April 01, 2012

How Participatory notes destroying Indian Share Market

Dr Subramanian Swamy explains

One of the key Indian politician (Sonia Gandhi) complained to P Chidambaram that instead of giving interest on our Black money Swiss banks are charging 2% service Charge. So Mr Chidambaram came with a new idea. He created a new financial derivative called "Participatory Notes". So what is participatory notes? You take rupees give it to Hawala man and Hawala man will send that to Europe. Take that money in USD and give that money to Morgan Stanley or Fidelity Investment and put that money in counter and say give me the participatory notes. Only country in the world which has Participatory Notes is India. They will give the peace of paper on which only amount will be written and then give that note to Mutual Fund and ask please invest this money (black money) in Stock Market. Because of such investment Stock Market booms and today our Stock market has become completely rigged. Because of this Middle class people are loosing money heavily.

There was only one problem left whose solution also done by Mr Chidambaram. That if you sells that stock you have to pay 25% capital gain tax. So he suggested that if the money is coming via Mauritius route and if you create a 1$ company and if that company invests then there will not be any tax because Mauritius is a very small and poor country. Indian laws has been desinged in such a way that SEBI (Security exchange bureau of India) has been barred from asking any question about participatory notes. NSA told that Terrorists are using this Participatory notes to collect money from Stock market and using it for blowing up Mumbai.

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