Wednesday, August 18, 2021

#IndianDataDollar: A whitepaper (Version 1.0: Eighth Page)

 Contd. from Page 7

preparation of the telecom sector. In this period, Parliament can upgrade the laws and the executive branch can shift to this new dual legal tender system. As far as the bridge between INR and IDD is concerned, RBI can take over this role and as far as project execution is concerned, a joint custodianship between TRAI and NPCI can pull off this job as they understand both the telecom sector and payments industry. Users can buy these tokens from the custodian with a maximum limit imposed per person so that IDD hoarding does not happen. This distribution of 3.65 trillion IDD tokens can be formalized via a constitutional bill passed by both the houses of the parliament. This will defend against any technological risks. Since the law is encoded, it can be used to do course correction if anything goes wrong.

The next important design feature proposed is to have a minimum friction in the IDD economy. Since this won’t be a hierarchical economy, the traditional tax collection machinery won’t make much sense here. Rather, a uniform transaction tax @2% is proposed in all IDD transactions. It means that anybody making an earning in IDD won’t have to pay any other form of direct and indirect tax. No Indian citizen would need to file Income Tax Return (ITR) and the same will be true of corporations. The blockchain programmability can ensure automatic collection of tax that can be shared with states and centre in 65:35 proportion. As far as the GST is concerned, any professional or a company can claim full input tax credit as it happens in the case of exports under “zero-rated supply” method. The way exports are encouraged despite GST, the IDD transactions can be treated in a similar manner. For those who think that it might be regressive, it must be clarified that just distribution of the UBI pool can generate a GDP push of nearly IDD 100 trillion. It can collect up to IDD 2 trillion. Though it is too early to predict such figures, it is quite predictable that the larger the IDD economy, the larger would be the tax collected by the government.

5.0 IDD proposes a new Political theory of Network State for India

What fundamental transition is happening here? With IDD as the second legal tender, India is shifting its monetary anchor to a dual consensus model; first is the traditional form of political LOLR consensus and the second one is public utility-based blockchain consensus built around data consumed by Indian users. This shift is moving away from semi-transparent monetary issuance to blockchain-based fully transparent monetary issuance, distribution and payment system. Legacy payment systems can continue to work in centralized servers as usual whereas IDD payments would work as parallel one on the decentralized nodes of the IDD blockchain.

..................................................................................................................Current territorial state is run by multiple server states located in different silos like UIDAI, NPCI, Telecom players, State governments IT infrastructure and so on. In the IDD blockchain, both central and state institutions can become the validator nodes to maintain fair control of the network along with telecom players, banks and other payment players. To ensure easy transition from IDD to INR and vice-versa, the governments can upgrade all Indian crypto-currency exchanges into crypto-payment banks and they can work with telecom players to disburse UBI Pool. If users are uncomfortable with public-private key pair, we can ask these exchanges to be custodian of private keys till users are educated enough. These exchanges are already experienced in handling large users who are learning the wallet management with public key infrastructure. The initial rush of the INR-IDD transactions can be managed by them with enough confidence. Even large players like NSE, BSE or banks can establish their own exchanges to manage this INR-IDD bridge. This will be a huge market where 1 billion users can generate huge volumes.

6.0 IDD offers an automatic framework for regulating crypto currencies

.................................................................................................................. Anybody who wants to interact using crypto currencies can move from INR to IDD and do the transactions. In this way, the legacy INR economy would not have to struggle with complications of regulating the crypto economy. IDD would provide default capital account convertibility to Indians. Any Indian company can receive payment in either IDD or any other crypto currency as well as can



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