HOW TO CONTROL CORRUPTION IN INDIA-CONCEPT PAPER

“Corruption is authority plus monopoly minus transparency.”
Availability and management of Currency.

Stop printing and issue of large denomination notes of Rs.1000 and Rs.500.

The above currency denominations will continue as legal tender. Banks can accept them at their counters but should not issue out to the public.

Currency retention limit for Individuals will be Rs.10,000/- and for families Rs.20,000/-.

Limit for various departments and commercial establishment has to be decided taking into account of the genuine need. Any amount exceeding the permitted retention limit can be confiscated to the government.

Currency payment for any product or service and any other money transactions is limited to Rs.5000/-.  Any payment or transactions above the limit of Rs.5000/- can be done through banking channels only. In this context banking channels means Smart Cards and all other existing banking channels.

Banking Spread

PSU bank branches can be instructed to convert our villages and towns to 100 percent banking zones. Each block or ward can be entrusted to one or more branches.

All bank accounts will be linked to the individual Aadhaar number/Pan card.

Introduction of Smart Cards

Banks will issue Smart Cards* with photo and biometric password to use as an Electronic Purse, in addition to the existing ATM Cards. The existing banking transaction modes will continue in operation.

Smart cards can replace the paper currency and therefore a green initiative also. Customers can load the SMART CARDS with required amount of cash and also replenish it from ATMs or Bank branches when necessary. They can also check the balance in the card on a display window available on the card. Display can be seen by pressing on the panel provided on the card using own thump/finger as a biometrics password.

What is a SmartCard?

A smart card is a plastic card about the size of a credit card, with an embedded microchip that can be loaded with data, used for electronic cash payments, telephone calling, and other applications, and then periodically refreshed for additional use. Users can load SmartCards known as an electronic purse with cash value (credit) to pay for goods or services or any other money transactions.

Smart Cards have a number of advantages over magnetic stripe cards due to high security mechanisms. Smart Cards are multi-functional and the Storage capacity is increased by up to 100 times. The anticipated working life of a smartcard is ten years compared to that of a magnetic stripe card at three.

Smart Cards within the next five years will be the industry standard in debit and credit cards. As the major high street banks and finance houses are now investing in the change over to smart card technology. The size of the card is determined by an international standard (ISO 7810).

Usage of Smart cards

The public departments providing services and merchant establishments selling products or services worth more than Rs.5000/- must install Card readers for any money transaction at their end. The credit card readers also can do this function. The currency limit doesn’t preclude use of Smart Cards for amounts less than Rs.5000/-.

More point of Services (POS) have to be provided by the banks for the convenience of customers in rural areas and cities.

Realty Transactions

Real estate transactions are always the mainstay of black money investments. To eliminate such possibility the government can consider the following steps to bring in sweeping changes.

National Realty Regulatory Authority

Establishment of National Realty Regulatory Authority, similar to SEBI and IRDA, can be a positive step in the right direction to formulate necessary rules and issue directives.

Payment through Banking Channels

State Governments should provide Smart Card swiping machines and other necessary accessories at all land registration offices. Realty Buyers and Sellers can transact the amount of the deal by swiping their Smart Cards at the registration office and confirm the transaction by checking the print out from the swiping machine. The amount of the deal will be credited to the sellers account directly by debiting the buyers account. The registrar should confirm that the smart cards belong to the actual buyer and seller. Any discrepancy will make the deal invalid.

Documentation

Central Government can introduce 16 digits numbering as Document Identification Number with the first 2 digits to represent States.  The number should be a self generated one by the system. The ID number and Name with details can be converted to Quick Response codes (QR codes)* and printed on the Outer Cover* and printed on the reverse of document sheets. The document ID number can be linked to Aadhaar/Pan Card.

QR Codes

Bar codes are linear one-dimensional codes and can only hold up to 20 numerical digits, whereas QR codes are two-dimensional (2D) matrix barcodes that can hold thousands of alphanumeric characters of information. Their ability to hold more information and their ease of use makes them smart, when we scan or read a QR code with iPhone, Android or other camera-enabled Smart phones.

Outer cover

Provide an outer cover with water mark of the state for the Title Deed Documents with the unique document identification number and the Photo of the Property owner and details of the property. The old documents also can be brought under the system with a time bound plan scheduled by the government.

Realty Brokers

In India it is necessary to have strict regulations for real estate investments. A central realty regulator can formulate rules for realty brokers and educate them with the new rules.

Registration Charges

Registration charges also have to be paid by Smart Cards. State governments can definitely think of reduction in charges, as all transactions will be through banking channels; which can reflect the actual value.

Precious Metals and Stones

Precious metals and Precious stones are another area where people invest black money.

The sale, purchase and repurchase of Precious metals and Precious stones should be allowed to operate only through Smart Card or any other banking channels.

Other areas of control

• All monthly salaries have to be paid through banking channels.

• Disbursement and repayment of any type of loans/borrowings should be routed trough bank accounts.

• All payments to colleges and schools should be routed through banking channels.

• Tickets for travel by Air, Ship and Upper class train should not be made available against Cash payment.

• All payments for stay in hotels 3 star and above should be routed through banking channels.

• Sale of Petrol and Diesel against cash has to be limited to Rs.2000/-.

• Cash payment for post paid and prepaid telephone charges can be limited to Rs.1000/-

• Public Distribution System (PDS) should be brought under the smart card system. Special smart cards, exclusively designed for the purpose of PDS can be used.

I am of the considered opinion that the above steps might not eradicate corruption completely but definitely it can reduce it to a very great extent. The above suggestions are not exhaustive but indicative in nature. The advantages to the people and the government by the implementation of the above concept are many.

Other Advantages.

Ø      It is a go green initiative by reducing the use of paper.

Ø      Government can save production cost of the currency.

Ø      Majority of money transactions will be through banking channels and more income for banks.

Ø      Money transactions can be traced and taxed. Hence increase in Tax collection.

Ø      Use of counterfeit currency can be controlled.

Ø      Big robbery and thefts will be under control and police force get relief.

Ø      Availability of cash funds for organized crimes and terrorism will be limited.

Ø      Crime rate will come down.

Ø      Property deals will be transparent and ownership of the property can be ascertained easily.

Ø      Hiding black money in cash, land and precious metals and stones also will be difficult.

Ø      Capital fee payments in educational institutions also can be curtailed.

Ø      Bribery other than cash also can be controlled.

Ø      Low supply and Lesser utility of currency notes will prevent hoarding of currency.

Unearth concealed Black money

Government of India may issue 2 types Special Bonds under an amnesty scheme, to uncover the money stacked in India and abroad.

Issue Special Bonds against Indian currency and foreign currency through banks, with a coupon rate of 6% flat rate per annum with 5 years lock in period.

Indian Currency Bonds

The Special bonds available against Indian currency will be issued at par for the first             6 months from the date of commencement. In the next 12 months after the first 6 months the bonds will be available at premium of 10%. In the subsequent years the premium for the bond will increase by 10% every year till the end of the 4^th year.

Foreign Currency Bonds

Foreign Currency bonds also can be issued with 5 years lock in period with similar conditions. But 50% of the maturity amount can be repatriated after maturity. 

Advantage

      Amnesty might give opportunity for the people to bring out hidden funds.

      Enough funds will be available for Infrastructure projects.

      Central Government may share them with the states from where the funds originates.

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