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Planned & Organized Deficit Cashless Electronic Velocity Finance Economic Example: A Brief

One can plan & organize a deficit in such a manner that there are no need for taxes, no shortages of capital, no displacement of personnel & no inflation.

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Firstly, an important digression & observation:

A new currency called “OM” or “O” should also be introduced (with the pun intended on “O”as being Aryabhatta’s Zero whose global IPR could be established if Judiciary India can achieve this in international courts) as the INR has its origins outside India (in Afghanistan now). Sher Shah Suri introduced the Rupee from Agra when he defeated Humayun. There is every reason to believe that the intangibles of Goddess Laxmiji’s & Ganeshji’s Maya (including all other relegion’s in India’s Gods & Goddesses for money & prosperity) could be affected or manipulated. “O” will be an alternative currency which will run parallel to the INR and would be equal to the same value as the INR. Here I would also like to point out that we celebrate our independence from the English but when will we celebrate independence from Foreign Islamic rulers. Today we (Meaning all India Indians) are free from both, but independence from Islam could also be commemorated if required. Do note that their maybe domestic India Indian Islam there which could be indigenous !!

This issue of the OM (“O”) currency is as important as the Ram Temple and in my opinion more so. Now back to the topic:-

We will use the electronic velocity of money (O & INR).

Before I begin an example of the tax less economy,(as per my article of 10th December,2017) I would like to emphasize that if the government or banks tax, then they are answerable to the people they tax, but if they do not tax then they can spend as they like (In a distributed manner as explained hereafter). Also, tax is a monarchist phenomena & not a democracy’s, as tax is not voluntary.

Now to begin an example for a tax less & cash less economy:-

Assumption: There is no supply/production/execution lag.

For example, suppose a 50 km road with self driven cars technology embedded into the road has to be built. We also assume that after due diligence it has been found that the 50 km road will cost 500 crores. The Ministry of Transport applies to the Ministry of Finance which marks the project to a team of personnel which consist of CAs, Cost accountants, commerce & economic graduates, (all tax officials will be fitted into these roles as  auditors) civil & road engineers etc so that the project is monitored, audited and executed in time. At this point, the MoF instructs the RBI to issue an electronic credit of 500 crores to the RBI Account 50 KM road account (RBI50KM). An authorized RBI official punches 500 crores in the RBI NEFT/RTGS/OTHER ELECTRONIC PLATFORM Computer system, and the money or electronic credit is received in the SBI50KM A/c electronically. The SBI bank account officials further disperse the monies electronically into the various accounts of vendors, contractors, and material & equipment suppliers as well as to management, staff & labor. Similarly, another 500 crores is also issued to the manufacturers of materials & equipment that will be utilized into making this road, as well as issued to the manufacturers and producers of the entire basket of goods, products & services consumed by all the personnel attached to this project. At the end of the project, the 500 (demand side) + 500 (Supply side) = 1000 crores (Balanced deficit) will be backed by a 50 KM road asset & not by manner of equivalent bullion, or any basket of currency values, treasury bills or bonds. The RBI & SBI is part of the government & one cannot lend money to itself. It can however, issue monies, in a manner as detailed here, for various projects.

This example can be used as many times as possible as long as 1 unit of electronic money demanded is backed by 1 unit of actual physical supplied & made available. Projects can be of any size and as long as physical supply & execution is there and made available, there need not be any limit on money demanded, as a balanced deficit which is backed by project executed assets and manufactured & supplied goods, products & services would always result.

Now as these monies can be just generated electronically with a bank official typing in the figure on the NEFT, RTGS or other electronic platforms from the RBI account to the project account, there is no need at all for any taxes. Of course, enough checks and balances on systems and authorized personnel will have to be placed to issue monies in such an electronic manner. Note, most banking in India is done by public sector banks.

As there will be no taxes, all money will be “white” and the entire Bharat economy will have to be taught & made compatible on how to participate in the economy in such an electronic cash less manner. This planning & execution as well as teaching is the exercise that has to be undertaken. But now as all the money is white it could earn deposit interest (an electronic credit now) and there would be no need to play the various “satta” markets to supposedly earn money from one’s own earlier capital cash. This would remove many layers of speculators between producers and consumers thus reducing prices and leading to deflation, which is welcome, as Real Income would go up with wages remaining the same, or increasing.

Note, as taxes are removed all the cash will be mandatory to be banked, with should now be not a problem (as there are no taxes), and electronic credits can be given according to deposits to operate in a cashless economy & without any new issues of cash currency. However, keeping accounts and issue of cashless currency would have to be 100% proofed against errors or fraud. While the cashless economy will take the initial load of the changeover to the “OM” (O) & parallel INR currency, the new cash (O) can then be dispensed with in a more organized and painless (no inconvenience to citizens etc) manner in due course.

All government tenders should be awarded to the best & not to L1. T1 cannot be bought at L1. Period. Tenders should also be accompanied by a Decision Tree analysis as well as a CPM analysis with a law to be executed and completed as presented. If this will not happen then inflation will set in and spoil the whole show.

The position the GOI should take is that of “compassionate capitalism” as Dr. Narayanmurthy puts it.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Vidur Raj

The author is Self taught & thought intellectual academic, in out of the box macroeconomic policy, since 1984-85. His website is

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