Tech trouble
Cryptos send babus back to school
The Union government’s decision to tax digital assets, and track hawala transactions and money laundering using these assets has brought a huge responsibility on the shoulders of income tax authorities. Even babus who were considered experts in unearthing hidden incomes and black money are racking their brains over the complexities of blockchain transactions. Hawala traders are using highly sophisticated ways to carry out transactions using virtual assets. Taxmen have learnt that digital assets are the new tools used by money launderers to send money to tax havens. Their modus operandi has not been cracked yet. Babus who are trained to handle the latest information technology tools are finding themselves on a new learning curve. Taxmen who were earlier seen poring over fat files trying to extract maximum possible revenue for the government are now seen spending much more time on computers trying to crack new tricks of the trade.
Entry ban
US deports Indian tycoon’s daughter
A real estate tycoon’s daughter was last week deported from San Francisco. Her visa has been revoked and a five-year ban on travel to the US imposed on her. She is a prominent personality in Lutyens Delhi’s glitterati circle, and holds shares in her father’s company of which she was once a whole-time director. The US action came after she was found to be carrying a few strips of Zolfresh and Tramadol without medical prescription. These drugs are Schedule-4 controlled substances in the US and could not be carried or consumed without proper medical prescription. Zolfresh is generally used by travellers to overcome jet lag. It is a sleeping pill which is also used as a nerve-calmer. Tramadol is a pain reliever. It is not unusual for travelers to carry these drugs. Her attorneys feel the action taken by US authorities against her is disproportionate as she was taking the medicine under prescription and her only fault was that she did not carry the prescription. They are preparing an appeal against the decision.
Flight of funds
High US inflation spooks Indian market managers
Inflation in the US has climbed to a 40-year high. This is giving sleepless nights to regulators of India’s capital markets and managers of its foreign reserves. The annual rate of inflation in the US accelerated to 8.5% in March 2022, highest since 1981. This has triggered talks of a biggish interest rate hike by the US Federal Reserve in order to restrict flow of cash into the economy, and check inflation. The rate cut would channel money into bonds. With higher US rates, there is a fear of portfolio investors pulling out from risky markets around the world and investing in US bonds. The Indian stock market has already had a $15-billion drop in foreign investments in the last one year, which was bigger than withdrawals during the 2008 crisis. The Indian stock market has been kept afloat by local investors whose number has reached over nine crores. Financial assets have been the choice of a new class of Indian investor. But the bombing of tech stocks such as Paytm, Zomato, etc. post blockbuster IPOs is sure to make the new investor wary. Regulators are nervously hoping that local buying would shore up the market when foreign capital starts moving back into the bond market.