Operating cost of the TOP Tax system: For example India (2009 )

[Not e - This document w as prepared in 2009. So t he operat ing cost w as based on t he figures available in 2009. Since t hen t his operat ing cost example has not been updat ed w it h t he lat est figures. Since t hen money supply has been increased in t he banking syst em. So t he bank profit s w ould be more t han t he figures show n in t his example even w it h t he increase of salaries of t he employees t o almost double t han it w as show n in t his example]

The t ot al number of Banks/ service cent res (Privat e& Public) t o be provided under TOP t ax syst em (a bank for every 2000 populat ion) w ill be around 5, 00,000.

Aft er est ablishing sufficient number of banks/ service cent res by t he Government w it h t he help of privat e sect or banks and financial inst it ut ions, all t he cit izens of India need t o be asked t o deposit all t he currency not es of 1000, 500, 100 and 50 rupees except 20, 10, 5, 2 rupee not es/ coins, available w it h t hem in t hese banks in t heir M ain Savings Account (M SA) or Sub Savings Account s (SSA) w it hin a st ipulat ed t ime of 30 days. All present ly run savings account s and current account s w ould be convert ed in t o Sub Savings Account s (SSAs) w it h t he same account numbers and can be operat ed from t he same banks. Similarly, people w ho have money in t he fixed deposit s and FDRs w ill have t o t ransfer all t heir

money from t hese fixed deposit s and FDRs t o t heir respect ive new ly given M SAs or new ly opened/ convert ed SSAs w it hin t he same st ipulat ed period of 30 days. People w ill have t o spend exact ly t he amount t hey earned/ saved and not a penny more (got by virt ue of int erest so far) as and w hen and in w hat ever manner t hey w ant . Except t he miniscule part of t he money in physical form of Rs. 20 and Rs. 10 out side t he syst em, t he ent ire money of people and Government w ill be inside t he TOP Tax syst em in t he banks in digit al/ numerical value in t hree t ypes of account s M SA, SSA, CAN. The huge money available w it h t he banks w ill be lent at low int erest rat es. The prime lending rat es w ill be 2% simple int erest per annum up t o Rs. 10, 00,000 and only 4% simple int erest per annum on am ount s above Rs. 10, 00,000.

In TOP Tax syst em t here w ill be no int erest on fixed deposit s, demand deposit s, bonds, et c. In t hat case t he banks w ill not pay int erest on deposit s in banking syst em. Up t o 90% (if CRR = 10%) of t ot al real money belonging t o people, companies, banks, organisat ions and Government , can be lent t o people, companies, organisat ions and Government at Prime Lending Rat e (PLR) 3% per annum up t o Rs. 10 lakhs and 4% per annum for above Rs.10 lakhs

The banks’ expendit ure w ill include only t he w age bill, provisions and cont ingencies. The Government can borrow money from banks up t o maximum of 24 % of t ot al loan money available in banking syst em. The PLR (4%) w ill be same on all loans above 10,00,000 given by banks t o people, indust ry or Government . There w ill be no repo reverse repo rat es.

Note - This figures in the below tables are assumed to be a per the data available in 2009 w hen this document w as prepared. Since then, the figures have not been updated. If w e take into the present size of the economy and volume of the money supply the banks profits w ould be tw ice more than the estimated in these tables

All figures are approximat ed

Number of Bank branches/ service cent res required 5,00,000 Number of Employees required (1x3) 15,00,000

A: Operating cost per year: Rupees in crores

Table -A

15,00,000 employees salaries ( 25,000 per mont h for each employee) for t he year {15,00,000 x 25,000 x 12mont hs}

45,000 As most of t he bank branches/ service cent res w ill be est ablished In rural areas,

villages, municipalit ies, t ow nships, colonies, average rent per branch w ill be around Rs 10,000 per mont h Tot al cost of rent per annum {500000branches x 10000 Rs. x 12mont hs}

6,000

elect ricit y bill per annum {500000branches x 10000 Rs. x 12mont hs} 6,000 St at ionary charges per annum {500000branches x 10000 Rs. x 12mont hs} 6,000 M aint enance incl. int ernet {500000branches x 10000 Rs. x 12mont hs} 6,000

B: Possible Incomes through Interests under TOP tax system Rupees in crores