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Tag Archive : Indian Government

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

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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

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

 

You are NOT an Angel Investor!

96% of all startups shutdown within 10 years of “starting-up.” Investing in early stage startups is a very risky business. Let this be a disclaimer for all those that want to enter this business seriously or for fun – be ready to go home empty-handed and red-faced. An angel investor or VC’s success can be attributed to several factors: understanding the space, the network, their own genius, diversification of portfolio and almost all the time – a good slice of luck.

The angel investor (or early stage VC) has the potential for generating a large amount of wealth in a short period. So let me be clear that this article does NOT provide gyaan on how to be successful at angel investing. This article is about whether you should participate in angel investing. Many developed countries define venture capital investors as sophisticated or accredited investors that have a significant net worth or who display enough knowledge to participate in this space. In fact, the US requires that you show at least $1 million (Rs 6.8 crore) in networth excluding the value of the primary home to participate to invest in startups.

So why is it important to build such credibility before entering such a risky space?

  1. There is a high probability of a complete loss.
  2. There is a chance that the startup does well (eventually) and you still don’t make good returns because of high dilution.
  3. You cannot exit the investment easily even if the startup is doing well.
  4. There are cases where founders have defrauded the company and investors.

I have personally requested the Start-Up India team to bring in regulations to control the unbridled entry of angel investors, some of whom are betting 30%, 40% and even 100% of their investment portfolio in investments into startups (sometimes even just ONE startup). The Startup India’s inability to regulate the industry (due to various valid reasons) does not mean that we shouldn’t self-regulate. If we don’t, we allow the entry of people who can wipe out their entire net worth and the industry will suffer due to the greed of a few founders and angel investment networks.

Here are some of my requests to the players in this space:

To the founders:

  • Reject investments from individuals who do not investment a minimum of 5 lakhs (~$7500) as those with smaller amounts are most likely passive investors who will not follow-on in later rounds. )They are also a pain to follow up for tranche based payouts)
  • If you are going to accept a Rs. 5 lakh cheque, the investor should bring in at least 10-15 lakhs worth of non-cash benefits.
  • Keep the cap table clean with larger cheques from smaller group of investors instead of the opposite

To angel investment networks:

  • Get your own accreditation standards to review the net worth of members and reject those that do not meet a net worth of Rs. 10 crores ($1.5 million).
  • Charge a decent annual fee so that the cost of investing is high enough to attract larger cheques.

To the incoming investors I request that you:

  • Limit your exposure to 10% of the TOTAL investment portfolio (i.e. your liquid net worth)
  • Have a minimum investment outlay of 50 lakhs per year ($75000) for a minimum of 7 years
  • Have the liquidity to double the amount from years 4-7 to invest in follow-on rounds.

The next time I get a request from someone to join the angel investment space I am forwarding them this link… Will you?