Indian ranking for ease of Business

India's ranking in terms of "Ease of doing business" index has gone up from 130 to 100. The Indian government claims success of Demonetization and GST. But, in fact, both these polices were never taken into account while computing this index.

India's rating has improved because Indian government

• Simplified the process of starting new business, terminating existing insolvent business and getting loans.
• Simplified the process of getting construction permits, enforcing existing contracts and simplifying corporate income tax.
• Taken steps to protect smaller shareholders.
• Digitization of Employee Provident Fund.

Demonetization has failed. The rich don't keep their black money in cash. They keep their black money in real estate, Gold and Dollars. So Demonetization has had almost zero impact on black money.

GST overall has good intentions, but it has multiple problems e.g.

• Small business people find the paperwork extensive. They will have to shut down or do business in cash only. The limit for tax exemption should be raised from 20 lakhs per annum within state to 5 crores within and inter-state per annum.
• GST rates are too high. In India, GST is on-average 18%. So a person pays about 30% income tax when he earns money and he will pay 18% tax when he spends his income. This means taxation is about 48% in India. In Singapore, GST is about 7% and income tax is less than 20% for most people. So most people pay less than 27% of their income to government.
• GST procedure is too complex. Most countries have a flat GST. India has different rates for different products e.g. what should be GST on chocolate ice-cream? The GST on Chocolate is different from GST on milk. So is chocolate ice-cream a chocolate product or a milk product?
• Asking business to file GST returns every month is too cumbersome. In Singapore, businesses file GST returns every quarter. Why should Indians file GST returns every month?

Indian ranking will not improve because of Demonetization or GST in current form.

India heading for huge inflation

Indian government will create currency, about ₹9 lakh crore, out of thin air. This is about US$ 139 billion. It will be used to make the banks solvent and build roads.
India's M3 money supply is about ₹8.3 lakh crore. So Indian government is more than doubling the money supply. So during the next couple of years we will see a huge inflation. Specifically:

• Real estate will go up
• Stocks will go up
• Gold and silver will go up
• Anyone with wealth in bonds, fixed deposits, PPF, etc will effective lose wealth.

Bitcoin can be hacked!

Yes, Bitcoin can be hacked. I will give a technical explanation below, regarding how it can be done. The total cost involved in less than US$ one million. Any government or company can spend this amount to break Bitcoin.

The hacking entity will need about 50 computers say C01, C02 to C50. Each computer will initially have about 1 Bitcoin. Now, C01 will transfer one millionth of Bitcoin to C02 continuously; C02 will transfer one millionth of Bitcoin to C03; C03 to C04. Lastly, C50 will transfer one millionth of Bitcoin to C01. Now we have a cycle. A large number of transactions will need to be written on block chain i.e. distributed ledger. These transactions will have to be recorded by all computers running Bitcoin software. This will cause the Bitcoin block chain to become very slow. For all practical purposes, now Bitcoin transactions cannot be used.

You can confirm from any block chain expert, that the above method will succeed. Bitcoin and other distributed crypto-currencies cannot fix this flaw, because this flaw lies in the basic algorithm of a distributed block chain.

Disclosure: I am a technical person and have no investment in any crypto-currency.

The coming crisis

During the next few years, the entire world is going to see a financial crisis. No one alive has seen this kind of crisis before; no one alive will probably see this kind of crisis again during their lifetime.

This is what will happen during this crisis

• A large financial institution or a sovereign nation will declare bankruptcy.
• Because of derivatives, which cannot be honoured by a bankrupt entity, other financial institutions will declare bankruptcy.
• The world financial market will come to a standstill.
• People will not be able to buy/sell bonds/shares.
• Credit cards will stop working.
• Banks will stop cash withdrawals.
• Goods will stop flowing because once credit stops, oil delivery will stop.

Here the world governments will have two choices: Hyper-inflation or Depression.

The world will need a new reserve currency. The governments will insist on a new world currency because existing currency will have either lost value (hyper-inflation) or be unavailable (Depression). The World Bank will suggest governments use SDR as their world currency.
SDR is just another fiat currency like Dollar, Euro, Rupee, etc. It will allow the world bankers to create inflation / deflation on a need basis. It will transfer the wealth of the world from the poor and middle-class to the rich; because the rich friends of World Bank will be informed in advance about coming inflation / deflation. So these rich people can play in the financial markets without any chance of a loss.

We, the common-people, can protect ourselves from this coming crisis by performing the following steps:

• Keep most of your wealth in Gold, Silver, etc. Don’t store this gold/silver in any bank locker. Don’t use ETFs to buy gold/silver. Store the physical gold/silver at location where you can touch it.
• Use cash or Bitcoin (or some other decentralized crypto-currency) for transactions.
• Keep minimal cash in banks, fixed deposits, stocks, life-insurance, debt, etc.
• Pay off your debts early, if possible.
• Keep cash with you to cover expenses for 6 months or so.

A huge percentage of people across the world will not survive this crisis. But the people, who perform the above steps, will greatly increase their chances of survival. In fact, the crisis will transfer wealth from the unprepared to the prepared.

BRICS rating agency

There are three popular rating agencies in world today i.e. Fitch, Moody's and S&P. These rating agencies have consistently given a poor rating to India because

• Indian taxes are too high and complex.
• India law&order situation is weak. Justice is not delivered or often delivered late.
• Indian bureaucracy is big and corrupt. It is difficult to get work done on time in any government department, without paying bribes.

To improve its rating, India had to

• Reduce taxes
• Reduce bureaucracy, rules and regulations
• Privatize many government agencies like BSNL, MTNL, Railways, etc.
• Stream-line the justice delivery system.
• Disallow politicians/bureaucrats from interfering in the day to day running of any government owned business.

But instead of making the above changes to improve the life of Indians, the government wants to setup a new rating agency. Reference.
This is akin to a student, who keeps failing in exam. Instead of studying harder, he wants to change the teacher.
With an attitude like this the student (Indians) will not see any real improvement.

Why do Governments hate cash?

Most governments, all over the world, encourage citizens to go cashless. The main reason are

• Control: If government can see all transactions, then it gives more power to government. The Government can easily see who is participating in anti-government riots, which business house/group is financing its opponents.
• Taxes: A cashless transaction is a taxable transaction. Cashless means more taxes for government.

What should common citizens do?
A common citizen should not allow government to grow bigger or powerful. So a common citizen should transact using cash (or crypto-currency like Bitcoin). This way government has lesser control over people and taxes may be lesser.

So let us be smart. Pay cash wherever possible.

Bullet train from Mumbai to Ahmedabad

The cost is expected to be 17 billion US dollars. Let us assume that cost of maintenance is 10%. So if the project is used for 50 years, the total cost over 50 years will be 13,781 billion US$.
Let us say the cost of ticket is Rs 1,000. So per day about 500 lakh people have to travel by this train so that project does not make any loss. This is impossible because the bullet trains don't have that carrying capacity and there is not so much traffic between the two cities.