Cyber threats and data privacy

 "Data Piracy is threatening Data Privacy".Information security starts with the CIA Triad-sounds more like mafia and counter-espionage jargon- is the bedrock of the cybersecurity edifice.CIA stands for Confidentiality, Integrity and Availability encompassing the entire gamut of Information security. Consider the following examples and contemplate on these real-life threats faced by all of us:

1)TWITTER SAYS 130 ACCOUNTS WERE TARGETED IN A MAJOR CYBER

ATTACK OF CELEBRITY ACCOUNTS TWO DAYS AGO SOURCE: BBC 17 JULY 20

2)MARRIOTT INTERNATIONAL NOTIFIES GUESTS OF PROPERTY SYSTEM INCIDENT SOURCE:

HTTPS://NEWS.MARRIOTT.COM/NEWS/2020/03/31/MARRIOTT INTERNATIONAL NOTIFIES GUESTS OF PROPERTY SYSTEM INCIDENT

3)Computers containing data relating to national security and VVIPs like Prime

Minister Narendra Modi were compromised in early September after

a security breach at the NIC (National Informatics Centre), Delhi Police

sources have said.The computers affected also stored data relating to National Security Advisor Ajit Doval, Indian citizens and senior government functionaries

There are Emotet Trojans, Email hacking,Rogue IoT devices, hacked admin passwords, stealth drones, compromised employees, even Central bank hacking, Pentagon data breach etc. etc. are happening all over the place. They pose risks of all kinds including an unimaginable quantum of funds being siphoned off which remain untraceable.

There are millions of people who are active in the Dark web and create this havoc in our real life on a day today. But cybersecurity has emerged as the foremost priority of any country, organisation or anything to do with the organized white web, which is legal,confidential and safeguards the sovereign interests. More so when it comes to individual data security and privacy. The fundamental right to existence of any human is threatened if  his information security is breached and pirated.

As a result the Central Govt is keen on legislating GDPR(General Data Protection Regulation) Act similar to the EU GDPR  and if all goes as planned this Act may become a reality during this year winter session of the Parliament.

Gartner has come out with the above trend with respect to Emerging Technologies which are likely to complicate and disrupt the Information security scenario.

In order to make the Cybersecurity robust National Institute of Standards and Technology has come out with a detailed Cyber Security Framework considering the ISO ISMS 27001:2013 standards.

In short, all the stakeholders of our economy must endeavour to protect their data and privacy with a robust framework and protect their passwords as they are the keys to the door to their individual privacy and prosperity. 

Health is Wealth - the maxim remains true always. However, today the Health of Your Wealth in a digitalised world , depends on robust Cyber Security.

What, when ,why and how of the Stimulus?

 "Negotiations over a shrinking pie are especially difficult, because they require an allocation of losses"

The above is from Daniel Kahnemann's magnum opus "Thinking, Fast and Slow". India is facing a shrinking pie situation with steep GDP contraction. Fiscal stimulus is imperative and it is expected on a yesterday war footing. Early birds and head-starts enhance hope and confidence which feed favourably into demand and investment.They also act as countercyclical to shrinking pie despondency. Credit boost is a temporary remedy to manufacturing machinery to kick start and keep up the production capacity. But it can work only up to a point, where the productivity and earnings should become sufficient to keep up with the plan of repayment of loans and borrowings. If the people in general do not foresee sufficient future income and employment, they may not turn out to buy things and assets.They cannot evergreen their loans like some corporates feeding only on liquidity. People should have sufficient disposable discretionary income to buy durables and assets. Or atleast have the confidence of generating future income through gainful employment or business opportunities. Otherwise it becomes a shrinking pie syndrome which feeds into further shrinkage,  leading to a vicious cycle.

For quick results, Govt should look at products that have price elasticity. One of the products which is highly price sensitive is Automobile. Irrespective of the clamour of the opposition that cars are bought by the rick, Govt should look at the huge multiplier effect this will have on the rest of the economy. UPA Govt used this carrot when the economy plunged into an economic abyss following the financial crisis in 2008-09 and the growth revival was tough. UPA Govt responded by temporarily reducing Excise duty on Cars etc. in order to boost their demand.This action had a huge beneficial ripple and multiplier effects running across the economy.

However much you tweek monetary policy to boost credit offtake, unless it is followed up by fiscal measures to give a fillip to the demand generation, the credit growth will not be sustained. Fiscal measures must also be credible in the eyes of the public and for that products which have demonstrated price elasticity must be chosen. Only this can start rotating the wheels of the economy bringing about a virtuous cycle of employment,income and surplus.

Of course ,Govt has also taken measures under Atmanirbhar Bharat to promote Make in India to crank up the economy and the demand. But quick result areas and the low hanging fruits must be tried immediately.Govt must always remember:

 "For want of a nail the shoe was lost.

For want of a shoe, the horse was lost.

For want of a horse , the rider was lost.
For want of a rider, the message was lost.
For want of a message ,the battle was lost.
For want of a battle, the kingdom was lost.
And all for the want of a horseshoe nail."

A stitch in time saves nine . The falling tax revenues and the 15th Finance Commission's Chairman Mr.N.K.Singh's exhortation to pep up the GDP growth is a clarion call that can be ignored by Govt only at its own peril.

Atmanirbhar India, the PLI schemes and import bans

 

Central Govt has brought three PLI (Production Linked Incentives)schemes so far- for Electronics Manufacturing, Pharma APIs and Medical devices- in order to give a big push for Make in India as part of PM Modi's aspirational theme "Atmanirbhar India".

Under PLI scheme for Electronics mfg. 4% to 6% is the incentive on incremental sales over the base year and the scheme has three sub-categories-Mobile phone (International Cos), Mobile Phones(Domestic cos) and Specified Electronic Components Mfg. The govt recently announced 16 companies under these categories which included the likes of Samsung, Apple's Contract manufacturers Foxconn Hon Hai, Wistron, Pegatron and also Rising Star. Under the Domestic companies, Lava, Micromax etc. and under Specified Electronics components, 6 companies have been approved.Over the next 5 years, this policy initiative is expected to lead to the production of over Rs.10.5 lac cr with a likely export of over Rs.6.5 lac cr out of this, as per the Ministry of Electronics & IT. 

Minister Mr.Ravishankar Prasad, exuded optimism that the Large Scale Electronics manufacturing would become successful under this PLI scheme providing huge employment opportunities and will set the right tone for all similar Atmanirbhar India schemes.The Cos. with an investment potential of Rs.11k Cr will be the torchbearers of this ambitious scheme which will put Make in India on a high pedestal in about 5 years' time.

Govt has also come out with PLI schemes for Pharma API and medical devices, which will entail a budgetary outgo of more than Rs.12K cr over the years.Since India is overdependent on China for Drug intermediates and APIs, this incentive scheme is expected to drive investments into these sectors making India self-sufficient in the years to come.This will give a fillip to manufacture of key starting materials(KSMs), DIs, and APIs and the scheme has been prepared to deliver Rs 7K cr as incentives for greenfield projects.Since India's pharma industry is the 3rd largest in the world and 14th largest in terms of value, this scheme has been designed to enhance the industry capabilities in terms of strengthening its value chain within the country with both backward and forward linkages.

All put together the Central Govt. has identified 10 sectors including the above. The other sectors like Battery storage, Solar PV modules, Automobile and auto components, textiles, food processing, white goods, telecom, and networking components.

The main aim of the scheme is to expand the manufacturing base of India in all these high potential niche products. However there are few criticisms by industry experts in smartphone manufacturing highlighting that this PLI scheme will only lead to an increase in domestic manufacturing value and not in increasing domestic value addition. This is explained by them saying that huge component imports from countries like South Korea and Taiwan and even China will continue. Since the focus is on phones which are priced Rs.15K and above ,which are mostly exported as against domestic mass consumption phones which fall under lower price category, they fear that this may be the picture on the ground. Some have also mentioned that even with this PLI, the Smartphone mfg. will still not be cost-competitive compared to China or even Vietnam. But the Govt strategy seems to be for incentivising the manufacturing within India and also for generating employment opportunities, so that value addition increase will happen over a period of time when the scale grows bigger and reaches the critical mass.

Now in order to support the Make in India under the overarching Atmanirbhar programme, Govt has chosen to ban the import of Pneumatic tyres, Airconditoners etc. This has been done not due to protectionist policies but in order to enable the nascent manufacturing to stand on its own legs and survive the vagaries of trade. The Govt. will have to be suitably cautioned not to persist with this policy of import restrictions for long beyond 3 years, since the flip side of it is poor quality and high price to the consumers.

With the above well laid out paths for manufacturing to take firm roots in this country, and with its contribution to GDP increasing from 14% at present,India is poised to compete with countries like China in the years to come.But the journey is forecast to be uphill and strenuous. An unshackled India can emerge victorious when pushed to a corner in a crisis like the prevailing one.

New Labour codes

 

Three New Labour codes have been passed by the Indian parliament last week. Central Govt without wasting the crisis has pushed through these Industrial labour reforms. Industrial Relations Code Bill,2020; Code on Social Security Bill,2020 and Occupational Safety, Health and Working conditions Code Bill,2020. These three codes will have to be taken together with the Wages code passed in 2019 making together a grand four labour codes merging 29 Central Labour Acts. Some of these Acts like Payment of Wages Act ,Workers Compensation Act etc. belong to British times and finally, these vestiges of colonial legacy have been buried in the 21st century. This leads us to the question "Are we fully liberated from British rule?!!"

In the first bill Industrial Relations Code Bill, the Central Govt. has proposed to introduce more conditions restricting the rights of the workers to strike work, and also to increase the threshold relating to layoffs and retrenchment in any industrial establishment to 350 nos. from 100 workers at present. These are measures aimed at providing flexibility to employers in hiring and firing depending upon the business conditions without govt poking its nose into the employer's domain. It has also raised the threshold for making Industrial standing orders mandatory to 300 workers which according to detractors may result in arbitrary service conditions to employees. The most important reform is with reference to the incorporation of the number of workers in the Act itself, instead of through an executive order which has been the norm so far. This has been done after a Parliamentary Standing Committee on labour reforms scoffed at the bureaucracy wielding the power when the earlier Act used to mention that such numbers will be decided by "Appropriate Authority".

Employers are definitely the gainers in this grand bargain but this has been done without trampling on the rights of workers. The process of negotiation and reconciliation have been given prime of place in the place of intimidations and threats. Enabling fixed-term employment, reducing the influence of trade unions and the extension of social security net to gig, informal sector and platform employees also are all big positives for the employment scenario on the whole.

The labour ministry will have to come out with the set of rules for the Acts to become functional on the ground. Even though some labour rights activists are saying that the rights of workers are slowly and surely being seized from them , fair-minded employers of the 21st century will get the ease of doing business with these forward-looking and long-pending reforms.

All these amendments have been recommended by many parliament committees over the years. Now many well-meaning labor economists say that these Acts have brought the right balance between the rights and duties of employees and the employers.

Agri bills and Rajya sabha commotion

 Indian Central Govt. successfully pushed  3 Farm bills through both the Houses of Parliament last week. Since the ruling NDA led by BJP has a majority in the lower house i.e Lok Sabha the passage of these bills happened without any hiccup there. But when the same bills had to be passed by the higher house i.e Rajya Sabha, where NDA has a thin majority, pandemonium reigned and all hell broke loose. But the Chairman of the house went by voice vote amidst allegations that he chose to ignore the call for division of the house.

Now the opposition is upset not by the farm bills per see but the way it was carried by the Chairman by the Upper house by not allowing them to stall this reform in the garb of discussions et al. Several Agricultural Commissions and Committees incl the Sen Committee and Dr.Swaminathan Comittee over the last 30 years, have strongly suggested on this unshackling of Agri markets across the country. This reform is long overdue. Even Congress Govt. wanted to implement this and it is in their election manifesto. But due to the reversal of roles, now Congress does not want this to be passed by Modi in order to deny him the credit for this. It is nothing but opportunism and blinded by the hatred for Modi ,UPA wants  Indian farmers to suffer.

The three reform bills passed and approved by the President are :

1)Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020.:-This bill aims to promote barrier-free interstate and intra-state trade in agricultural produce;

2)Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020:- This is for allowing farmers to engage with processors, aggregators, wholesalers, large retailers and exporters directly;

3)Essential Commodities (Amendment) Bill, 2020:-to generally liberalise the regulatory environment for the farmers and to free them from the clutches of middlemen.

The twist in the tale which adds spice to the whole drama has been clearly brought out in this article by Sanjay Jha(link) when he says Dr.Man Mohan Singh went on television when UPA was ruling, to assure the farmers that by a similar action of passing the farm bills their lives would be made better and he tried to assuage their hurt feelings. When the agri reforms ordinance was promulgated in May 2020, pl. note the tone and tenor of agri economists like Prof Ashok Gulati who backed these ordinances hailing this as "the 1991 moment "for agri reforms.(link)

People who are now opposing the momentous changes to be ushered through these far-reaching farm bills are those who have vested interests in the continuation of status quo. There are many middlemen who make money and lend/give easy money to politicians try to block these bills. Many of them do not pay income tax by showing that their income is agricultural income. Now this lot is in dire straits and does not want to let go off the golden goose from their hands. By supporting these elements the opposition is revealing their colours to the public scrutiny.

With many assemble elections around the corner, politicians are trying to portray themselves as the saviour of the farmers by misleading the gullible farmers against these reforms.  By repeating a lie, that Govt will abolish MSP, they are stoking the farmers' fears and are trying to create panic and chaos among the farmers. This is despite PM Modi assuring on the floor of the Parliament that the MSP mechanism will not be revoked at any point in time in the future.

The farmers must see through these games played by the opposition parties, and understand that more choices for them to market their produce will not set them back both financially as well as socially. They should look at the stories of ITC eChoupal, Mahindra's, Amul's agri ventures, and emulate them by evolving their cooperative community farming to further their dreams in those lines.

When fruits, vegetables and milk are sold liberally without the MSP crutches, farmers must introspect and understand that MSPs help only 6% of the total agricultural output in the country.

Multiple avenues to market their farm output will only lead them to a better future!!

CAG report on IT disputes and appeals

 

Comptroller and Auditor General of India(CAG) is the top Govt Auditor of India, who is a Constitutional authority. He Audits all the Central and State Govt related accounts and gives his report with his findings, lacunae observed in the system, along with necessary corrective measures as per the best practices around the world.

In his latest report on the Income & Corporate  Tax department functioning under the Central Govt, he has given some damning statistics. People in the know feel vindicated with his report lashing at the ineptitude of the Dept in tackling the inefficiency of the tax bureaucracy.

Let us look at some of his key observations:(link)

1)Income tax arrears of demand has increased from Rs.11 lac cr.in 2017-18 to Rs.12.3 lac cr, in 2018-19.

2) Out of this Rs.12.3 lac cr. the Tax dept itself says 99% of it is non-collectible or in other words, would be difficult to recover.

3)At the CIT Appeals, which is the first forum of Appeals,the Auditor observed, the number of cases has gone up from 3 lacs in 17-18 to 3.4 lacs in 18-19 and the total amount locked up has gone up from Rs.5.19 lac cr to Rs.5.6 lac cr.

4)The above amount of Rs.5.6 lac cr is more than the revenue deficit of the Central Govt for the relevant year, the CAG has remarked.

5)The total cases pending at the higher courts i.e ITAT/High Court/Supreme Court have gone up from 82000 in 17-18 to 1.35 lacs in 18-19, which is a whopping 65% jump.

6)CAG also observed that "there have been persistent and pervasive irregularities in respect of Corporation tax and Income tax assessments cases over the years.Recurrence of such irregularities, despite being pointed out repeatedly in the earlier Audit reports point to structural weaknesses on the part of the Department as well as the absence of appropriate institutional mechanism to address this".

7)The auditor has reviewed 2.72 lakh out of 2.99 lakh cases taken up by the I-T department for scrutiny during 2017-18. CAG has also audited 60,000 cases of scrutiny assessments completed in the earlier financial years. CAG found an incidence of errors in assessments checked in audit at 6% (19,768 cases), as against 6.45% in the previous year.

8)More than 82% of individual taxpayers faced TDS mismatch problems during the last three years resulting in disallowance of refund and the creation of avoidable harassment of taxpayers who are mostly middle-class salary earners.

All the above are reflections of deep-rooted malaise plaguing the system of assessments, appeals etc. The tax department is afflicted by the disease of "Appealititis" as per one of the earlier observations of CAG. The tax bureaucracy always plays safe disregarding well-founded precedent judgements of ITAT/HC and even SC, which are in favour of assessees.They conjure up a point of differentiation from precedent judgments which may sometime look contrived, trivial,frivolous, flimsy, and they blow it out of proportion to suit their arguments. The tax department is addicted to filing appeals against the hapless and penniless assessees even after SC ruling against it.This is the special caprice of the experts in the Tax dept, which drives the assessees bankrupt , if not mad. 

You add the judicial delay to this and the cost of fighting these mostly infructuous appeals and what you get is a heady decoction of endless litigation!!!The cost of all this finally falls on the honest taxpayers.

Honest taxpayers still wait for the fructification of the vision of our PM who has drawn a charter for Honouring the Honest.Hope it does not become an endless wait!

Import Trade restrictions and Make in India-Atmanirbhar!

 Import Trade wall or barriers are not new to India. The country had very steep walls in terms of Tariffs, licensing ,quotas etc. all in the name of safeguarding the domestic industry. When the country gained independence, many of the industries were either nascent or anemic and in order to restore their health, Central Govt had no option but to erect some import restrictions so that local industries in the economy are nurtured. This grooming of domestic industry with level playing field took a new turn in the late 1960s and 1970s with widespread nationalisation of private enterprises, ushering in an era of erratic socialism all in the name of protecting the citizens from private profiteering.

This concept led to erecting walls within the country between the commanding heights of Govt. undertakings and the Private enterprises. The private sector was neglected and was left to fend for itself and scaling up an enterprise became a uphill challenge for private sector. Inorder to protect them from imports from manufacturing bases around the world with deep pockets several safeguard duties and tariff walls were made stiff .

But all this had a negative side effects as the local industry became flabby, lethargic,self seeking, ignoring Tech.upgradation, without stiff market competition on Quality , Cost and Delivery.All this was done with the good intention of making India self restraint through import substitution. But the unintended consequences of this led to high cost of manufacuring and poor quality product.This situation was reversed when GOI started reducing tariffs and import restrictions through some pragmatic steps inviting foreign direct investments in the early 1990s.

By the time we missed the bus and Chinese who started this in 1980s had a clear headstart over us. Our two steps forward and one step backward strategy in all these matters of import policy were designed by bureaucrats with the hidden intent of rent seeking politicians, businessmen and babus behind it.

Only after the advent of Japanese, US ,German and South korean companies started their manufacturing bases in India , Quality, Cost and Delivery gained attention and became the guiding lodetones of enterprises keeping them lean and mean. This tough market competition has helped India in achieving the pinnacle of success in Auto sector especially in becoming World's top two wheeler manufacturing base.

That said , now there is lot of discussion on Govt's announcement of Trade tariffs for imports from China and licesing and ban on import of defence equipments,  high end TVs etc. The heated debate of back to the moribund policy of import restrictions in the name of Make in India- Atmanirbhar Bharat is indeed a good one.  

Does this mean back to the future?

But there can be an argument in terms of supporting this policy of  import restrictions.

When fledgling industry is sought to be setup like in high end tech products, these specific products may require some sort of support or sops for a initial few years. When foreign direct investment is invited for huge sunrise industries, such import walls will be helpful but all but temporarily. If there is a sunset clause introduced for all these tariff or sops or subsidies, it should be welcome. Govt. should make it a point to insert a sunset clause for all these import walls except in very few strategic sectors which may not exceed five on the whole.Govt should not give an impression that it is interested in augmenting its tax revenue through these high import duties.

India has given a great fillip to Make in India- Atmanirbhar in some of the industries like Auto, Smartphones etc which has generated huge employment opportunities in the country. Inorder to give a temporary boost to this policy, Govt has done the right thing by introducing few Tariff walls in order to promote the above stated policy  and these Tariff barriers should neither be seen as a way of revenue rising, nor as a permanent fixture to protect the domestic industry.

Orwell and Covid vaccine

  "All animal are equal, but some animals are more equal than others," wrote George Orwell in his allegorical novel Animal Farm. the stody in short conveys the meaning that the absolute power corrupts absolutely.

His novel 1984 which is a classic dystopian novel, also wrote about Thought Police to persecute individuality and independent thinking . This novel and Aldous Huxley's "Brave New World" rank as two of the best dystopian novels of twentieth century. Huxley's novel describes a world where people are born and raised  through engineered artificial wombs and childhood indoctrination into predetermined classes or castes based on intelligence and labour.

In all these novels, a world covered by intelligence which gives it an order and discipline predetermined by its rulers, is a dire prediction.

Coming to Covid 19 driven world of today, our ways and methods are directed by rulers assisted by doctors, epidemiologists and virologists , and we are not at liberty to do and act on our own. The overarching societal welfare notion constrains individual liberty and movements. Since it is viewed as a temporary measure many have been living with it.

But once Vaccine is made available, this may give way to more individual liberties and rights.

However there is a lingering question: "who will get Vaccine first".

Pl. read the opening sentence now again. Some people are considered more equal than others and they are the powers that be and those close to them.

But this notion is against the principles of natural justice and would not hold waters in a democratic society in a free world. The Vaccine adminstration should have a free protocol without any strings of power, money, position pulling it. This is very very important for the society or any country to think they are still democratic and free.Only then future is secure and people can look forward to prosperity guided by a truly compassionate Govts.

Are we still democratic society?

Hammer and Dance strategy- both with Corona and China!!

Initially, when COVID 19 started spreading in India, PM Modi announced a war on Covid 19 and every single citizen abided by his exhortation.

Many newspapers and media personnel screamed Modi is going hammer and tongs at Covid 19 virus in order to scorch it totally.

But after a few lockdowns, both PM and the common man understood with humility that Covid demands hammer and dance strategy to deal with it.

So we are now reconciled to the fact that we must learn to live with Covid 19 at peace instead of waging a losing war. Adapting to its speed and spread, the common man is now equipped with mask, social distancing etc. to tackle it and dance with it.

Govt adopts the hammer and the common man adopts dancing with it.

Hopefully, this will become a considered foreign policy also with China, the birthplace of Covid19. Hammer at LAC and then dance with it in commercial and trade space!!Also, dance with China to wean it off Pakistan!!

Government's asset monetisation

Policy prescriptions are flying thick and fast and on my part, I am adding one more .

All Economists including me are prescribing deficit monetisation, pump priming etc. taking a leaf out of Modern Monetary Theory.

As against this,Central Govt. has an alternative which is called Asset monetisation, according to me.Govt calls it Disinvestment/Divestment of PSUs. When the whole world is reeling under Covid pandemic , will there be a suitor for Air India?

Even if there is a good buyer will he be willing to pay the right price for Air India.What will be the benchmark for its valuation when the whole industry is bogged down by this pandemic and its repercussions on the travel industry.

In such unprecedented situations , it is best advised not to go in for outright sale transactions of Government stake in PSUs including Air India, BPCL,etc.

Similarly, other intangible but real assets are Spectrum waves (link), Mining/Abiotic  ,Biotic Resources which are hidden inside the Earth, Ocean ,Space etc., Potential Renewable energy sources, which have future economic value and can add to GDP when suitably exploited without degrading the environment.

If these resources are valued properly, and India identifies these assets in terms of monetising its strengths, then India will have to look for its Enterprise value and raise suitable resources upfront for its current requirements in investing in its infra development.

In fact even lands owned by Indian Airports Authority can be used better by allowing usage of its land underground for commercial purposes.Even some of the defence lands can be wisely used under the ground for commecial purposes without in any way jeopardising defence security.

Immediate prescription for demand stimulus!

Sri. Krishnamurthy Subramanian, Chief Economic Advisor to Central Govt,yesterday, has gone on record saying that further demand stimulus measures will be announced after vaccine becomes available. Why should we link stimulus to vaccine availability is not clear. What kind of vaccine he is expecting and if the vaccine falls short of his expectations whether he would not allow roll out of stimulus?

It may become too late to wait till then.Why because, the common man has started saving his meagre earnings due to his fear about his future earnings and not due to Covid pandemic per se.In order to allay his fear about his employment and future earnings, Govt must sacrifice some near term revenue and announce some economic incentives  for kick starting the economy.What better place to start than with Indirect Tax cuts.

Auto sector is the biggest in manufacturing in terms of GDP and reducing GST on it from 28% and converge it with Revenue Neutral Rate(RNR) of 18% will give a huge boost to demand, and thereby to the generation of employment.The multiplier effect will be huge on the rest of the economy with ripple effects cascading throughout the economy.Difficult times demand drastic steps in terms of revenue sacrifice by Govt in the near term.The Govt.will get back more than half its sacrificed revenue by way of huge jump in volumes of goods and services produced.The feel good factor this can generate will negative the fear over the pandemic and will give a greater fillip to PM's call for "Atma nirbhar Bharat" and "Make in India" initiatives.So, one should not wait for Vaccines to announce this.We must do it on war footing.

We have anecdotal examples at hand. Like Mr.Mukesh Ambani bringing in huge FDI even during Covid without waiting for it to end, the Govt. must take a cue from his proactive action and give this relief to the economy.Thiruvalluvar also says "தூங்குக தூங்கிச் செயற்பால் தூங்கற்க தூங்காது செய்யும் வினை."(Sleep over such actions as may be slept over, but not over such actions which require quick actions)

 This calls for immediate action on the ground to kickstart demand and to restore the confidence of common man in his future earnings, income, and employment.

India's research, design and manufacturing capabilities!

If you do a SWOT analysis of India's capabilities, certainly Software prowess will be among the top in the list in terms of technological leverage. Pharma will come next to it and there are others like leather goods, cotton textiles, garments etc.

There is one niche area where India has excelled in all- Research, Design and Manufacturing capabilities and that is two-wheeler production. Even though India borrowed the technology from Japanese manufacturers initially, now India has its own name in the world for 2 wheeler manufacturing competing and even outshining the best in the world.

Yesterday I was listening to a panel discussion on defence manufacturing. Two out of the four panelists predicted in about 5 to 10 years time, India will be among the first three in terms of Research, Design and Mfg. of niche defense equipment incl high-end weapons built on the cutting end technology. According to them ,it has been made possible by the coherent, calibrated and painstaking efforts of this Govt. starting from Manohar Parrikar as the Defence Minister.

One of the panelists being Air Vice Marshal(retd) knew what he is talking about in terms of Govt. policies and the dilly-dallying attitudes of bureaucrats in carrying the agenda of the Govt. forward. He said that the dance involving the Govt, bureaucrats, and the armed forces have got into synchronized steps with well thought out targets after listening to the Defence Mfg.Industry.

Apart from these industries, India is also looking at developing capabilities in semiconductors, smartphones, chemicals and high-end pharma, renewable energy power equipment production, Mobility solutions etc. India stands to gain by investing in cutting edge technologies in Nano, AI, Robotics, Space, IoT, ML, DL, etc. For these things, India's investment in Targeted Research and Development will have to be substantially scaled up as a percentage of GDP.

Alvin Toffler in his "Powershift" mentioned about Knowledge, Wealth and Power/Violence as the three dimensions (கல்வியா,செல்வமா,வீரமா?) of the society with Knowledge being mentioned as the most democratic of all levers.India has to use that lever to its advantage.

Then, India can leapfrog into Industrial Revolution 4, since India was forced to miss the first three Industrial Revolutions by design!

Reforms in Power sector.

Central Govt announced Rs.90K cr rescue package for power gencos through PFC and REC.But PRAAPTI ( Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators) website shows that the total overdue amount to be paid to Gencos stood at Rs.113.8K cr at the end of May 2020 continuously going up for the last 18 to 24 months. The total outstandings were Rs.125.6K cr.link.

Apart from this, there is renewable energy generation pending to be adjusted against captive consumption of factories which is not yet visible.This may be another iceberg submerged.

After clearing Rs.90K cr.as per GOI plan  stated above, how the state discoms are going to manage their future liabilities.

With a negative gap between Average Cost of Supply(ACS) and Average Revenue Realised at Re.0.41 per unit on an All India basis, it is a losing game. AT & C loss is also still very high at 18.72%link.UDAY (Ujwal Discom Assurance Yojana) commitments lie in tatters.

All the UDAY Targets remain unfulfilled. The website says there are no newsletter releases after Jan 2019 and that sums up the state of affairs under UDAY. UDAY is now Asthamana.It looks like an orphan.

Targets on All India basis set were:

Feeder Metering                                   30th June 2016 
DT Metering                                          30th June 2017
AT&C Losses                                        15% by FY 2019
Consumer Indexing & GIS Mapping      30th Sep 2018
Upgradation of DT,Meters etc.              31st Dec 2017
Smart meter for Consumers                >500 units by Dec 2017;>200 units by Dec 2019
Elimination of ACS-ARR gap                 FY 2019

Smart metering completion is at 6% - 7%  on All India basis as per the website UDAY.in whereas , it should have been completed  100% by Dec 2019 according to the Targets set.

Are there methods amidst madness to come out of this mess?. There are practical methods to bring down AT &C loss by upgrading the cable quality.adoption of smart metering etc. But the easiest way to do is by horizontal deployment across states. State of Himachal Pradesh has the lowest AT &C at 5.62%. There are great lessons for other states to learn from them. The lowest gap between ACS and ARR is in Gujarat at just 4 paise. This will open the eyes of other States.This cross fertilisation of ideas is the way forward to healthy federal competition.

Many political parties give electoral promises of free electricity to farmers to win elections and in the guise of farmers many use free electricity even for their farm houses. This misuse is rampant across India.

The best way to counter this is to transfer subsidy given to marginal farmers to their Jan dhan account and charge uniformly for agri sector. Another method could be charge 10 paise for a unit for agri activity instead of calling it free and increase this tariff every year by indexing it to CPInflation for those agriculturists consuming more than 1000 units per annum.

" IT Harassments"- no euphemism pl!!

Pl. see the below page from the Central Govt published data.link

Regular IT assessments done by Dept is yielding only 7 to 8% of total Gross Direct tax collected where as Adv. Tax, TDS and SA Tax is 92% i.e the voluntary compliance .

Is there not a strong case for abolishing Assts for atleast individuals who have good track record of say 10 continuous years and have limited scrutiny assessments only for Corporates/Companies with incentives for exemption from assessments if they remit Tax at least 15% more year on year.This will take care of tax buoyancy ratio and reduce assessment costs drastically.

Mr.Sunil Jain of FE recently sent a tweet to FM saying that IT dept is following up with him on some assessment notice despite complying with it and paying tax. Everyone of us have similar experiences on IT assessments despite computerisation. Straightaway all these scrutiny assessments can be called " IT Harassments "-no euphemism.

But it should also be emphasized that the scale of high pitched assessments has substantially come down over the last one/2 years but still more needs to be done in order to totally move away from Tax Terrorism to augment direct tax revenue. I am not making a case for tax evaders or dodgers who r small percentage and who will anyway continue to do so.

My firm conviction is ,if assessments are done away with , then more small businessmen will voluntarily pay under presumptive tax, file return and forget.Another indicator is the difference between how many assessees have paid tax/TDS and the no. who have filed returns.Almost 2 crore nos.!! Is it not sounding another loud bell for doing away with Assessments /Scrutiny assessments but with safeguards  like good track record or yoy 15% inc. in tax remittance etc.

 One last point. Out of such Tax assessed and  shown collected by the Dept how much is contested in appeals before CITs, Tribunals , HCs and SCs.Huge burden on these Courts will also come down and unnecessary litigation is avoided. Lots of multiplier effects can be seen if assessments are abolished.

For encouraging people to file their Income Tax return, Govt can run a lottery or even give atleast  health insurance policy under Ayushman Bharat free of cost.  

 Page 7 reproduced below:

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Land is not manufactured anymore! Can we turn this on its head.

"Buy land, they're not making it anymore"-Mark Twain

Govt. is in the process of identifying land parcels for attracting industries moving out of China for want of safe haven. If big land parcels can be earmarked for setting up Industrial parks and industrial clusters, it will give a huge fillip for Make in India campaign.

As PM said India has the Intent, it paves way for Inclusion,  provides Infrastructure. attracts Investment and enables  Innovation. But what is stopping it from leap frogging. It is redtapism in land acquisition ,lackadaisical Court procedures and the greed of politicians that put paid to ambitions of growth in Make in India. Even smaller countries like Vietnam, Indonesia are able to attract industries moving out of China in a big way but the sleeping giant like India falters.

Despite improving the ranking in Ease of Doing Business has the economy really energised itself to become an aspiring industrial giant. There are green shoots here and there , but one swallow does not make a summer. We know of several projects that are languishing due to land acquisition hurdles like Chennai MRTS last leg of just 500 meters upto St Thomas Mount for more than a decade. Who pays for the time, cost over runs. Nothing is free in economics and only the poor taxpayer foots the additional bill and he gets empty rhetoric but gets no infra facility for decades.

Some out of the box solutions for land parcels will have to be found out. We know that land is not manufactured anymore.Is it really? Can we not flatten some of the mounds, hillocks around our cities and build industrial parks.

For example near Chennai airport there are few hillocks and if they are removed or flattened reasonably, many industries can be located. If these rocks removed from such hillocks are deposited near our Coastline can we build small islands to locate some industries over there?

Can we start manufacturing lands as part of Make in India initiative?