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
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