The issues of corruption, black money in Indian economy has been discussed a lot in media and online forums. Some thoughts are presented here, which we can develop.
1. The best way ( the only way?) to mitigate corruption is to abolish cash transactions. Now, I know many of you may scoff this idea being impractical, at least initially.
2. My idea is to give each and every one in the county a smart card ( debit card) to pay money and a swiping holder, with a keypad and display to receive money. These can be of the size of a small cell phone. When you want to pay somebody, you need to swipe your card in the other person's swiping device, input the amount similar to card swiping done in shops. This card will have links to PAN/UID number of a person. Hence, all the money a person receives and spends will be recorded in the Income tax registry. Separate filing of tax returns won't be required. In the next tax code, any way the govt is contemplating removal of tax deductions on various accounts of insurance, home loan etc.
3. All the existing type of online/internet transactions can be retained.
4. How this idea can eliminate corruption? Its simple! Corruption happens a govt. official or politician asks for cash against a favorable action. If there is no hard currency payments possible, he will have to resort of electronic money transfer by this PAN/UID enabled debit card. This process records money transactions to Income tax, hence trouble for the bribe seeker.
5. This can be done to even transactions with a neighbourhood panwallah! No spoiled notes, searching for changes etc. Life will become easy!
6. All land transactions will be in white, if we follow this code. No underpricing or overpricing possible!
6. Money transfer between corporates and between corporates and employees should be done online only. Companies cannot receive any cash and spend any cash. This will reduce fictitious expediture bills which companies report to income tax authorities.
7. Govt and Banks can issue notices to customers to deposit all cash that they have and convert into e-money which can be spent by debit cards only. There won't be any ATMs!
8. Tax collection by govt will improve significantly, as all transactions in corporates and individuals are recorded. The income of a person, or a company will be available with the Income tax/UID authority all the time.
9. The smart card can be operated with a password only while paying and receiving. It can carry lot of information such as location via GPS, to identify and locate a person's whereabouts! This may be seen as sneaking into privacy, of course!
9. If you have questions on how this can work, please pose them here. Lets think together and bring about a fresh thinking!
Dinesh
