Arthakranti

A design towards Principled, Prosperous & Peaceful living

Saturday, July 06, 2013

Arthakranti
Vision

A design towards Principled, Prosperous & Peaceful living

Vasudhaiv Kutumbakam

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Arthakranti
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.

A design towards Principled, Prosperous & Peaceful living

Arthakranti
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!

A design towards Principled, Prosperous & Peaceful living

Arthakranti
Effects of Fiscal Deficit on Local Industry

A design towards Principled, Prosperous & Peaceful living

Unemployment

Social Insecurities
Reduced Rural Purchasing Power

Uncompetitive Local Industry / Trade

Policies Influenced by Foreign Interests

Local Agriculture Rendered Uncompetitive

Poor Infrastructure

Attract FDI

Subsidies Curbed

Fiscal Deficit

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Effects of Fiscal Deficit on Credit Cycle & Government Revenue

A design towards Principled, Prosperous & Peaceful living

Unemployment

Uncompetitive Local Industry / Trade

Inflation

Deficit Budget

Fiscal Deficit

Social Insecurities
Conservative Lending

Hard Credit Policy Purchasing Power Reduced NPAs Increase Inadequate Tax Revenue to Govt. Low Demand / Recession

Inadequate Capital Supply to Economy GDP Growth Slows Down

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Effects of Internal Borrowings on Fiscal Deficit

A design towards Principled, Prosperous & Peaceful living

Internal Borrowings

Spent on NonDevelopmental Activities

Fiscal Deficit

Inadequate Tax Revenue to Govt.

GDP Growth Slows Down

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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

External Borrowings

Expensive Capital

Fiscal Deficit

Lending Rates Increase

Bank Interest Rates Increase

Tax Rebate + High Interest Rates on Savings

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Fiscal Deficit
Pressure to Disinvestment

A design towards Principled, Prosperous & Peaceful living Effects of Fiscal Deficit on Disinvestment Policies & Reduced Social Spending

Threat to Organized Employment

Reduced Social Spending

Public - Private Partnership e.g. Toll

Govt. Control Lost in Essential Commodities [e.g. Oil, Medicines etc.]

Cost Burden Passed onto Common Man

Scope for market exploitation

Purchasing Power Reduced

Severe Impact on Weaker Sections

Social Insecurities

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Effects of Fiscal Deficit on Anti-Social Industries

A design towards Principled, Prosperous & Peaceful living

Increased Congestion, Accidents, Pollution

Social Insecurities

Promoting Increased Use of Oil Automobiles

Direct Ill Effects on Public Health

Increase in Oil Import Losses (Subsidies)

Lack of Infrastructure / Public Amenities (e.g. Public Transport System)

Promotion of Liquor, Gutkha, Cigarettes

Promotion of State-Run Lottery Schemes

Fiscal Deficit

Inadvertent Promotion of Anti-Social Industries

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Uncompetitive Local Industry / Trade

A design towards Principled, Prosperous & Peaceful living Effects of Fiscal Deficit on Taxation System & High Denomination Currency

Social Insecurities

Fiscal Deficit
Inadequate Tax Revenue to Government

Poor Governance

GDP Growth Slows Down

Parallel Economy

Corruption

Inadequate Capital Supply to Economy

High Input Costs

Tinkering of Taxation System

Black Money

Non-Traceable Transactions

Flawed Taxation System Expensive Capital Less Use of Banking System

Tax Evasion Large Denomination Notes

Ease of Cash Transactions

Poor Credit / Capital Formation

Inflation

Fiscal Deficit

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Effects of Fiscal Deficit on Credit Cycle & Farmers Suicides

A design towards Principled, Prosperous & Peaceful living

Farmers Suicides

Social Unrest

Unjust Borrowings from Private Sources

Inflation

Deficit Budget

Fiscal Deficit

Low Credit Supply to Agriculture

Hard Credit Policy

Individuals Credibility NOT Established

Poor Credit / Capital Formation

Less Use of Banking System

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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

A design towards Principled, Prosperous & Peaceful living

Arthakranti
Currency Denomination

A design towards Principled, Prosperous & Peaceful living

Country

Per Capita Income

Highest Denomination

Per Capita Income / Highest Denomination

USA

40,000 $

100 $

400

UK

20,000

50

400

Japan

40,00,000

10,000

400

India

Rs. 37,000

Rs. 1,000

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

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ArthaKranti Proposal

A design towards Principled, Prosperous & Peaceful living

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
Effects of ArthaKranti Proposal
Adequate Revenue to Government

A design towards Principled, Prosperous & Peaceful living

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
Effects of ArthaKranti Proposal
Adequate Revenue to Government

A design towards Principled, Prosperous & Peaceful living

Anti-Social and AntiNational Elements Effectively Checked

Black Money Eliminated

Anti-Social and AntiNational Elements Effectively Checked

Opportunities for Corruption Eliminated

Tax Collection is Simplified

Fake Currency Eliminated

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
Effects of ArthaKranti Proposal
Adequate Revenue to Government

A design towards Principled, Prosperous & Peaceful living

Anti-Social and AntiNational Elements Effectively Checked Industry / Trade Supply Stimulated

Industry/Trade Supply Stimulated

Market Demand Boosted

Purchasing Power of Society Increases

Increase in Banking Transactions Net banking Revenue Increases

Cheap and Easy Capital

Part of BTT goes to Banks

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

Bank Transaction Tax: the ONLY Tax, Deducted Automatically (say 2%)

High Denomination Currency is Removed (say above Rs. 50)

Arthakranti
Effects of ArthaKranti Proposal
Adequate Revenue to Government

A design towards Principled, Prosperous & Peaceful living

Anti-Social and AntiNational Elements Effectively Checked
Anti-social and antiIndustry / national elements Trade Supply effectively checked

Stimulated

Cheap and Easy Capital

Purchasing Power of Society Increases

Prices Drop

Market Demand Boosted

Commodities and Services are FREED from Tax Influence

Bank Transaction Tax: the ONLY Tax, Deducted Automatically (say 2%)

Focus Shifted to Innovation from Tax Manipulation

Industry/Trade Supply Stimulated

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
Effects of ArthaKranti Proposal
Adequate Revenue to Government

A design towards Principled, Prosperous & Peaceful living

Anti-Social and AntiNational Elements Effectively Checked Industry/Trade Supply Stimulated

Industry/Trade Supply Stimulated

Money Supply Regulated

Adequate Revenue to Government Tax Revenue Increases by Orders of Magnitude

SLR Revised

Black Money is Converted into White

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
Effects of ArthaKranti Proposal Anti-Social and AntiNational Elements Effectively Checked

A design towards Principled, Prosperous & Peaceful living

Social Security Restored

Employment Opportunities

Industry/Trade Supply Stimulated

Empowered Government

Effective Governance

Cleansed Political System

Black Money Eliminated

Govt. Debts Checked

Fiscal Deficit Recovered

Budgetary Provision for Political System Adequate Revenue to Government

Globally Competent Agro-Segment

Appropriate Subsidies

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
Increased Purchasing Power Building Individuals Credibility Cheap and Easy Credit Availability Revenue for Banking Budgetary Provision for Political System
Bank Transaction Tax: the ONLY Tax, Deducted Automatically (say 2%)

A design towards Principled, Prosperous & Peaceful living

Anti-Social and AntiNational Elements Effectively Checked

Decentralized Revenue Collection System

Elimination of Black Money

EMPOWERED INDIA
Creativity FREED from tax Manipulation
High Denomination Currency is Removed (say above Rs. 50)

Social Security Scheme

Industry/Trade Supply Stimulated Tax Burden Reduced with BTT

Elimination of Means & Motives for Corruption

Legal Provision Made Restricting Cash Transactions up to a Certain Limit (say Rs. 2000)

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!