One of the relatable cases of PAP is sales - the sales executive is likely to motivate you to buy those products where s/he earns more commissions, rather than those which are cheaper or beneficial for you. This problem occurs in any kind of a sale whether its a kitchen appliance or insurance product.

Maybe you've already guessed where I am going with this - the PAP with taxes. The government is an agent which levies a charge (taxes) on its people - possibly the strangest of principal-agent relationships [in all other cases, the agent is usually paid a fixed or pre-defined percentage of gains]. So clearly higher taxes are good for the government, but bad for people - at the same time, given that political parties depend on people's votes for staying in government, stakes are balanced. So there will be political parties who will make lower taxation a rallying election cry. So, only on the aspect of tax rates, the scale is generally balanced between the principal (people) wanting lower charges (taxes) and the agent wanting to deliver it to continue in business.

However, there is another aspect of taxation where PAP presents a particularly vexing imbalance - the complexity of the taxation system. Complex taxation usually manifests in form of increased compliance burden than just increasing tax rates. So while the rate of taxation may be low or meet people's expectations, the complexity of taxation remains high. India is a particular example of a state where every form of taxation is much more complex compared to its peers.   

• Income tax in India not only is progressive, but there are a number of exceptions and surcharges to the tax slabs.
• There are other forms of tax exemptions available only to entities such as HUFs (Hindu Undivided Family) only which treat a family as a tax unit rather than the individual.
• Corporate taxes in India are currently low, but again there are several exceptions relating to CSR and other such contributions made to the society.
• India's VAT implementation (christened GST) is one of the more complex systems with more slabs and ambiguity for goods and services which fall between the various categories defined by the law.

Apart from the complexity in applying or calculating taxes - the key aspect here is about the burden of depositing tax and compliance filings. For direct income taxes, the burden technically falls on the individual itself and for indirect taxes (GST), it is on the body-corporate undertaking the sale. However, Indian governments have successively shifted the burden of individual income taxes also on businesses / non-payers.

The first example is TDS - Tax Deducted at Source; any business which pays a salary, compensation or fees to employees, contractors or other businesses must debit taxes prior to making the payment and deposit the same with the government in name of the recipient of the monies. Similarly, TDS is also required to be debited by the buyer of a real estate property from the amount they pay to the seller, and deposit the required amount with the government and file compliance. Notably, TDS is not unique to India - other countries also have this system under names like Pay as you Earn / Go or Withholding tax.

TDS not only shifts the burden of tax compliance away from the tax-payer, but it also increases the complexity of compliance for businesses because businesses now must find out what tax slab the individual or business, to whom payment is being made, falls in; but also perform sufficient due diligence to verify the accuracy of this information before deducting taxes and depositing it with the government. 

More recently, the Indian government added a new animal to its tax compliance arsenal - Tax Collected At Source or TCS. TCS is reverse of TDS - while TDS is deducted by someone who makes the payment, TCS is 'collected' by someone who receives payment. TCS collected by a seller of goods or services from the buyer for certain kinds of purchase (ex those involving foreign remittances like booking a hotel overseas). TCS also shifts the burden of tax payment and compliance away from the actual taxpayer to another entity and the same complexities of determining tax slabs and compliance exist.

TDS and TCS are classic cases where the incentive of the agent and principal - both are divergent. While the government wants to ensure that it collects taxes from the taxpayer from all sides, but because the taxpayer itself would possibly not comply - they shift the burden to intermediaries, businesses in most cases, who have no direct relationship with the entire tax deposit/collection of the relationship.

TDS and TCS result in increased cost of operating a business in India making it less viable for smaller businesses to operate because of higher compliance costs. They also create perverse incentives on Tax authorities to harass businesses for matters which do not necessarily have a direct correlation with income and expenses of their core business. 

Ideally, better tax compliance would be achieved by digitizing the economy and incentivising people to be fair in their tax assessment. Tax compliance incentives typically would mean a simple taxation system with fewer slabs (maybe flat slab?) and no exemptions; instead of complexity. 

However, given that the tax regime in India is complex and hence prone to people evading taxes using exemptions as systemic loopholes, the government's countermeasures are in form of TCS and TDS. TDS and TCS make it difficult for people to evade taxes and may even result in collecting higher taxes, from some people, than what they actually owe. This shifts the burden away from the government to collect taxes, to citizens who now need to collect refunds. 

I must underscore and acknowledge that Taxation is a complex subject - I don't claim to be an economist or know better than civil servants running the Finance Ministry. I am not claiming that TDS/TCS are wrong, even though I do believe in the general principle that simplification always is a preferred option over over-complication in solving any problem. But rather than comment on TDS / TCS being right or wrong, the limited point I am making in this post is that by reducing 'ease of doing business', as a side effect, TDS and TCS reflect how a convoluted solution to a problem results in unexpected outcomes.

Image Credits: https://unsplash.com/@konkarampelas

References

I had surmised four years ago that the future of education was clear to me, just that the path to get to this future wasn't clear then. The future I predicted was - and I quote: 

Take a leap into future, learning could be transitioning back to the heydays of Indian Gurukul system - just that these Gurukul's will be online. What will be known is not universities, colleges or degrees; what will be known is teachers and professors of repute (the Guru's) and the subjects they teach. Thanks to the ubiquitous nature of the Internet, Guru's could be running a course on several platforms or several courses on one platform. People will take courses from Guru's of repute to learn what they want to, not because they want a degree from the platform which they represent!

I believe the path to get to this future of education has been found and it runs through the Pandemic zone called Covid-19. Covid-19 is a warp zone which has accelerated the transition from the brick-and-mortar University education to take-your-class-online model. However, what we are seeing in the short term is the University (and school) classrooms getting transitioned to the Online classroom - this is more of a tactical than tectonic shift. But the longer Covid-19 pandemic continues, the more the tactical shift risks moving towards tectonic shifts.

I spoke to Engineering students about these trends few months back and a recording of my session can be viewed here: https://www.youtube.com/watch?v=AfM4wpiixz4

Synopsys

Concepts such as Lambda School, WhiteHatJr along with the earlier MOOC platforms are going to use this 'tactical' shift to further their access to kids getting educated today. As students get used to getting educated online, they will also start realising the benefits and liberties of change of the medium. They will start exercising their choices and power will shift slowly from the Professor / Teacher into the hands of Students (and in some cases, parents). 

Education will see the unbundling effect, similar to the one Steve Jobs brought to Music with the iPod. Just like we no longer buy a full Music album, but only individual tracks, education will also no longer be in the current 'Industrial' model where you have to select a full degree - students will instead choose courses. Coincidentally, I again borrow from Steve Jobs - he mentioned about his dropping in on the Caligraphy courses during his 'dropout phase' at Stanford in his commencement speech. While it happened for Jobs by chance, it's going to happen to students today by choice - students will choose subjects to study instead of degrees they want to attain. I mention some practical cases of this happening around me in the video.

There are few other tectonic shifts this phenomenon will see, and I talk about them in the video - here's an enumerated list: 

The essence of my talk is that power has shifted, but so has responsibility. During the industrial age, if we got into a good university, we automatically got great teachers/professors, a good education which led to future positive outcomes of having a good career and happy lives. But with the shifts in education now, the path has many a fork along the way - getting into a good university doesn't guarantee a great life - one must keep making the right choices; choice of subjects, choice of allocating time, choice of scoring on the right topics, choice of selecting the right career opportunities; in order to have a great life.

It's much more fun than the erstwhile world - there's so much more freedom, choice and so many more possibilities - and yet, the challenge is as great or maybe greater! 

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Image Credits: https://unsplash.com/photos/-PnSpCHYKsw

v/s

I've written earlier about my musings on Clustered cities vs Suburban Sprawls being the two contrasting futures mankind stares at. I concluded in the 3 part series that the future of humanity, at least until the developing world gets to a median level of development, will be to be present in clustered cities. The other alternative which I envisaged for the longer term was to set up a colony on Mars.

However, since then we've had many developments and Covid-19 impacting the whole world. While Covid-19 has been devastating on economies across the globe, its impact on climate has been benign - fall in economic frenzy has only led to a reduction in carbon emissions, a civilizational realization about the value of boosting natural human immunity and end to wasteful ways of living. 

The other side of Covid-19 is the realization that the pandemic is also an impact of human activities much like climate change itself. And as Covid-19 rages on forcing people to stay indoors, California faced the worst possible forest fires in history burning 3.1 million acres of forests, 26 times higher than last year (2019). More than 6500 structures were damaged or destroyed - assuming even 50% of them were homes with average 4 residents, we are talking about 13000+ people impacted. 

Notably, forest fires are a major threat to suburban living and not so much for metropolitan clustered cities - suburban living disperses populations far and wide, closer to the forest not only increasing the risk of forest fires but also their impact on human life. Metropolitcan clustered cities instead promote isolation of human populations in urban limits leaving nature to thrive in the hinterland without much intervention.

Amidst all this, are increasing advances being made by cleantech enthusiasts in the areas of sustainable suburban living - whether it is super-efficient HVAC by Tesla or rave reviews of their Powerwall in combination with the original Solar roof. Improvement in battery technologies are also making a lifestyle disconnected from the powergrid possible. Ironical or not, but it is Californians, worried about an insecure energy future, who are increasingly looking to this kind of solution - a powergrid disconnected suburban home which produces its own power using the roof, stores it in a Powerwall which can keep running the house through the year. The economics don’t yet work for every household, but the economics of scale for green-power combo of solar panels plus batteries is slowly building up. Needless to say, the math won't work out for clustered cities where per-capita solar charging space would be a premium.

The Fork

Summarising, it looks like humanity is diverging (or has already diverged?) into two separate civilizations at the moment. 

First, the developed world population which can live off the power grid, work and earn remotely. A typical suburban family, in this part of the world, will have a large house without any need to step out if there's a pandemic out there, they can get contactless food delivery via robots and as much entertainment online on the Internet via Starlink satellites. This civilization will live and work between the developed parts of earth and Martian colonies. They'd travel back and forth between these Martian outposts and earth, plan the future of the human race on the red planet and beyond. 

The other fork to humanity will live in the ever-developing world in clustered cities, live lives more industrial in nature. They will be under constant threat of being impacted by outages, climate change events (pandemics or natural disasters) and their raison-d'être would primarily be producing goods (and services) for the other civilization.

Taking a leaf out of my other post on inequality, this is a future we stare at - a humanity split into two and unequal in not just the quality of life but also in their purpose and stature. This split may not be as visible as Aparthied but it will surely be as evident as Segregation, it may not be as unfair as Colonialism but definitely be based on Neocolonialist tendencies. And hence directionally, this split would be opposed to the liberal thought and libertarian ideals which many of us cherish.

If we believe that inequality is a bane for humanity, we must make all efforts to prevent this fork in the future of human civilisation.

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A thread on Hindi Diwas; for the last few months I have been influencing my daughter to learn Hindi by telling her greatness & elegance of Hindi

हिंदी दिवस के उपलक्ष्य में एक ट्वीटमाला; पिछले कुछ माह से मैं अपनी बेटी को हिंदी की महत्ता और लालित्य के बारे में समझा रहा हूँ|

She is in Grade 2 and just started learning the Hindi alphabet and grammar. 

वह कक्षा २ में है और अभी हिंदी वर्णमाला और व्याकरण के पहले पाठ पढ़ रही है| 

Yesterday, she asked me why I think Hindi is a great language. Context being India has so many languages and our mother tongue is Marathi. 

कल उसने मुझे पूछा कि मैं हिंदी को एक महानतम भाषा क्यों मानता हूँ - जबकी भारत में इतनी सारी भाषाएँ हैं और हमारी मातृभाषा मराठी है| 

My answer - No doubt Hindi is a rich language in terms of literature, vocabulary, variety and its script Devnagiri is very scientific in nature... 

मेरा उत्तर था की यद्यपी हिंदी साहित्य, शब्दावली, विविधता से परिपूर्ण हैं और उसकी प्रमुख लिपी देवनागिरी वैज्ञानिक है, ... 

... But then these virtues describe almost all Indian languages.

Hindi is great because above all else, its a perfect representation for the melting pot which India stands for. 

हिंदी की प्रतिष्ठा इसलिए है क्योंकि वह भारत देश ही की तरह वसुधैव कुटुम्बकम की परंपरा को सजीव करती है| 

Its name comes from a Persian word Hind (used for Sindhu / Indus River).

हिंदी यह शब्द फारसी लब्ज़ हिन्द (जो कि सिंधु नदी के नाम से निकला है) से है| 

Its vocabulary is not just from Sanskrit but enriched by words from Prakrit, Arabic, Persian and many Indian languages; and it shares its word roots with several Eurasian languages.

हिंदी की शब्दावली प्रकृत, अरबी, फारसी और कईं अन्य भारतीय भाषाओं से बनी है और इसके शब्दमूल कईं यूरोपीय भाषाओं के शब्दों से मिलते हैं|   

Hindi has at least 10 documented dialects and can be written in at least 3 scripts  - Devnagiri, Urdu Script and now Romanised Hindi (used on Whatsapp mostly).

हिंदी १० से भी अधिक बोलियों में बोली जा सकती है और दीवानागिरि, उर्दू और [अमूमन व्हाट्सऐप पर] रोमन लिपियों में लिखी जाती है| 

As the fourth most spoken language in the world, Hindi is possibly the best representation of the Indian ethos of Unity In Diversity. 

विश्व की चौथी सबसे अधिक बोली जाने वाली भाषा, हिंदी, भारत की अनेकता में एकता का सच्चा प्रतिबिम्ब है|

इस ट्विटमाला को यहाँ पढ़ें: https://twitter.com/kulkarninikhil/status/1305567715260731392 

Unlike philosophers, journalists and teenagers, the world of entrepreneurship does not permit the luxury of gazing into a crystal ball to predict the future. An entrepreneur’s world is instead made of MVPs (Minimum Viable Product), A/B Tests, launching products, features or services and gauging / measuring their reception in the market to arrive at verifiable truths which can drive the business forward.

Which is why I have never written about my musings or hypothesis about travel industry – we usually either seek customer feedback or launch an MVPised version and gather market feedback. However, with Covid-19 travel bans across the globe, the industry is currently stuck – while a lot of industry reports and journalistic conjectures are out, there’s no definitive answer to the way forward. Besides there is no way to test your hypothesis since even the traveller does not know what they will do when skies open.

So, I decided to don my blogger hat and take the luxury of crystal gazing today – below are some thoughts on how the travel industry may see itself a few years after Covid bans end.

Sidenote: My general take about everything “post Covid” is that Covid will only exacerbate trends we have seen coming for last several years, in some cases, decades. Covid is not so much about a change of direction as it is about speed. Covid will accelerate hitherto hidden trends and provide velocity to existing transformations.

Dip, Slowdown or uptake?

While opinion is abound, most research suggests that with Covid, corporates may adopt Work-From-Home as a permanent situation even if not necessitated by environmental reasons. As work gets done for longer duration remotely, and people’s minds and schedules adjust to remote nature of work, several work categories will soon settle into a permanent habit of remote efficiency. When the world finally opens, this would mean that while many workers would surely throng to their offices to meet colleagues – businesses’ propensity to fund business travel would surely reduce.

On the other hand – and this is where I gaze into my crystal ball – as more people start longer-term remote work, their need for leisure travel may go up substantially. Travel is fundamental to human existence – if the first humans had not wandered out of the African continent, the history of human evolution would have been very different. Just like man is a social animal, he is also a wanderer – wandering is embedded in mankind’s DNA and it is impossible to take that away from us.

So, to compensate a long-drawn shelter-at-home / work-from-home fatigue, not only would leisure travel provide an immediate succour but the trends for leisure travel may see a permanent bump for times to come, may be even (over)compensate the reduction in business travel budgets.

Travel Agencies?

Many travel agencies have shuttered temporarily to brace the Covid storm. Almost everyone has administered a pay cut to employees, some have laid off staff, some have paused salary payments on a temporary basis. As the skies open up, many of these half-shut hibernating agencies will wake up and start again. There are many possibilities which await them:

1. Resumption of pre-Covid work schedules and load 
2. Partial resumption with lowered transaction flow [owing to lower business travel]
3. Expectation of lowered costs / commissions from clients 
4. Expectation of digital / remote experience in providing services earlier delivered in person 

Background

Conjecture 

Substance