A Letter to my Prime Minister

Dear Prime Minister,

I wanted to write this open letter to you yesterday but couldn’t allow myself to logically put down in words the emotional, mental and physical hurt of the events of February 14th. As I got ready this morning, I silently cursed myself for not responsibly expressing my feelings. Just then, I heard the cries of a child on the TV, who had lost his father in the event.

A TV channel was showing the anguish of the 40 families, villages and communities who had lost their sons. I didn’t even realise when the tears started flowing from my eyes. That’s when I resolved to write this letter, even if it was a day late.

As I write, I can barely see the screen through my watery eyes, but I demand from you, who promised to protect us from the perpetrators of such violence, to whom I gave my vote in 2014, a vengeance. Vengeance for the blood of our soldiers, who were killed in a cold blooded murder by people and organisations that claim to be of a higher god, people who represent one of the largest religions in the world (which they don’t) but are actually just petty terrorists without any religion and humanity. They need to be crushed for the petty cockroaches that they are!

For all their claims of bravery and sacrifice, these terrorists don’t even have the courage to face my slain brothers face to face. Instead, they choose the cowardly option of attacking when my soldiers were not ready. They knew very well that they did not stand a chance in a hand to hand combat, and hence adopted such pathetic measures.

These terrorists are not deserving of any mercy, trial, diplomacy or compassion. All of these have been tried in the past and met with the loss of even more blood of our men. This cannot continue.

Neither can there be a continuance of restraint afforded to the nations that directly or indirectly shelter these people, their intent and their organisations. They are as culpable of this murder as the people that carried it out.

You have promised independence for our armed forces but I also expect that you will not restrain them for completely defeating the enemy like the Prime Minister did in 1971. You have to allow our forces to deliver an answer that does not leave anyone behind, even to listen to it. I demand from you the restoration of the faith that our democracy, armed forces and judiciary has placed in you. I believe you will not disappoint us.

And if you feel that there isn’t enough blood available to support the country and the forces, you can start by taking mine.

Jai hind, Mr Prime Minister.

Anirudh A Damani

My Angle on the Union Budget 2019

I would rate the budget presented by FM Piyush Goyal, a solid 4 out of 5. The budget managed to do the difficult dance between fiscal prudence and a sustainable, stable but progressive tax policy. More importantly, it provided security to two of the weakest links in India’s growth story i.e. the unorganised work force and the marginal farmers.

It is a common gripe amongst taxpayers that they do not get the benefits of paying taxes which they pay honestly (or otherwise) but various data sources suggest that we have one of the lowest tax revenues to GDP ratios in the world at ~11%. Compare that to Mexico who at 16% was the lowest amongst the OECD countries and most of these countries in this list are developed economies unlike India, where even the most basic infrastructure is being developed. The developing and growing economy is being supported by 6.8 crore taxpayers paying 120+ crores, which is dismal. Until we get to 30% tax revenues to GDP, we as tax payers will continue to bear this burden.

Unlike previous governments, I am happy with the way this governemnt has invested and spent my tax rupees and the change it has brought is visible. In the last 12 months, I visited at least 15 cities that can be classified as Tier 2 or beyond and I travelled to these places by planes, trains and automobiles. I have witnessed the benefits that these infrastructure investments have brought for the people who live in Bharat. Some of the areas that have seen the biggest ROIs are:

  • Connecting North East India with the rest of the country via rail & highways
  • The massive highway construction program
  • Upgrading the intra-city railway network, cleaner and better-equipped railway stations
  • Faster, more efficient and punctual intra-city railway services
  • Sanitation, electricity and home construction coverages

No money has been spent mindlessly. Almost all major urban centres are set to have intercity metro services, the defence spending has improved our security infrastructure and we now have a space programme that will put an Indian in space, with technology that will be developed within the country. These are all developments that I, as a taxpayer, am extremely proud and shall continue to support, with my tax rupees.

In the same vein, the Rs. 6,000 rupee direct cash transfer to farmers should be looked at as the start of an experiment that has its roots in the immortal words of late Rajiv Gandhi who had inferred that only 15% of the money given for welfare of the poorest and weakest sections of society actually received those benefits. This statement was made in 1985 and since then, the situation has barely gotten better.  In fact, the elected representatives have looted everything from seeds, urea and fertilisers that were meant for farmers. So a direct deposit of Rs. 6,000 would actually be equal to Rs. 40,000 benefit that the government would’ve had to dole out in order to achieve the same outcome. The only people that are making the most hue and cry about this are those that have made a living on such ill-gotten gains. However, this time the money will not be fattening the pockets of middlemen who have stolen my tax rupees. Instead, this will be the beginning of the process of plugging the gap. I am supportive of the initiative because the direct benefit transfer has saved us over Rs 90,000 crores according to UIDAI as well as the ancillary gains of the accurate welfare amounts reaching the intended recipients have been significant. Therefore, with this direct income support, it will be yet another nail in the coffin of the middlemen.

My only real grouch with the budget was the lack of support to the VC ecosystem, especially the VC funds. Other than the Rs.10,000 Crore fund of fund allotment (which is extremely difficult and complicated to avail) there hasn’t been any incentive for investors to put money into VCFs. Investing in VC funds is a new phenomenon for most investors, therefore, a tax incentive like offsetting tax on capital gains from real estate or listed securities by investing into SEBI registered VCFs would have provided a boost for investors. Secondly, reducing the tax on gains from VC funds to those from listed equity funds or even lower would have been a positive move.

However, in the end, the government did it’s best to support the ones that needed it most and modestly rewarded those who have contributed to the nation. There was a clear message that the government will encourage consumption but in a way that it directly benefits the targeted beneficiaries. I (as a taxpayer) am extremely satisfied and hope that the successive governments learn and follow the same path.

Lobbying for lower taxes can wait.

20/2019

Gir's Sons have India Roaring, on the Cricket Pitch… and Off it Too!

Investment advisors have been selling the potential of 100 crore Indian consumers to investors across the globe for the past 20 years with excellent success – for the advisor. But, investing in that potential has always led to investor gloom and doom. The potential was always there but somehow India always found a way to overpromise and underdeliver, just like the Indian cricket teams that left with tremendous promise for Australian tours, but those expectations almost always came crashing down like a house of cards.

However, today’s India is writing a new script, in cricket and as an economic powerhouse. The potential of 100 crore wallets that was entangled in the web of black money, oppressive taxation, poor infrastructure and expensive logistics in finally unlocked. Demonetisation, Digital Payments, GST and Tax Compliance reignited the hope that this was finally India’s moment but building out rural consumption points was expensive, and it took years if not decades. Unlike the previous failures, this time the economy and the cricket team had those two pieces that have alluded an Indian victory. Interestingly both of those pieces, whether it is the economy or the cricket team, find their roots in Gujarat.

The ability to battle ahead on the trickiest of pitches, facing the most abrasive oppositions and weathering the relentless media attack requires grit & determination. That role has been perfectly essayed by Cheteshwar Pujara who not only blunted the opposition but took the fight to the opposition while the others built around him. Prime Minister Narendra Modi did the same for the economy. The PM’s economic policies improved throughput of government subsidies to the neediest through the smart utilisation of Aadhar. He filled the government’s empty coffers by increasing tax revenues through higher compliance and bringing in the fear of evasion. He also took the fight to the opposition by calling out their “Accidental PrimeMinister” and allowing his team to build better infrastructure, bail out the near bankrupt banking sector and amicably improving or destroying the relationships with our neighbours.

All this gunpower required a spark to explode from someone who would have the planning, intelligence and the pace to bamboozle the opposition. Jasprit Bumrah did that to the Australian batsman, while Mukesh Ambani’s Jio did that to the telecom sector, forcing into submission. Jio’s introductory offers were like Bumrah’s deadly bouncers, Jio’s fast and extensive network like Bumrah’s yorkers and their strategy to hook a user to their content ecosystem was like Bumrah’s slow yorker to Shaun Marsh, it bamboozled them.

The results that India and the world has been waiting for are finally here. The cricket team is 2 wickets away from winning their first Boxing Day match in history. It is a moment that 560 million Indians can watch tomorrow on their Internet-connected devices, a first too. This maturing of India’s potential has driven a record amount of FDI into the country, almost $40 billion flowing in 2018, a whopping $7 billion more than China, a first again, in 2 decades.

The results have taken time and we have endured pain, but the victory is near and will be comprehensive.

103/2018

The Taxman cannot solve Angel Tax

It has only been a week since I wrote a post on the need to change the investment narrative in India and just 3 days after that, I received a slew of notices from the income tax department asking for ludicrous details on the investments made by Artha India Ventures. Furthermore, a couple of our founders warned us that more notices were on their way since they had gotten them too. This witch hunt is nothing but a death knell for angel investors. Former-IAS Venkatesh Shukla said it best “civil services officers were the “worst” people to decide policies for start-ups.

In one of the notices that we received, we were asked for proof for 20+ points that included literally everything but my medical records (although I should submit them too, just in case). One of the items of the information sought included personal bank account statements of the director of the entity that we had invested through. Since the current directors are all family members, getting this information was not a problem, but can you imagine the embarrassment we would have had to face if we had prominent people as our independent directors? To sum it up, the evidence being sought is nothing but a ruse in forcing us to settle with the officer.

I would love to challenge this harassment in a court of law, but our legal system is already creaking under the weight of crores of cases, adding another one would hardly serve any purpose. The Prime Minister and the Finance Minister need to be cognizant of the difficulties of doing business in India as well as raising seed and angel funding for Indian start-ups. Such fact-finding missions will certainly drive away the much-needed financial support for the start-up industry in India.

Thankfully these notices (as of now) are not being sent to VC/PE funds, so the investors putting in money through funds are safe from this kind of harassment. However, I do continue to believe that we require a robust angel investment ecosystem to start producing 3,000-4,000 seed funded start-ups that will expand out of India by 2030. One of the solutions would be SEBI or a competent authority providing accreditation to certain individuals/entities to be angel investors, a topic I have been discussing on various forums for the past 2-3 years.

This accreditation would put an angel investor on par with VC/PE funds that are allowed to assess the risks of investing in unlisted companies and decide the value they are willing to pay to buy a stake in them. Start-ups that would raise money from accredited investors would only be required to submit the investor’s accreditation certificates (which SEBI can also list on their website) to the income tax officer during the enquiry. If any of the investors on the list do not have accreditation, it would open the start-up and that whole round’s investors to income tax enquiries. The message would be loud and clear i.e. no accreditation is equal to IT investigation. Therefore, this would form a self-policing system wherein start-ups would avoid raising money from non-accredited investors and investors would not like to invest alongside non-accredited investors, thereby pushing every angel investor to get themselves accredited.

The PMO and FMO offices need to step in to stop the mess being created by the income tax department’s officers, from spreading further, or (I shudder to say) we will be an India of 1990 and not 2020.

98/2018

The Sun has Risen but it Proves that Sunset is Required for Archaic Laws

Justice Indu Malhotra, who was a part of the 5-judge bench that took the decision on article 377, aptly said it in her verdict:

“History owes an apology to the members of this community and their families, for the delay in providing redressal for the ignominy and ostracism that they have suffered through the centuries. The members of this community were compelled to live a life full of fear of reprisal and persecution.”

The word “history” is important here because it took over 24 years for the legal system in India to repeal the provisions of Article 377, a law that was made in 1861 i.e. 157 years ago.
This repeal is a significant step towards legalizing people’s choice of a same-sex partner and allowing them to start a family by adopting children etc. So, while I celebrate for many of my friends who have been open about their sexual preferences regardless of the law, I fear that the marriage acts framed over 50 years ago will be a hindrance to their struggle for legitimacy. As demonstrated by the repeal of this law itself, it might take another decade to move the required changes through the legal framework of India and update the law.
I have long held a view that every law, be it civil, criminal, corporate or other, should come with a sunset clause i.e. they should be considered redundant unless they are reviewed and reinstated by an act of parliament, every 25 years. The world around us is changing rapidly and we still have over 300 acts that were made before 1947! In addition, there are laws governing commerce that were written when our nation was experimenting with socialism, and now are directly conflicting with the success we have achieved with capitalism & entrepreneurship.
Even the finance ministry brought in sunset clause for their schemes to “improve the quality of government expenditure”, proving that even the government believes there is merit in reviewing outdated laws from time to time. Therefore, all laws that are past their expiry date need to be rewritten to make them relevant for the era in which they are being used. This will significantly improve the quality of Indian law and justice, ensuring that “history” will no longer be apologetic to the citizens of free India.
82/2018

I support Trisha Shetty in demanding action from our elected leaders

Child rape is a heinous crime and shockingly our society has been unable to curb it. In light of the Asifa case, the issue has been politicized so much that we have lost sight of the core issue and failed to take any action against the perpetrators. In the midst of this blame game, I was unable to form an opinion on the right course of action until I watched this video clip that I received from a friend via WhatsApp. In this video, a 28-year-old activist took on the spokespeople of multiple political parties and had them squirming in their seats unable to answer her simple arguments sans the political brouhaha.
I wish that Arnab would have shut up and let the woman speak but I think that would be asking for too much

The woman in this video is Trisha Shetty, is the founder of SheSays, an NGO that Forbes describes as “an Indian non-profit that empowers the country’s women to act against sexual violence by providing education, legal, medical as well as psychological support.
I absolutely commend Trisha for putting forth such a bold and unrestrained argument. In her two-minute monologue, she pointed out what these seasoned politicians have been avoiding for years i.e. removing the people in your party that have been accused or are accused of sheltering & defending those that were accused of a heinous crime like child rape. As many other Indians will, I strongly resonate with her argument. The accused people should be removed from office until proven innocent and be barred from holding positions of power if found sheltering the accused. None of them are above the law and shouldn’t be allowed to act as if they are.
Any elected official that believes that his or her views on this topic are being smothered by the louder & more powerful voices in their party, should have the guts to leave that party. We did not elect our representatives to follow the orders of a few, but to speak up and defend our rights, act on and resolve our complaints and protect our right basic right to have a respectable and secure life for ourselves and our children.
44/2018

Lets start this debate

We are 6 to 15 months away from getting our forefinger inked for having voted for a new Member of Parliament, which will then decide the India’s next Prime Minister. Therefore, there is no better time than now to initiate the debate of what our issues are, the issues of the Lok Sabha and what kind of candidate we need to represent us. There many debates that have defended or destroyed the current government’s handling of our country, its economy and social fabric. However, these polarised debates have not helped in drawing up a resolution, which can be attributed to the style of debating where people are yelling like barbarians at the top of their lungs and embarrassing themselves in front of the entire nation.
I found a fresh new style of questioning and debating in the YouTube video below wherein Kunal Kamra engaged the BJP Youth Wing Vice President, Madhukeshwar Desai in a debate about what he as stands for, what his party stands for and most importantly what they both do not stand for. As a fan of stand-up comedy and Kunal Kamra I found that this video had the perfect balance with a little bit of everything i.e. comedy, diplomacy, maturity, uncomfortable questions and some leg pulling.
I want to engage in a debate to take our country forward and this is how I would love to do it.

22/2018

My Pre-Budget Wish List

As Finance Minister enters the parliament to present his 5th budget… These are the changes that I wish to see!

  • Personal Taxes
    1. Reduction in number of slabs
    2. IT exemption limit increased to Rs 3,60,000
    3. Top tax slab reduced to 25%
    4. Exemption for equity investment increased to Rs. 2,00,000
    5. Penalty on Income Tax evaders increased
    6. Announce final round of Voluntary Disclosure of Income Scheme
    7. No change in LTCG on listed equity investments
    8. No LTCG on startup investments that are held for over 3 years
    9. Farm income over 50 lakhs should be taxable
  • Corporate Taxes
    1. Flat tax of 25%
    2. Removal of exemptions
    3. Investment in qualified start-up funds (impact & seed) allowed from CSR allocation
    4. Dividend Distribution Tax reduced to 15%
  • Startups
    1. Increase Fund of Fund allocation to Rs. 15,000 crores
    2. Tax exemption for investing in SEBI registered start-ups funds;
      1. 1 crores for individuals
      2. 5 crores for corporates
    3. Removal of IT exemption scheme for start-ups
    4. Increase in allocation for CGTSME loan schemes
  • Power
    1. Removal of MAT on power projects
    2. Utilisation of Coal Cess to encourage rooftop solar projects & rural electrification
    3. Tax and other benefits for banks to lend to power projects
    4. Custom duty on import of solar panels.

Now crossing my fingers (but not holding my breath). Best of luck everyone! 😊
12/2018
 

Screw Amendments… Rewrite the Law !

I have wanted to write this post for a very long time but kept putting it off for some good reason best known to the subconscious. However, the attack on e-commerce by the tax-man was the spark that ignited this story. As it is normally the case, some law that was written in goodness-knows-which-generation is going to be used to harass a business enterprise. It doesn’t matter that our PM Modi is racking up air miles in convincing the world outside and within India on a red carpet welcome to capital and services but alas, did someone forget to tell that to the tax man?
So, it all started when I on my daily cramming of articles on Startup Logic read this article on the application of outdated laws to new age business models to a global behemoth like Amazon. The clash has led to a cancellation of licenses for Amazon’s warehouse in Karnataka in addition to the umpteen headaches from the tax authorities and the obvious loss of face. This doesn’t even count the numerous transactions that will be delayed or cancelled due to the diktat.
So while each government has a Finance Ministry which oversees the balancing of the budget, do they have an Economic Impact Unit that offers a perspective on the economic impact of shutting or opening a business unit? Are the tax authorities asked to give an assessment on the positive and negative impacts of their actions and the bigger affect that their actions can have on the country’s image? Or are they just allowed to march in and shut a unit down all in the hope of sweating out a few people and greasing their own dirty palms?
It is high time that the majority government passes a law that mandates the ‘rewriting’ of laws that are over 25 years old. There are just too many cases today where the outdated laws of pre-independence (and some that even pre-dated to the birth of my great-great-grandfather) are being used to harass entrepreneurs, law abiding citizens and even party revelers from enjoying their ‘independence’.
lawbooks
The reason I choose 25 years is because it provides a balance between the generational change in India with the rapid change in the pace of technology and society. Unfortunately our legal system has passed its expiry date on both accounts and it is time for a radical change through the rewriting of this system for the youth of today to believe in the legal system and to agree to follow it.
To know how deep the malaise of outdated laws affect our ‘independence’ and outdate reality, just read this article from India Today. While the article only touches the tip of the ice-berg it should have further gone on to explain how the Indian Partnership Act was passed in 1932 and was last amended in 1983!
Why amend such old laws, they don’t change the intent of the law and neither do they capture the changes in the applicability of the law (can you imagine what a partnership meant in 1932 or even in 1983 versus what it means today?) for that matter imagine what was the intention when the Press and Registration of Books Act of 1867 was written… electricity was a privilege then and we are in the age of the e-book!
These laws aren’t just affecting our entrepreneurs, imagine what intention the Indian Divorce Act of 1869 wanted to achieve versus the reality today? What about the Indian Evidence Act of 1872! I don’t even want to read what those acts say except knowing that their entire intention is defeated when the intent with which an act was written is no longer a reality my generation or even the generation after me can imagine.
There are umpteen number of my friends, family and brother and sisters of my country that are breaking their heads and their spirit against the colonial laws created by the British curb Indians and in a way we are still enslaved to the draconian laws 68 years after our Independence. So Mr. Prime Minister before we attract billions, trillions and gazillions from China to Timbuktu… let’s clean up our judicial system and restore its faith and stature in the eyes of our generation.
A list of laws & acts governing us is available here