Demonetization Part 2 - Implementation of the Artha Kranti Proposal

Recent news and rumors suggest that the current demonetization done is in line with the Artha Kranti proposal and would lead to a Cashless economy.

Can this really be achieved in India? The last I read was that in India only about 10 percent of money transactions is done cashless. First we have to look at the Artha Kranti proposal.

The main points in the Artha Kranti proposal:

- Replace all Taxes with Bank Transaction Tax (BTT) -- The proposal states to remove Income Tax and all other taxes and replace this with a compulsory tax for all people in the way of BTT. The only tax they propose to be kept is the Customs/Import Duty. The BTT they propose is 2%.

The BTT will happen at the receivers end. So, when a salaries employee receives her pay she would get a BTT removed amount, like the current TDS for taxable employees. The BTT proposed is 2%. So, there would be no tax slabs and all people will be kind of paying a tax.

Also, whenever you go out and buy something, the BTT will be cut on the receiver's end. For example, you go and buy a mobile phone, the company that sells the mobile phone will get the sale price minus the BTT.

Hmm, isn't this already the case. All taxable employees get their salary after the deduction of TDS. And, nearly all goods are taxed with Service Tax and other taxes. So, what is different?

The difference lies in the next proposal.

- Withdrawal of Currency and Limit on Cash Transactions -- The proposal wants to withdraw all currency above INR 50 and place a limit on cash transactions at INR 2000.

This will bring all transactions under BTT. Payments to the vegetable vendor, the milk man, local grocery store, medicines, masonry work, carpenters, household repair works, sweets shop, building material (like marbles, plywood, etc), hardware stores, agriculture equipment, packers movers, and many more will be included in BTT. These are just a few examples of services which are done using Cash, will now be required to go through the Banking system and BTT.

Currently there are around 100 services already taxed under Service Tax which is at 15%. Would BTT remove Service Tax?

What about the Cess that the Central Government levies?

What about Transparency?
There is no mention of Transparency in the Proposal. What the proposers think is that if the BTT is collected, the works would happen magically and India would become "Sone kii Chidiya" (My opinion).

Even in the current system, the Tax is collected and for example roads are made. And, according to many news sources, such roads are just made on paper and no actual work is ever done. What guarantee is there that the work is going to be actually performed by implementing BTT?

Also, talking about the Cess, the Central Government had started to take the Swach Bharat Cess. In a recent news (or some RTI reply, I forgot what the news topic was) what came up was that there is no information on how the funds are being used.

Parallel Economy
These words are being used like there are two countries in India. They say that cash does not attract Tax. But, whenever someone uses Cash, the Cash is taxed indirectly in the form of Service Tax, etc.

Also, from the proposal, the requirements for payment gateways becomes important. And such payment gateways like the online wallets will see a huge market. What about the money that is stored in these online wallets. Is this money which will be lying unused be taxed by the Government or would these wallets be free to use such money for their own purposes. Will these wallets share their additional income with the people. Would these online wallets not be the Parallel Economy?

Living on Coupons
The side effect of such Parallel Economy like online wallets is discount coupons. We would be living in a age of searching for coupons. And this will be used by the big corporates for their crony capitalist ideas.

Online Frauds / Hacking / Cracking
Our online money will be seriously exposed to online fraud. A recent news said that some 30 lakh bank cards were compromised. What will happen if all our money is concentrated in just one place? We will all be beggars in a second if a large scale online fraud happens.

Specially Indian Government websites lack even basic security. This was exposed by some school going child according to a recent news. The child was able to hack into a government website and leak its details even without the use of sophisticated means.


In conclusion, I would like to minimize my Income Tax :) But with only bits and bytes as our currency, security will be even greater concern.

Demonetization

Demonetization of the current INR 500 and INR 1000 notes is the hot topic hogging the limelight in India. Will this really clear "Black" money? Is this just an inconvenience for the time period? Does this signal to cashless transactions? What do I think about this, lets see.

Sudden Decision
First this decision was quite sudden for the common man. But was it really unforeseen? As per some recent news, this action was in the making some six months prior to the actual announcements. Hmm, so the ones that were in the know would already have taken the preemptive actions and would have at least told their near and dear ones of this coming problem. Well, just my two bits.
So, for who was this sudden. Only the common man.

Targeting "Black" money
Some have said that this move target "Black" money. Hmm, what is "Black" money. Money that is available in hard cash is "Black" money? Money that is meant for the Milk Man, House Maid, Medicines, House Repairs, Traveling from Work to Office and vice versa, Railway Tickets, Eating out, are these functions "Black".
I have not included paying Electricity Bills, Gas Connection Bills, Phone Bills, Water Dues, Property Tax, and many more such monthly bills. Are all these activity "Black".
Hmm, may be they are targeting the <5% of people that are hoarding up the hard cash. So, for these <5% people, >95% people are harassed for the "Greater Good".

"Greater Good"
So we come to these words, "Greater Good". What is "Greater Good". Who suffers for this "Grater Good". Does the person who has bags and bags of cash does not have any source of income? Will the burning of this current money will end that person's fortune. What do you think? Will that person not make up the lost money in say less than a years time, maybe a few couple of years more.
Will this scrapping of money happen every two years?
Who has this inconvenienced? Only the common man.

Introduction of INR 2000 notes
Now the money hoarders will require less real estate space to fill their "Black" money with. To be specific, they would require half the amount of bags to stuff their cash. With the introduction of INR 2000 notes, going "Black" has its incentive?
Again who is inconvenienced, the common man.

Use Cashless Payments
This is the magic solution given by many. Will your Vegetable vendor accept credit cards? Will your Maid be comfortable when you ask for bank details? When you go out for a walk with your little ones and the kid asks for a balloon that the kid saw a person selling on the street. Will your credit card come to your rescue?
Cashless payments are only good for only half of your monthly expenses, for the other half you require hard cash. There is no other way, not at least in the near future.

Cash in Indian Society
Cash is not just money to be spent in Indian Society. Cash is your devotion to God. We have Gods who look after our wealth. We give cash in our Temples to show our devotion to God. We give cash at weddings to the newly married couple to show our happiness and connection with the families.

No Logistics
There are queues and queues of people standing under the hot Sun to get their cash at Banks. And, the Banks have run dry of cash. There is an utter failure of logistics happening. There was no thought process put in when this "Sudden" announcement was made.
Lets see the sequence: Announcement was made that your cash is invalid -> Banks will be closed the following day -> There will be no ATM withdrawals available for next few days -> Banks do not have cash to exchange your money
And they say don't panic. Everything is under control.

Temples to the rescue
In a recent news article I read (http://www.news18.com/news/india/gods-get-richer-as-blackmoney-hopes-for-rebirth-through-temple-hundis-1310898.html), it said that Temples have become the de-facto way to convert "Black" to "White". Who runs these Temples? How many times have we seen Politicians and the Rich go visit their Gurus, SadGurus, Saints of the various sects and sections of society. All political people and the rich people have links to these organizations where donations are anonymous.
The "Black" money of these <5% Rich are safe. Who suffers, the Common Man.

The Common Man Suffers
In conclusion, I can only say that its always the Common Man who has to suffer. The rich do not care if a few bundles of cash go in the fire, it is the Common Man who has to fight for his legitimate hard earned money.

Xiaomi Redmi 0x04 (End of Transmission)

Well, I was searching for the significance of the number 4 and I got to the Wikipedia article on the number 4. There was a lot of information on this number's relation to various aspects, like in religion, politics, science, transport, sports, etc. But the most near significance to the topic at hand was '0x04'. As stated in the Wikipedia article, '0x04' is the ASCII code of the character End of Transmission, which is abbreviated to EOT.

Why is this relevant to the topic at hand? Well, the most recent launches in the Xiaomi Redmi branded smart phones are the number 4 iterations. And, basically these just do not justify a bump in the version number. Maybe, this signals a lack of interest of Xiaomi in the Redmi brand or may be they are looking to end the Redmi brand or at least stall it to a crawl.

There have been two version 4 in the Redmi brand: Xiaomi Redmi Note 4 and Xiaomi Redmi 4. The previous iteration were Xiaomi Redmi Note 3 and the Xiaomi Redmi 3s. The Note 3 is one of the best selling smart phone in India. As per the latest news on this smart phone by Xiaomi, they have sold nearly 2.3 million (23 lac) units of Note 3 smart phone in India. This is an astounding number considering Xiaomi's online only strategy. And the Redmi 3s Prime has no other competition in its price range and for its bang for the buck. I have highlighted this fact in my previous post. Hmm, maybe Xiaomi has become complacent or maybe the lack of competition has made them lazy to roll out significant changes. Only time will tell.

The latest iterations, the number 4 of these two smart phones bring nothing significant and for one device, this iteration actually goes a step backwards.

Lets take a look at the major differences between the Note 3 and Note 4 smart phones (from gsmarena website):

	Xiaomi Redmi Note 3	Xiaomi Redmi Note 4
Weight	164 g (5.78 oz)	175 g (6.17 oz)
Chipset	Qualcomm MSM8956 Snapdragon 650	Mediatek MT6797 Helio X20
CPU	Hexa-core (4x1.4 GHz Cortex-A53 & 2x1.8 GHz Cortex-A72)	Deca-core 2.1 GHz
GPU	Adreno 510	Mali-T880 MP4
Primary Camera	16 MP, f/2.0, phase detection autofocus, dual-LED (dual tone) flash	13 MP, f/2.0, phase detection autofocus, dual-LED (dual tone) flash
Secondary Camera	5 MP, f/2.0, 1080p	5 MP, f/2.0, 720p
Battery Capacity	Non-removable Li-Po 4050 mAh battery	Non-removable Li-Po 4100 mAh battery
Battery Life	93h endurance rating	83h endurance rating

From the above, the only bump up is from a Hexa-core CPU to a Deca-core CPU. But, from using various Chipsets on PCs, I can safely say that the performance improvement will definitely be debatable.
Other than that, in Note 4, we get a bulkier device with inferior Primary and Secondary Cameras and inferior Battery Life even with the bump up of battery capacity.

Next, lets look at the main features of Redmi 3s Prime and Redmi 4 Prime (again from gsmarena website):

	Xiaomi Redmi 3s Prime	Xiaomi Redmi 4 Prime
Weight	144 g (5.08 oz)	155 g (5.50 oz)
Display Size	5.0 inches (~71.1% screen-to-body ratio)	5.0 inches (~69.4% screen-to-body ratio)
Resolution	720 x 1280 pixels (~294 ppi pixel density)	1080 x 1920 pixels (~443 ppi pixel density)
Chipset	Qualcomm MSM8937 Snapdragon 430	Qualcomm MSM8953 Snapdragon 625
CPU	Octa-core 1.4 GHz Cortex-A53	Octa-core 2.0 GHz Cortex-A53
GPU	Adreno 505	Adreno 506
Internal Memory	32 GB, 3 GB RAM	32 GB, 3 GB RAM
Primary Camera	13 MP, f/2.0, phase detection autofocus, LED flash	13 MP, f/2.2, phase detection autofocus, dual-LED (dual tone) flash
Secondary Camera	5 MP, f/2.2, 1080p	5 MP, f/2.2, 1080p
Sensors	Fingerprint, accelerometer, gyro, proximity, compass	Fingerprint, accelerometer, gyro, proximity, compass
Battery Capacity	Non-removable Li-Ion 4100 mAh battery	Non-removable Li-Ion 4100 mAh battery

The major change is in the screen resolution and the Chipset. But, the question is would the new Chipset handle the increased load of the new resolution, since the bump up on the GPU side is just one number, from Adreno 505 to Adreno 506. Would the increased CPU speed and performance create a bottle neck on the GPU, eliminating any visible improvement.
I am also concerned about the Battery Life in the newer Redmi. With the increase in the screen resolution and the Chipset, would the Battery Life remain on par with the older Redmi, since both have the same Battery Capacity. I have my doubts.
So, like in our earlier comparison, here too we see that the new device is bulkier and could potentially have inferior Battery Life.

So, what we have is Xiaomi taking a few steps back in the number 4 iteration. Maybe Xiaomi is taking a gamble and seeing what the other competitors can come up with. I believe this is the perfect time for an Indian brand to rise up and launch a competitive device.

Indian Smart Phone Brands are Fading away

Please note that this post/text is hypothetical, please do not think otherwise

Not too long ago, Micromax, Karbonn and other Indian smart phone brands were ruling in the Indian smart phone market. I remember the launch of Micromax Canvas and most if not everybody were jumping to get one. It was the first or at least the early adopter of 5 inch display when nearly all other brands even international brands like Samsumg and iPhone were stuck in the 4 inch sizes.

One of my close friend even traded his Samsung Galaxy for the Micromax Canvas. Now, I know that the build quality, the camera performance, etc was not up to the mark, but the bigger screen size was the craze then.

And, not only Micromax, even Karbonn and other Indian brands had a decent portfolio of smart phones.

But now these brands are not even talked about at least in the major cities in India. They may still have some followers and buyers in smaller cities, but these brands have been wiped clean from the major cities. Why has this happened and that too in such a few year's time.

For one, I think (I may be wrong) these brands did not manufacture/assemble the devices in India, but just re tagged some Chinese smart phone brands. In particular, I think the designs of Micromax smart phones and a particular Chinese brand which is now available directly in India, were too similar.

Other reasons would be the very low innovation and very low to nil manufacturing ability of these Indian brands. And, the most important reason is the introduction of Chinese brands directly in India.

Now, we get Xiaomi, Vivo, LeEco, Huawei, Coolpad, Oppo, and more Chinese brand smart phones directly without the middle men that used to peddle these as Indian branded smart phones (Again, this may be wrong.)

For example, take the latest basic smart phone of the Xiaomi Redmi brand, the Redmi 3s Prime. It is priced at INR 8,999 and has a 5 inch screen, a Fingerprint scanner, 13 MP back camera, 3 GB RAM, 32 GB Internal Memory, 4100 mAh battery, 5 MP front camera, 1280 x 720 pixels screen, FM radio, Infrared port, sensors: accelerometer, gyro, proximity, compass. So basically you get all the most important features that is required in a smart phone.

Now lets see what competition this smart phone has got from the Indian brands. From the gsmarena website, I have selected the Indian brands: Celkon, Intex, Karbonn, Lava, Micromax, XOLO and YU. Lets see what we get for the 2016 smart phone models with similar specifications of Redmi 3s Prime.

The criteria that I selected: Year 2016, 2 GB RAM, 16 GB Internal Memory, 5 inch Size, 8 MP Primary camera, 2 MP secondary camera, Fingerprint scanner, Battery Capacity of at least 3100 mAh.

The results are:

• YU Yureka Note
• YU Yunicorn
• Micromax Canvas Unite 4 Pro

Only three and that too of just the Micromax and its subsidiary YU brand. And if we raise the RAM requirement to 3 GB and Internal Memory to 32 GB we get just one result, the YU Yunicorn.

But what about the price. Well from the Amazon India website, the price for YU Yunicorn is INR 12,600 and as stated above the Redmi 3s costs INR 8,999.

How is this possible, that an Indian brand cannot compete with a Chinese brand which I think would also have to pay some Excise duty and may be other Indian Government taxes and still give more bang for the buck. Something just does not fit. Something is really broken in the Indian brands which needs fixing and fixing up fast. Otherwise, there would not be even a single competing device left from the Indian brands.