Arthakranti
A design towards Principled, Prosperous & Peaceful living
Monday, April 13, 2015
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Vision
Vasudhaiv
Kutumbakam
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Arthakranti
A design towards Principled, Prosperous & Peaceful living
Social Reality
Our nation is like a huge ship sailing
in the middle of the sea. Just when it
looked like sailing smooth, it hits a
hidden rock suffering damage
causing water to rush into
compartments from the bottom.
The Unorganized Class at the
bottom is in panic and is running
around screaming for survival. The
only way is to move upwards.
The Organized Class sleeps
behind closed doors, feeling
secured with pensions, insurance
and provident funds. They do hear
an odd scream but pretend not.
The rich and Elite Class – the
blessed few are up enjoying the
view. They do not even know that
the ship is sinking. But this
ignorance real or fake will not
stop any of us from sinking in the
worst scenario.
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Economic Reality
Let us say our economy is like a multi
storied building. The overhead water
tank on the roof is the Treasury. The
floors from the top downwards are the
various heads of government
expenditure in order of priority.
There are pipes leading water down
from the overhead tank to the various
levels - their taps are dry. On
investigating, we realize that the
overhead tank is only half filled – and
the lower levels will not get any water
unless the tank fills completely. This
gap in the overhead tank is the Fiscal
Deficit.
We check the main reservoir on the
ground floor and find that it does
contain a lot of water. The pump is
running at full speed.
The pipes which lead this water up into
the overhead tank – the taxation system
- are so impossibly twisted, choked and
corroded that they leak at many points.
A lot of water is leaking out of these
pipes and that is why the overhead
tank does not ever get filled up!
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Deficit on Local Industry
Poor
Infrastructure
Unemployment
Social
Insecurities
Uncompetitive
Local Industry /
Trade
Reduced Rural
Purchasing
Power
Policies
Influenced by
Foreign Interests
Local Agriculture
Rendered
Uncompetitive
Attract FDI
Subsidies
Curbed
Fiscal Deficit
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Deficit on Credit Cycle & Government Revenue
Unemployment
Uncompetitive
Local Industry /
Trade
Social
Insecurities
Inflation
Deficit
Budget
Fiscal
Deficit
Hard Credit
Policy
Purchasing
Power
Reduced
Conservative
Lending
Inadequate
Tax Revenue
to Govt.
NPA’s
Increase
Inadequate
Capital Supply to
Economy
Low Demand
/ Recession
GDP Growth
Slows Down
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Internal Borrowings on Fiscal Deficit
Internal
Borrowings
Spent on NonDevelopmental
Activities
Fiscal
Deficit
Inadequate Tax
Revenue to Govt.
GDP Growth
Slows Down
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Policy & External Borrowings on Credit Policy & Banking System
Threat to Local
Banking System
National Policies
Influenced
Fiscal
Deficit
Expensive
Capital
Lending Rates
Increase
External
Borrowings
Bank Interest
Rates Increase
Tax Rebate + High
Interest Rates on
Savings
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Deficit on Disinvestment Policies & Reduced Social Spending
Fiscal
Deficit
Reduced Social
Spending
Public - Private
Partnership
e.g. Toll
Cost Burden
Passed onto
Common Man
Purchasing
Power Reduced
Pressure to
Disinvestment
Threat to
Organized
Employment
Govt. Control Lost in
Essential
Commodities [e.g.
Oil, Medicines etc.]
Scope for market
exploitation
Severe Impact on
Weaker Sections
Social
Insecurities
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Deficit on Anti-Social Industries
Increased Congestion,
Accidents, Pollution
Direct Ill
Effects on
Public Health
Promoting Increased
Use of Oil 
Automobiles
Increase in Oil
Import Losses
(Subsidies)
Fiscal
Deficit
Social
Insecurities
Lack of
Infrastructure /
Public Amenities
(e.g. Public
Transport System)
Promotion of
Liquor, Gutkha,
Cigarettes
Inadvertent Promotion of
Anti-Social Industries
Promotion of
State-Run Lottery
Schemes
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Deficit on Taxation System & High Denomination Currency
Uncompetitive
Local
Industry / Trade
GDP Growth
Slows Down
Inadequate
Capital
Supply to
Economy
Poor Credit /
Capital
Formation
High
Input
Costs
Expensive
Capital
Social
Insecurities
Fiscal
Deficit
Poor
Governance
Inadequate
Tax Revenue to
Government
Parallel
Economy
Tinkering of
Taxation System
Black
Money
Non-Traceable
Transactions
Flawed Taxation
System
Tax
Evasion
Ease of Cash
Transactions
Less Use
of Banking
System
Large
Denomination
Notes
Corruption
Inflation
Fiscal
Deficit
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of Fiscal Deficit on Credit Cycle & Farmers’ Suicides
Farmers’
Suicides
Social Unrest
Unjust Borrowings
from Private Sources
Inflation
Low Credit Supply
to Agriculture
Hard Credit
Policy
Individual’s Credibility
NOT Established
Deficit
Budget
Fiscal
Deficit
Poor Credit /
Capital Formation
Less Use of
Banking System
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Flawed Taxation System
Narrow base and limited coverage of Direct Taxation
Direct to Indirect tax ratio is 40:60
Inequitable and hence Regressive
Non-Productive
Uncertain
Inelastic
Uneconomical
Complex nature of taxes
Tax laws open for interpretation
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Currency Denomination
Country
Per Capita
Income
Highest
Denomination
USA
40,000 $
100 $
400
UK
20,000 £
50 £
400
Japan
40,00,000
India
Rs. 37,000
¥
10,000
¥
Rs. 1,000
Per Capita Income /
Highest Denomination
400
37
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Highest Three Denominations account for
91% of the total Currency Money while
Per Day Income of 78% Population is
Less than or Equal to Rs. 20
Arthakranti
A design towards Principled, Prosperous & Peaceful living
ArthaKranti Proposal
Withdrawal of existing Taxation System completely (except Customs and Import Duties)
Every Transaction routed through a bank will attract a certain deduction in appropriate
percentage as Bank Transaction Tax i.e. Single Point Tax Deducted at Source (say 2 %)
This deduction is to be effected on receiving/credit account only
This deducted amount will be credited to different Government levels like
Central, State and Local (as say, 0.7%, 0.6% and 0.35% respectively)
Transacting Bank will also have a share in the deducted amount as it has to
perform a key role (say 0.35%)
Cash Transactions will not attract any tax
Withdrawal of High Denomination Currency (above Rs. 50)
Government should make legal provisions to restrict cash transactions up to a certain
limit (say Rs. 2000)
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Adequate
Revenue to
Government
Tax Revenue
Increases by Orders
of Magnitude
Adequate
Revenue to
Government
Increase in
Banking
Transactions
High Value Cash
Transactions
Not Practical
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
High Denomination
Currency is Removed
(say above Rs. 50)
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Black Money
Eliminated
Adequate
Revenue to
Government
Anti-Social and AntiNational Elements
Effectively Checked
Anti-Social and AntiNational Elements
Effectively Checked
Opportunities
for Corruption
Eliminated
Tax Collection
is Simplified
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
Fake Currency
Eliminated
High Denomination
Currency is Removed
(say above Rs. 50)
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Industry/Trade
Supply
Stimulated
Adequate
Revenue to
Government
Market Demand
Boosted
Increase in
Banking
Transactions
Part of BTT
goes to Banks
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
Anti-Social and AntiNational Elements
Effectively Checked
Industry /
Trade Supply
Stimulated
Purchasing
Power of Society
Increases
Cheap and Easy
Capital
Net banking
Revenue
Increases
High Denomination
Currency is Removed
(say above Rs. 50)
Globally
Competitive
Interest Rates
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Cheap and Easy
Capital
Prices
Drop
Commodities and
Services are FREED
from Tax Influence
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
Adequate
Revenue to
Government
Anti-Social and AntiNational Elements
Effectively Checked
Anti-social and antiIndustry
/
national
elements
Trade Supply
effectively
checked
Stimulated
Purchasing
Power of Society
Increases
Market Demand
Boosted
Focus Shifted to
Innovation from
Tax Manipulation
High Denomination
Currency is Removed
(say above Rs. 50)
Industry/Trade
Supply
Stimulated
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Adequate
Revenue to
Government
Industry/Trade
Supply
Stimulated
Industry/Trade
Supply
Stimulated
Money Supply
Regulated
Adequate
Revenue to
Government
SLR
Revised
Tax Revenue
Increases by Orders
of Magnitude
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
Anti-Social and AntiNational Elements
Effectively Checked
Black Money is
Converted into
White
High Denomination
Currency is Removed
(say above Rs. 50)
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Social
Security
Restored
Anti-Social and AntiNational Elements
Effectively Checked
Empowered
Government
Govt. Debts
Checked
Effective
Governance
Cleansed
Political System
Fiscal
Deficit
Recovered
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
Industry/Trade
Supply
Stimulated
Employment
Opportunities
High Denomination
Currency is Removed
(say above Rs. 50)
Black Money
Eliminated
Budgetary
Provision for
Political System
Globally
Competent
Agro-Segment
Adequate
Revenue to
Government
Appropriate
Subsidies
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Increased
Purchasing
Power
Building
Individual’s
Credibility
Cheap and Easy
Credit
Availability
Anti-Social and AntiNational Elements
Effectively Checked
Decentralized
Revenue
Collection System
EMPOWERED
INDIA
Revenue for
Banking
Budgetary
Provision for
Political System
Bank Transaction Tax:
the ONLY Tax,
Deducted Automatically
(say 2%)
Creativity FREED
from tax
Manipulation
High Denomination
Currency is Removed
(say above Rs. 50)
Elimination of
Means & Motives
for Corruption
Legal Provision Made
Restricting Cash Transactions
up to a Certain Limit
(say Rs. 2000)
Elimination of
Black Money
Social Security
Scheme
Industry/Trade
Supply
Stimulated
Tax Burden
Reduced with BTT
Adequate
Revenue to Run
Govt. Programs
Existing Cash
Deposited in Banks &
Attracts BTT
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Arthakranti
A design towards Principled, Prosperous & Peaceful living
Jai Hind!