (indirect, direct, customs), banking and digital payments, public or govt sectors, asset holdings (financial, RE, vehicle), air travel, etc.
◙ Digital payments for business and retail transactions have mushroomed and so have non-banking payment modes like wallet, UPI and Aadhaar based. Core banking is becoming widespread.
◙ Shell companies were found to be conduits for money laundering during demonetisation, which led to their mass cancellation. Banking systems were found wanting, and this led to greater use of technology and blockchain.
Closure of black money channels
◙ Closure of lakhs of shell companies and barring of their directors.
◙ Tightening and closure of NGOs that don't file accounts and transgress
◙ The Banning of Unregulated Deposit Schemes Bill, 2018 deals with unregulated deposit schemes, or ponzi schemes that find loopholes in State laws. Promoters and directors are obliged to repay deposits in full, or risk attachment of assets, hefty fines and lengthy jail terms.
◙ The Benami Transactions (Prohibition) Amendment Act, 2016 should force people to simplify their holdings or risk hefty consequences. This should be coupled with proper registration of land & property titles (which has not happened).
◙ Insolvency and Bankruptcy Code 2016 should deter embezzlement of large sums of borrowed money, as lenders can take defaulting companies to bankruptcy and liquidation court. Govt is using Interpol and bilateral agreements to bring back wilful defaulters and their loot.
◙ Fugitive Economic Offenders Bill, 2018 deters defaulters from absconding abroad, as they will stand to lose their property in India. Govt could make it applicable overseas through bilateral agreements.
◙ Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 should curb foreign black money, as it attracts tax at over 100%, and a hefty 3-10 years in jail for willful offenders.
Tax treaties and information exchange
◙ Tax treaty revisions to reduce round-tripping of black money.
◙ Automatic real-time exchange of banking information with member countries
◙ Detailed financial reports of multinationals ("country-by-country reports") are obtained through automatic route (by bilateral agreements or via 72 nation MCAA). This improves risk-assessment to detect tax leakages (ie. selection for taking up tax audits) and subsequent transfer pricing audits.
Recovery of Bank fraud money
https://www.livemint.com/Industry/aTpgAeuR87Wp9Jj6FybcAM/Prime-Minister-Modi-launches-India-Post-Payments-Bank.html
Funding capital requirement of Banks
Blockchain
Limiting discretion in govt policy implementation
-------------------------------------------------------
The launch of India Post Payments Bank (IPPB) by PM Narendra Modi
16
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REPLY 28w - Transfer pricing and taxable income of multinationals
--------------------
Multinational companies with over $850m turnover must file a country-by-country report with tax authorities.
1. Reports provide information on revenue, profits, capital, tax, no. of employees, the nature of business in each country where it operates
2. CBDT issued guidance and instruction [instruction no. 2/2018] which are binding on tax authorities. This will help in Ease of Doing Business.
3. Access, appropriate use and confidentiality of C-C reports in India is laid out. These are issues of concern for companies, esp to stop leaking of sensitive information on value chains, sources of competitive advantage, organisational structure, etc
4. India has signed "Multilateral Competent Authority Agreement" (MCAA) for automatic exchange of country-by-country reports, with 72 countries including the UK, Singapore, Japan, and China.
5. CBDT wants to have bilateral agreements with other countries not included in MCAA. Bilateral agreements allow for the exchange of such reports or require a subsidiary of the multinational to file such reports, eg US & Taiwan.
6. In absence of any bilateral or multilateral agreement, multinationals with Indian operations are required to file a report in India.
6. Central tax directorate (DGRA) is a high-level body that does risk-assessment on these reports. A field transfer pricing officer will do a detailed investigation of any company that comes under audit, using SOP devised by the DGRA. C-C reports are a useful starting point for a detailed audit.
7. Transfer pricing investigations will determine whether wrongful transfers of profits or capital were made out of the country. Such reports are also useful for statistical purposes.
8. Confidentiality is protected by statutory tax laws, treaties and OECD standards. Thus tax officers have to handle these reports with due care, otherwise, tax administration stands to lose rights to make transfer pricing adjustments. Advanced transfer pricing agreements are in place and have maintained confidentiality. This gives a lot of credibility to India.
9. Non-compliance by tax authorities will invoke suspension of report sharing. Thus various proceedings in quasi-judicial bodies (like tribunals) and publications need to be re-considered for sake of confidentiality.
10. As a result of CBDT's instructions, the scope of tax authorities and SOP for audit is circumscribed. Instructions provide a focused and intensive 2 stage process: risk-assessment & transfer pricing audit.
11. Non-compliance with BEPS (i.e. filing all the relevant forms in India relating to three-tiered documentation) could trigger an audit.
REPLY 28w - TIGHTENING and CLOSURE of NGOs
Summary
Prior to 2014, NGOs were easy conduits for funding nefarious activities within India. Its an indictment on the previous govt that anti-national activities and highly damaging activities like terrorism, conversions, organised crime, drug & human trafficking, etc were encouraged under their watch. NGOs with domestic donations indulge in rampant corruption and can launder money without too much scrutiny. The situation now is much better but we don't know whether any/ some or most of the criminals are getting prosecuted and put behind bars.
Abridged article
In 2013, the Delhi High Court stated that 99% of the NGOs were money-making entities. Only 1/100 served the charitable purpose for which money was collected!! NGO funds were diverted for personal purposes and laundered as black money.
Crackdown on NGOs happened early in Govt spell in 2014------------------------------
1. Govt reduced foreign donations.
In 2016-17 foreign donations fell to 36% (from Rs 17, 773 to Rs 6,499cr). Also, 20,000 FCRA licenses were cancelled and 1300 NGOs denied renewal of FCRA licenses.
Only entities registered under the Foreign Contribution Regulation Act (FCRA) could accept foreign donations. Those whose licences were cancelled could not receive foreign donations -- eg. Greenpeace, Jawaharlal Nehru University (JNU), Indira Gandhi National Open University (IGNOU), Indian Institute of Technology (IIT) in Delhi and Madras, Infosys Foundation. Cancellations were done for repeated violations of FCRA, eg.under provision for filing of financial returns certified by a chartered accountant, only 10% of NGOs had filed returns.
Govt questioned why there was such lack of accountability and transparency. At the same time, Intelligence noticed mushrooming of NGOs in trouble-hit areas like Kerala, Uttar Pradesh, Bihar, Chhattisgarh and Jharkhand, and reported appropriation of funds for nefarious purposes like funding terror, anti-national activities, religious conversion and money laundering. 25 organisations lost their licenses for ‘anti-national’ activities.
2. Blacklisting of fictitious NGOs
As of August 2018, 118 NGOs have been blacklisted by Govt. For example, in February 2018, NGO called "Being Human Foundation" was set up by a famous Bollywood actor -- for providing healthcare facilities and education of the underprivileged. But the project was never implemented. As a consequence of blacklisting, names of NGOs are made public, both to name-and-shame and to warn the public against cooperating with these NGO.
In 2017, SC told the Govt to take tougher action. It wanted criminal action against NGOs for misappropriation (funds used for other than prescribed purpose) and for swindling funds (taking funds by deception or cheating).
3. Tightening the laws
SC also directed the Centre to formulate a stronger law to regulate the NGOs including the disbursement of funds. CBI report 2017 pointed out that some states were lax in requiring (financial) transparency. For example, Kerala with 3 lakh NGOs had no legal provision to submit returns. Centre acted by providing the following guidelines:
◙ It is mandatory for all NGOs to register with Niti Aayog’s NGO Darpan in order to receive government grants.
◙ It must disclose in-depth details about their past work, fund utilization, yearly audit report and key people managing the NGO.
◙ It is required to have a performance audit by independent third parties. Another audit will be done by Comptroller & Auditor General of India.
◙ Govt must file a lawsuit to recover the money syphoned. Govt has the right to mount a criminal prosecution against NGOs for not completing a project within the prescribed deadline.
◙ Govt asked NGOs to open bank accounts which had core banking facilities (ie where all financial transactions would be accessible to security agencies on a real-time basis).
4. Accrediting the NGOs
In 2014 -- just like US has done -- India also started to grade NGOs on good performance. CRISIL, a leading rating agency was chosen for the task. Independent agencies or NGOs have started to scrutinise and accredit NGOs. According to them, a pass means the NGO is vouched as good to receive donations.
REPLY 28w - Demonetisation had good & bad short-term impacts, but did it change things in the long-term?
-----------------------
The banning of notes did not diminish the total value of notes since virtually all were returned to banks or exchanged for valid currency. But demonetisation has given leads into the underworld, which among other things has lead to the closure of lakhs of shell companies. Income tax filings & payments have shot up, and mutual fund investments have come in spates. It has also hastened the pace of non-cash payments. Moreover, a fair share of tax will be collected, once investigations are completed. However, more Benami properties should have been seized, and embezzlement of public monies by politicians & bureaucrats seems untouched and continues as before.
To effectively combat this scourge of black money on a permanent basis, all large cash transactions should be viewed with extreme suspicion (and treated as illegal). Secondly, all stores of wealth must be identified with a beneficiary. Thirdly Benami properties act must be enforced so holdings by associates would be severely curtailed.
https://plus.google.com/100789863972538583352/posts/PiwikMA4nWr
Big bang structural reform (by govt spokesman)--------------------------------
Govt has done a good job. It has unearthed over Rs 1.44 lakh crore, through over Rs 66,000cr from Income Disclosure Scheme, Rs 53,000cr in indirect taxes and another Rs 25,000cr plus undisclosed income in foreign banks (this is subject to ongoing investigations).
I will present facts that prove demonetisation was successful in every way.
1. Taxman is still working through large deposits---------------------------------------------
People who deposited over two lakh crore rupees in cash during demonetisation had never ever filed income tax returns. Taxman is examining people who had altogether deposited over Rs 2 lakh. Of these 22.22 lakh suspect entities, most (21.12 lakh) were individual. Rest were 11,579 companies, and 57,693 trusts, associates of person, Hindu undivided family, and artificial judicial persons.
2. Cancellation of shell companies and directorships---------------------------------------
Over 2.1 lakh shell companies and over 3 lakh directors had their bank accounts frozen, registrations cancelled & names disqualified.
3. Equity investment and savings are boosted----------------------------------------------
Idle cash is adding to productive savings and investments. Jump is seen in both no. of new retail investors and volumes of monthly inflows. Eg: new retail investors grew from 35 lakh (2015-16) to 77 lakh (2016-17) & over 1 crore (2017-18). Monthly inflows grew from Rs 4,000-6000cr to Rs 7,000-8000cr.
Cash was added to formal banking channels. Over Rs 80,000cr was added into dormant Jan Dhan bank accounts; Rs 10,700cr into NE bank accounts and Rs 16,000cr into regional rural banks. Unpaid loans worth Rs 80,000cr were repaid.
4. Bringing money and people into the tax net-----------------------------------------
As much as 1.3 to 3.6% of GDP was brought into formal banking channels. These will be subject to taxation. As more people are brought into the formal sector, the official GDP would be boosted by a few percentage points. This will improve the visible macroeconomic indicators such as public debt % GDP.
Moving to the superior tax compliance that demonetisation unleashed, it is pertinent to note that immediately within the first four months following demonetisation, 56 lakh new income tax assessees were added to the income tax base in fiscal 2016-17. Post-demonetisation, the growth in new tax returns filed has risen by 85.51 lakh and 1.07 crore. These are at significantly higher than earlier times.
Over 5.29 crore income tax returns have been filed in the current FY 2018-19, with over 22 lakh returns filed on August 31, 2018. More than the visible tangible benefits, it the sheer fear of the law that demonetisation has ushered in, which will always stand the test of time. Therefore, the number of income tax returns filed has risen from 3.8cr in fiscal 2013-14, to 6.86cr in fiscal 2017-18. The overall income tax revenues rose from Rs 6.38 lakh crore to a whopping Rs 10.02 lakh crore in the said period.
5. Unearthing fake accounts used for grabbing benefits------------------------------------------
Demonetisation coupled with Aadhaar has helped unearth 3.5cr fake LPG connections, 2.95 crore duplicate ration cards, 93 lakh fake MNREGA accounts, 11.4 lakh fake pan cards, 4.4 lakh fake ghost accounts under the mid-day meal scheme, among others.
6. Non-cash payments-------------------------------
Digital transactions received a phenomenal boost post-demonetisation. Pre-demonetisation, transactions via Unified Payments Interface, on an average, stood at just one lakh a month. Post-demonetisation, that figure has risen to as high as 25 crore transactions per month. Again, pre-demonetisation, credit card and debit card transactions via point of sale terminals, on an average, stood at 70 million transactions per month. That figure, post-demonetisation, stands at a robust 400m plus transactions per month. It is important to note here that while it took almost 70 years for India to reach 70 million digital transactions per month, it took less than 18 months for the country to reach an average monthly size of 400 million transactions.
7. Lowering of borrowing costs-----------------------------------
Beyond digitisation, demonetisation led to an almost 100-150 basis point fall in the marginal cost of lending for most banks, from nine to 9.5per cent, to barely eight per cent, which in turn, benefited the Indian middle-class by way of lower EMIs.
8. Impact on crimes (stopped funding of nefarious activities)--------------------------------------------
Interestingly, beyond numbers and hard data, demonetisation has been hailed by umpteen global research groups for not only curbing Naxalism in a big way but also curtailing human trafficking in large parts of Assam, Meghalaya, Manipur and Siliguri and the neighbouring countries like Nepal and Bangladesh.
REPLY 28w - Post-demonetisation analysis (critical)
-----------------------
Post-demonetisation (defence)-----------------------
https://www.opindia.com/?p=121716
REPLY 26w - GST
------
GST has been transformational. For example, it has led to a massive increase in voluntary compliance and new GST filings.
But early on, tech glitches and business unpreparedness had created difficulties for both taxmen and taxpayers. Manual processing was used leading to delays. Lack of proper software support undoubtedly led to tax leakages. Govt stretched deadlines and let off errant taxpayers in view of popular discontent. But this phase has passed. Tax authorities are using data analytics, combined with additional information coming from e-way bills, selective invoice matching, digital payments, etc.
"We now have the wherewithal to track tax defaulters and punish them," says Chief Commissioner of taxes, Bengaluru.
It is perhaps easiest for traders to switch over to digital transactions as dealing with GST then becomes very easy. Govt has helped by reducing GST tax rates. It may reduce standard tax slabs to just 2 or 3 from 5. Ie. replace 12, 18 & 28 slabs with 15%?
REPLY 28w REPLY 28w - Pradhan Mantri Jan Dhan Yojana (PMJDY)
-------------------------------------
It was a flagship financial inclusion scheme launched in August 2014. At that time, the focus was on opening account for every household. Jandhan bank account, when combined to added security (via Aadhar) and accessibility (via Mobile), was called JAM. The basic account came with RuPay debit card, free accident insurance and limited overdraft facility. Low-cost pension and microinsurance were added one year later.
Current Status:-------------
JD accounts 324.1m
Deposit balance Rs 81,200cr
Average balance Rs 2505
Aadhar seeding 85%
Women 53%
Enhancements announced in Aug 2018:--------------------------------
Free Accidental Ins. cover doubled to Rs 2lakh (opened after 28/8/18)
Overdraft limit doubled to Rs 10,000
Unconditional Overdrafts introduced to Rs 2,000
Focus has shifted to recruiting every adult in every household
World Bank report----------------------------
Progress can be seen in Global Findex Database released by the World Bank, https://globalfindex.worldbank.org/
India is shown remarkable progress in terms of bank accounts and financial inclusion. 80% of 15+ yrs old people now have bank accounts. This is in line with China. However, half the accounts are inactive, and 190m adults don't have bank accounts.
Govt policy boosted bank accounts among unbanked adults through biometric ID cards. Govt has ensured high inclusive growth of bank accounts, by actively recruiting those that were historically excluded. From 2014, account ownership rose over 30% among women and the poorest 40% of households. The rise was 20% among men and the richest 60% of household. Strong Govt push had reduced the gender (to 6% from 20%) and income (to 4.5% from 15%) gaps.
A switch by govt from cash dispersals to digital payments has reduced corruption and improved payment efficiency. For example, leakage of pensions is down 47% when payment is made through biometric smart cards. There is a strong gender gap in digital payments (42% of males vs 29% of females).
Financial inclusion is also about people saving and borrowing as per exigencies. Having access to financial services is a crucial step to reducing both poverty and income inequality. In this respect, mobile phone ownership and internet access (or digital ICT) have opened up opportunities for universal financial inclusion. For example, out of the 1.7b unbanked population globally, 2/3rd own mobile phones.
https://www.business-standard.com/article/finance/190-mn-indian-adults-don-t-have-bank-account-says-world-bank-report-118041900972_1.html
REPLY 28w - 28w
- Social Security Schemes
-------------------------------------
Social security cover has increased x10 to around 500m since 2014. PM Modi says, "Social security gives people the strength to face challenges. Our schemes have now reached millions of people across the country." The security net may not be very deep but it is now reaching large numbers that desperately need it.
280 million new bank accounts were opened under the PMJDY. Life Insurance is provided through PMJDY and Accident Cover through Rupay card. Two old age schemes were also introduced. Eg.
-- Pradhan Mantri Jeevan Bima Yojana has 5.47cr subscribers
-- Pradhan Mantri Suraksha Bima Yojana has 14cr subscribers
-- Atal Pension Yojana has 1cr subscribers
-- Pradhan Mantri Vyay Vandana Yojana (for aged 60+)
Women
PM Modi expressed happiness for more women having bank accounts. They have entered the financial mainstream through funding the unfunded scheme (called MUDRA) which avails capital for small business enterprises.
Elderly
Over 10m are now subscribers of the assured minimum pension scheme called Atal Pension Yojana. 300,000 elderly people have benefitted from the Vaya Vandana Yojana started in 2017. This gives citizens above 60 years a high 8% pa fixed for 10 years. Tax allowance for the elderly was also increased.
REPLY 27w REPLY 28w - DBT
----
List of schemes has grown. States are also using DBT for their payments.
https://www.thetruepicture.org/four-years-modi-govt-roadmap-towards-financial-inclusion/
REPLY 28w - DBT
--
A huge number of claimants. This has been boosted by PDS. Centre is indicating that electricity subsidies (beyond a certain limit) should be done by DBT. Against this, the Supreme Court has not come out with a definitive verdict on the use of Aadhaar in DBT.
REPLY 28w - Ayushman Bharat will increase overall insurance penetration
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While Ayushman Bharat covers the poorest 40% of the population, it will be also lead to a greater uptake of medical insurance from those left outside the scheme. These are the growing middle classes, young people and retirees who will not want to be left behind. It is likely that it would lead to cross sales of other insurance products.
Ayushman Bharat will create lakhs of new jobs and shake up the value chain comprising healthcare and allied sectors. As such, this should lead to lower cost of health insurance.
Sectors to be benefited are pharmaceutical, diagnostics, medical devices, data management, insurance hospitality TPAs, quality accreditation and human resource management (ie. medical, nursing, paramedical and technical education).
REPLY 28w - Sukanya Samriddhi Yojana (SSY) is a small deposit scheme for the girl child launched as a part of the 'Beti Bachao Beti Padhao' campaign. It is currently 8.1 per cent and provides an income-tax benefit under section 80 C of the Income Tax Act,1961. Even the returns are tax-free in the scheme.
A Sukanya Samriddhi Account can be opened any time after the birth of a girl till she turns 10, with a minimum deposit of Rs 250 (Earlier it was Rs 1,000). In subsequent years, a minimum of Rs 250 and a maximum of Rs 1.5 lakh can be deposited during the ongoing financial year.
The account can be opened in any post office or authorised branches of commercial banks. The account will remain operative for 21 years from the date of its opening or till the marriage of the girl after she turns 18. To meet the requirement of her higher education expenses, partial withdrawal of 50 per cent of the balance is allowed after she turns 18.
The government, via Notification No. G.S.R.863(E) dated December 2, 2014, has notified the Sukanya Samriddhi Account Rules, 2014, which came into force with effect from the same day.
What are the rules for opening Sukanya Samriddhi Account?
The account can be opened by the natural or legal guardian in the name of the girl from her birth till she turns 10. A depositor may open and operate only one account in the name of the girl child under these rules. One can't open two accounts for one girl.
The birth certificate of the girl in whose name the account is opened should be submitted by the guardian at the time of the opening of the account in the post office or bank, along with other documents relating to identity and residence proof of the depositor.
How much can be deposited in the account?
The account can be opened with an initial deposit of Rs 250 and thereafter, any amount in multiples of Rs 100 can be deposited, subject to the condition that a minimum of Rs 250 will be deposited in a financial year, but the total money deposited in an account on a single occasion or on multiple occasions will not exceed Rs 1,50,000 in a financial year.
Deposits in the account can be made till the completion of 15 years, from the date of the opening of the account. For a 9-year-old, deposits have to continue till the child turns 24. Between ages 24 and 30 (when the account matures), the account keeps earning interest on the balance.
An irregular account where the minimum amount has not been deposited may be regularised on payment of a penalty of Rs 50 per year, along with the minimum specified subscription for the year (s) of default. If the penalty is not paid, the entire deposit, including those made before the date of default, will receive interest at post office savings bank account rate, which is currently 4%. If excess interest has been paid, it will be reversed.
What is the mode of deposit?
The deposit in the account can be made in cash or by cheque or demand draft and an endorsement on the back of such instrument has to be made and signed by the depositor, indicating the name of the account holder and the account number in which the deposit is to be credited.
Deposits may also be made through electronic means (e-transfers) in the concerned post office or banks if there is CBS (core banking solutions) availability in them. In case the deposit is made by cheque or demand draft, the date of encashment of the cheque or demand draft is the date of credit to the account, while for e-transfer, it is the date of deposit.
How is the interest rate on deposits calculated?
The government fixes interest rates on quarterly basis based on the G-sec yields. The interest rate spread that the SSY enjoys over the G-sec rate of comparable maturity is 75 basis points.
REPLY 28w - How much pain do you see for the banking sector in terms of resolution of bad loans and NPAs?
The real reason for the increase in percentage of non-performing assets (NPAs) is something that has to be understood before we talk of resolution of NPAs. During the UPA-II period, there was a huge increase in the disbursement of loans. This was due to a phenomenon known as “telephone banking”, that was a characteristic of that regime. In this telephonic instructions used to go directly to banks and loans would get sanctioned, without, in most cases, there being any proper scrutiny or checks of assets etc. Data shows that the gross advances of Public Sector Banks (PSBs) increased almost threefold in six years from 2008 to 2014. The result of such random sanctioning of loans is today’s problem of NPAs.
And, more importantly in the previous regime, the quantum of these NPAs was also understated, due to which the true scale of this problem could not be known to the country.
These facts we came to know once our government came to power. Someone else in my place would have perhaps washed all this dirty linen in public for political mileage and laid bare the havoc wreaked on the economy by the previous government. However, I knew that this would raise an alarm in the economy and perhaps destabilise the situation. So, we worked steadily and firmly instead of bringing the banking system back to health. Simultaneously we also made efforts to ensure that the banks comply with all prudential norms and regulations.
The asset quality review (AQR) carried out by RBI in 2015 revealed a high incidence of Non-Performing Assets. Many Stressed loans, were reclassified as NPAs. As a result of AQR initiated by RBI in 2015, gross NPAs of PSBs increased by nearly Rs 6.17 lakh crore. Significant provisioning — Rs 5.12 lakh crore — was carried out by PSBs for transparent recognition.
To address the NPA issue and for creating a clean and effective recovery system, the government enacted the Insolvency and Bankruptcy Code. The government also amended the Banking Regulation Act, 1949 to authorise RBI to direct banks to take recourse to the IBC route. In fact, the cases of 39 large defaulters, amounting to almost Rs 2.69 lakh crore of exposure have now been filed before the National Company Law Tribunal (NCLT) for resolution With this process, lenders have already received more than Rs 40,000 crores and have successfully implemented change of management with substantial improvement in operations of companies.
To further strengthen PSBs, while the Indradhanush plan had earlier envisaged infusion of Rs 70,000 crore as capital in these banks, we have also announced recapitalisation of Rs 2.11 lakh crore in October 2017. We have brought in the Fugitive Economic Offenders Law to comprehensively and conclusively deal with absconding offenders. As a result of action by both the government and RBI by recognising NPAs transparently, upfront provisioning, recapitalisation for banks, reforms for comprehensive systemic improvements in banks and cleaning up of lending and recovery systems, a clean and robust banking system has been put in place.
This improvement is reflected in the credit growth of 12.4% year-on-year (as on 20.7.2018) shown by the Scheduled Commercial Banks (SCBs).This credit growth coupled with a strong deposit base of Rs 114.38 lakh crore also reflects customer confidence and a strong fund base. Our banks are thus strongly placed to contribute towards overall economic growth.
Second follow-up: Do you think the fugitive economic offenders bill will do enough to prevent defaulters from fleeing the country?
It will be a deterrent for such economic offenders who for all these years have exploited the existing loopholes in the system and evaded justice. It brings in an all-encompassing mechanism to ensure that these offenders are themselves forced to return to the country and face the due judicial process for their offences. In fact, this law has already started to show its impact. In one case, assets with the market value of more than Rs 800 crores have been attached under PMLA. In another case, assets of more than Rs 3,500 crores have been attached/seized under PMLA. This law should have been enacted much earlier had the government of the day wished to take action against such offenders.
Do you think that there is fear in the business community, which is somehow inhibiting their tendency to invest here? And do you think there is also an unfair perception that all businessmen are dishonest?
This government is fully committed to promoting ease of doing business. At the same time, my government is also committed to bringing to book unscrupulous elements. The emphasis of this government is on making the processes simple, be it incorporation of a company, or induction of a director, or payment of income tax; or payment of GST. To a large extent, the human interface in these procedures has been eliminated by a robust IT interface. The World Bank ranking on Ease of Doing Business, where India has moved from rank 142 to 100, clearly shows that we are moving towards an enabling environment for our companies. So while for the compliant and law-abiding, the procedures and processes are being simplified and made transparent, for the unscrupulous, there is no escape since transparency and simplicity would not be in consonance with their ulterior motives and dishonest intentions
Further, as part of our mission against black money and corruption, my government has struck off the names of around 260,000 shell companies and 309,000 directors. We are continuing the process of striking off names of another 55,000 companies within this month and many more are likely to follow in the coming months. On the taxation front, a presumptive taxation regime for professionals whose gross receipts do not exceed Rs 50 lakh per annum has been established. The first slab of income tax up to the income of Rs 5 lakh has been reduced from 10% to 5% for non-corporate taxpayers, one of the lowest entry level rates in the world. The rate of income tax for companies with a turnover up to Rs 250 crore has been reduced to 25% and this covers 99% of all companies in the country.
Similarly, for GST, we have not gone in for enforcing compliance. We have trusted the businessmen and stakeholders and they are cooperating with the government and the system. If we thought that all businessmen were dishonest we would not have relied on them in this manner.
Let me summarise by saying that these actions are being taken to protect the interest of the honest taxpayers, whether companies or traders or individuals. Those inconvenienced by these measures would obviously not belong to the above-mentioned categories. As far as the outcome is concerned, we are seeing a major increase in FDI in the country. The economy is growing at a robust 7.5% plus, all macro indicators are positive, the foreign reserves are well over US $400 billion. Our economy is being termed as an elephant that’s starting to run. I believe that we are running on the right path.
The issue of jobs and jobs data has become a contentious one, with some people claiming lots of jobs have been created in the past four years and others saying not many have been. Have we generated enough jobs? And what else do you think we can do to create more jobs? While formalisation is desirable from the long-term, it does cause some pain in the short-term, and also erode some political capital. How have you been able to manage this?
Besides those doing it due to vested political interest, people saying that not many jobs have been created in the economy are basically doing so because of there being no streamlined database of jobs and employment. Naturally, in the absence of information, our opponents will exploit this situation and blame us for not creating jobs.
To overcome this, we are now trying to create data on jobs. In the first place, we have used EPFO/ESI/NPS data to give us an idea of the employment generated. If we just look at EPFO data, more than 4.5 million formal jobs were created between September 2017 to April 2018. According to our study based on EPFO data, more than 7 million jobs were created in the formal sector alone last year.
While formal enterprises are there, we all know that the informal sector constitutes around 80% of all jobs. We also know that creation of jobs in the formal sector has a spin-off effect on job creation in the informal sector. To give you an example, there are close to 300,000 village-level entrepreneurs who are running common service centres across the country and creating employment. There are more than 15,000 start-ups which the government has helped and as we all know they are job multipliers. More than 130 million loans have been given under MUDRA Scheme. Is it unfair to expect that one loan would have created a job for at least one additional person? There has been massive construction activity in last four years, be it roads, railways or housing. All this generates jobs. All reports, whether national or international, show that poverty in India is on the decline. Can we think of such a possibility without people having jobs?
The tourism sector in the country has grown by 14%. The foreign exchange earnings through tourism have registered a healthy 19% growth in 2017 over 2016. We all know that tourism provides maximum employment, both direct and indirect. When we say that tourism has been growing, are we saying that this growth is happening without any employment being generated at the ground level?
Similarly, our air traffic has shown a growth of more than 18% year on year, which is the highest in any major economy. The number of operating airports has increased by almost double. Newer aircraft are being added by airlines on a monthly basis. All this cannot happen without some increase in the number of people working on the ground. The number of mobile manufacturing units in this country has risen to 120 from a handful when my government had taken over. These alone have generated 450,000 direct and indirect jobs. It is evident that all this cannot happen without employees on the ground, and with growth in these sectors, it is equally evident that jobs too would grow.
In addition to this misinformed debate, there are also claims made by certain state governments – West Bengal says it created 6.8 million jobs and the previous Karnataka government had claimed that it had created 5.3 million jobs. Are we saying that all jobs in the country are being created only in some states and that other states and the country as a whole, are not creating jobs? This propaganda on jobs by the Opposition is nothing but a political gimmick.
REPLY 28w
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