Arthakranti 2012 June 10 English

ArthakrantiA design towards Principled, Prosperous & Peaceful living

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Friday, April 7, 2023


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Presentation

Vision

Social Reality

Economic Reality

Current Reality Loops

Proposal

Effects of Proposal

Strategy

Animations

Credit Establishment

Vision

Flawed Taxation System

Economic RealitySocial Reality

Appeal

FDICredit

Expansion

Local Industry

Credit Cycle

Farmers’ Suicides

Internal Borrowings

Banking System

Disinvestment

High Denomination Currency

Proposed System

Statistics

CalculationsCurrency

Denomination

Bank Money Direct & Indirect tax

Revenue after BTT

Proposal

Anti-Social Industries

Commodity Prices

Appeal

Strategy


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Vision

Vasudhaiv Kutumbakam

One Economy

Capital Formation

Revenue for Effective

Governance


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Social Reality


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Economic Reality

Interest on External Debt

Cost ofrunning Government

National Security

Infrastructure, Agriculture,Needs of Common man

ComplexTaxation system


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Effects of Fiscal Deficit on Local Industry

Fiscal Deficit

Poor Infrastructure

Policies Influenced by Foreign Interests

Attract FDI Subsidies Curbed

Uncompetitive Local Industry /

Trade

Unemployment

Local Agriculture Rendered

Uncompetitive

Reduced Rural Purchasing

Power

Social Insecurities


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Effects of Fiscal Deficit on Credit Cycle & Government Revenue

Fiscal Deficit

Deficit Budget

InflationUncompetitive Local Industry /

TradeUnemployment

Hard Credit Policy

NPAs Increase

GDP Growth Slows Down

Conservative Lending

Inadequate Capital Supply to

Economy

Purchasing power

reduced

Low Demand / Recession

Inadequate Tax Revenue

to Govt.

Social Insecurities


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Effects of Internal Borrowings on Fiscal Deficit

Fiscal Deficit

Internal Borrowings

Spent on Non-Developmental

Activities

Inadequate Tax Revenue to Govt.



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Effects of Fiscal Policy & External Borrowings on Credit Policy & Banking System

Fiscal Deficit

External Borrowings

National Policies Influenced

Threat to Local Banking System

Expensive Capital

Lending Rates Increase

Bank Interest Rates

Increase

Tax Rebate + High Interest Rates on

Savings


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Effects of Fiscal Deficit on Disinvestment Policies & Reduced Social Spending

Fiscal Deficit

Pressure to Disinvestment

Threat to Organized

Employment

Social Insecurities

Purchasing Power Reduced

Govt. Control Lost in Essential

Commodities [e.g. Oil, Medicines etc.]

Severe Impact on Weaker Sections

Scope for Market ExploitationCost Burden

Passed onto Common Man

Public - Private Partnership

e.g. Toll

Reduced Social Spending


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Effects of Fiscal Deficit on Anti-Social Industries

Fiscal Deficit

Increased Congestion, Accidents, Pollution

Social Insecurities

Inadvertent Promotion of Anti-Social Industries

Promotion of State Run Lottery

Schemes

Increase in oil Import Losses

(Subsidies)

Promoting Increased use of Oil Automobiles

Lack of infrastructure /

public amenities(e.g. public transport

system)

Promotion of Liquor, Gutkha,

Cigarettes

Direct Ill Effects on

Public Health


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Effects on Taxation System & High Denomination Currency

Fiscal Deficit

Inadequate Tax Revenue to

Govt.

Tinkering of Taxation System

Uncompetitive Local Industry /

Trade

Expensive Capital


Inflation

Black Money

Parallel Economy

Poor Governance

Social Insecurities

Corruption

Non Traceable Transactions

Ease of Cash Transactions

Large Denomination

Notes

Less Use of Banking

System


Inadequate Capital

Supply to Economy

Poor Credit / Capital

Formation

High Input Costs

Tax Evasion

Fiscal Deficit


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Effects of Fiscal Deficit on Credit Cycle & Farmers’ Suicides

Fiscal Deficit

Deficit Budget

Inflation

Hard Credit Policy

Social Unrest

Less Use of Banking System

Poor Credit / Capital Formation

Individual’s Credibility NOT Established

Low Credit Supply to Agriculture

Unjust Borrowings from Private Sources

Farmers’ Suicides


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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

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Statistics

How should it be… Show


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Currency Denomination

CountryPer Capita

IncomeHighest

DenominationPer Capita Income /

Highest Denomination

USA

UK

Japan

India

$40,000

20,000 £

40,00,000 ¥

Rs. 46,000

$100

50 £

10,000 ¥

Rs. 1,000

400

400

400

46

Currency Denomination Distribution


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Credit Establishment

Less Use of Banking System Obstructs Credit Registration of a lot of Citizens in

the National Economy


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Withdrawal of High Denomination Currency (say above Rs. 50)

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 (say 0.7%, 0.6% and 0.35% respectively)

Transacting Bank will also have its share in this deducted amount as the bank has a key role to perform (say 0.35%)

Cash Transactions will not attract any tax

Government should make legal provisions to restrict cash transactions up to a certain limit (say Rs. 2000)


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Effects of Arthakranti Proposal

Bank Transaction Tax (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

High Value Cash

Transactions Not Practical

Increase in Banking

Transactions

Tax Revenue Increases by Orders

of Magnitude

Adequate Revenue to

Govt.

Adequate Revenue to Government

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Tax Collection is Simplified

Opportunities for Corruption

Eliminated

Black Money Eliminated

Anti-Social and Anti-National Elements

Effectively Checked

Fake Currency Eliminated


Effectively Checked







Attracts BTT


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Increase in Banking

Transactions

Part of BTT goes to Banks

Net Banking Revenue Increases

Globally Competitive

Interest Rates

Cheap and Easy Capital

Purchasing Power of Society

Increased

Market Demand Boosted

Industry Trade, Supply

Stimulated


Effectively Checked



Stimulated






Attracts BTT


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Commodities and Services are FREED from Tax Influence

Prices Drop

Focus Shifted to Innovation from

Tax Manipulation


Stimulated

Cheap and Easy Capital

Purchasing Power of Society

Increases

Market Demand Boosted

Anti-social and anti-national elements

effectively checked


Effectively Checked



Stimulated

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Attracts BTT


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Black Money is Converted into

White

Tax Revenue Increases by Orders

of Magnitude

SLR Revised

Money Supply Regulated


Stimulated

Adequate Revenue to

Govt.


Effectively Checked



Stimulated






Attracts BTT


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Adequate Revenue to Govt.


Stimulated


Effectively Checked

Fiscal Deficit

Recovered

Govt. Debts Checked

Empowered Government

Appropriate subsidies

Globally Competent

Agro-Segment

Social Security Restored

Employment Opportunities

Budgetary Provision for

Political System

Cleansed Political System

Black Money Eliminated

Effective Governance






Attracts BTT


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Revenue for Banking

Cheap and Easy Credit Availability

Decentralized Revenue

Collection System

Elimination of Black Money

Social Security Scheme

Tax Burden Reduced with BTT

Budgetary Provision for

Political System

Elimination of Means & Motives

for Corruption

Adequate Revenue to run Govt. Programs

EMPOWERED INDIA

Creativity FREED from Tax

Manipulation

Building Individual’s Credibility

Industry, Trade, Supply

Stimulated


Effectively Checked

Increased Purchasing

Power






Attracts BTT


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Jai Hind!


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BackDirect & Indirect Tax Revenue forCentral & State Governments

YearCentre Taxes

Direct Indirect Total

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009-2010

69197 117863 188603

83085 133181 216266

105090 149258 254348

132771 172187 304958

165206 200949 366150

230192 243320 473512

312198 280949 593147

345000 282949 627949

370000 271079 641079

State Taxes


13309 99921 121887

17714 108578 136634

20096 118920 153750

23375 133654 180417

30211 180235 210446

37579 212932 250511

43409 240940 284349

48125 293774 341899

53683 331698 385381

Centre & State Taxes


82506 226441 308947

100799 252101 352900

125186 282912 408097

156146 329229 485375

195412 381184 576596

267771 456252 724023

355607 521889 877496

393125 576723 969848

423683 6027771026460

All figures in Rs. Crores

2010-2011 430000 316651 746651 174266 452881 627147 604266 769532 1161241


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BackDistribution of Central Govt. Direct & Indirect Tax Revenue


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BackDistribution of State Govt. Direct & Indirect Tax Revenue


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BackDistribution of Centre & State Govt. CombinedDirect & Indirect Tax Revenue


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BackCentre & State Govt. - Direct & Indirect Tax revenue Distribution 2010-2011


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Currency Denomination Distribution

Year Coins Rs.2 Rs.5 Rs.10 Rs.20 Rs.50 Rs.100 Rs.500 Rs.1000

2001-2002 6270 538 1264 11989 1531 35601 118141 68512 7179

2002-2003 6972 483 1739 9088 3425 35191 115386 93813 15971

2003-2004 7199 472 2276 7750 4383 33027 121442 122938 27473

2004-2005 7351 462 2086 6770 3876 29941 123282 152728 42082

2005-2006 7651 451 1980 6274 4077 27842 134637 182332 64346

2006-2007 7761 447 1887 7155 4178 27951 135444 225400 93676

2007-2008 9125 636 2111 9333 4108 26508 134575 263108 141219

2008-2009 9657

2009-2010 10872

2010-2011 12328 851 3430 21288 6040 15980 140243 445311 302713

665 2271 12222 4399 24440 137028 308304 191784

698 2233 185636 4681 21057 138364 364479 238252



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BackCurrency Denomination Distribution2010-2011

Highest Three Denominations account for 94 % of the Total Currency Money while 78% of our Population earns Rs. 20 or less a day.


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BackComparison of Currency Denomination Distribution: Indian Rupee & U. S. Dollar

Indian Ru

Indian Rupee U.S. Dollar

500

1000 100100

1

Note: Absence of Denominations Larger Than $100 in U. S. and the fact that considerable part of the U. S. Currency in $100 and $50 Bills is in use outside U. S. …. it being an International Currency.


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BanksPrimary Deposits

Cash ReservesLoans / Derivate

Deposits

Credit Expansion through Banking System

A 20001 200 18002

B 1800 180 1620

C 1620 162 1458

D 1458 145 1313

E 1313 131 1182

Eventually 20,000 2000 18,0003

1 - Original Primary Deposit2 - Original Excess Reserves3 - Total Capital Formation through Credit Expansion with Original Primary Deposit of Rs. 2000


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ProductMFG Cost

Taxes

Analysis of Commodity Prices

Cement 151 ~ 52

Two wheeler(Activa) 34,223 13,652

Petrol(Delhi)

46.20 / lit 26.98 / lit

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All figures in rupees

Sales Price

~ 300

47,875

73.18 / lit

Chinese Cost

72

25,000

-

Diesel(Delhi)

34.39 / litRs.13.91 subsidy

6.52 / lit 40.91 / lit -

*

Includes taxes levied until the commodity is manufactured (e.g. Service Tax, Tax on fuelused for transport of commodities, etc.) & import duty*


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Sample Calculations

Narrow Money (M1) = Currency with public + Demand deposits

For year 2010-2011Currency with public = 9,50,000Demand deposits = 7,18,000Narrow Money (M1) = 16,68,000

Assuming 20% of M1 (Transaction Money) in daily transaction,Amount of money in daily transaction (D1) = 3,33,600Amount of money in daily transaction (Y1) = D1*365 = 2,20,000*365 = 12,17,64,000

Considering 2% (notional) Transaction Tax in which share of Centre Government 0.7%, State Government 0.6%, Local Corporation 0.35%.

Revenue for Centre (0.7%) and States (0.6%) Combined = Y1 * 1.3/100 = 12,17,64,000 *0.13 = 15,83,900

Revenue for States (0.6%) =~ 7,31,800Revenue for Local (0.35%) =~ 4,27,000Revenue for banks (0.35%) =~ 4,27,000



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Country

Transaction Money

Money Supply

Currency (A)

Ratio B ÷ ADemand Deposit (B)

Total (A + B)

50 222 272Australia 4.44

5 24 29China 4.80

75 443 518Japan 5.91

38 98 136South Korea 2.58

3.74 27.84 31.58New Zealand 7.44

847 3942 4789Euro AREA 4.65

24 105 129Singapore 4.37

54 1055 1109UK 19.54

1000 1170 2170USA 1.17

10200 7100 17300India 0.70

Unit

Bi Au $

Tr Yu

Tr Yen

Tr Won

Bi Nz $

Bi Euros

Bi Sing $

Bi £

Bi $

Bi Rs.


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Dependency on FDI


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Dependency on FDI

India

China


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BackRevenue of Centre & State Governments

(Combined)

2010-2011 BudgetProbable Tax Collection Under T.T. System [0.7% Share

Of the Centre + 0.6% Share of the States]

Total Revenue 11,61,240 15,83,000 + Import Duties 31,66,000 + Import Duties

At 20% Transaction Ratio At 40% Transaction Ratio

Currency Money Demand Deposits

9,50,000 7,18,000

Total Narrow Money (M1 = Currency Money + Demand Deposits)Rs.16,68,000 Crores – with a moderate assumption of 20 to 40%of this amount to be active in daily transactions.



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ArthakrantiPratishthan

Advertising Campaign

Public Presentation

Media Tools

The Indian Citizen

Business Leaders

Political Leaders & Parties Experts

Members of Parliament

The Arthakranti Doctrine

The Citizens Charter of Demand

The Arthakranti National Reform Bill Implementation

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Media

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BackGovernment Officials

H.E. Smt. Pratibhatai Patil, Hon. President of India

(Personal meeting twice)

Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning

Commission (Book)

Dr. Bhalchandra Mungekar, Member, Planning Commission

(Presentation)

Dr. Parthasarathy Shome, Ex-Chief Economic Advisor to

the Union Finance Minister (Presentation North Block)

• Dr. Adarsh Kishore Saxena - Ex-Union Finance Secretary (Presentation in the presence of Smt. Pratibhatai Patil)

• Mr. Johny Joseph - Chief Secretary, Maharashtra (Presentation To CM, Maharashtra )

• Mr. Agarwal - Finance and Planning Secretary, Maharashtra (Presentation To CM, Maharashtra )

• Mr. Sangith Rao - Principal Secretary, Maharashtra (Presentation To CM, Maharashtra )


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Economists & Experts

Dr. D. R. Pendse Dr. Narendra Jadhav

M N Chaini

• Chandrahas Deshpande

• Sunil Bhandare

• Jairaj Salgaonkar

• V. M. Govilkar

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P B SawantJustice – Supreme Court

R A Mashelkar


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Political Leaders

Congress

Manmohan Singh, Hon. Prime Minister(Book)

P. ChidambaramUnion Finance Minister(Book)

Sushil Kumar Shinde, Union Power Minister

Pawan Kumar Bansal, Minister of State for Finance (Presentation)

Prithviraj ChavanMOS, PMO’s Office(Meeting)

Vilasrao Deshmukh, CM, Maharashtra (Presentation)

• V George P.A. to Smt Sonia Gandhi (Presentation)

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Political Leaders

BJP

LK Advani Bhairon Singh Shekhawat

Yashwant Sinha Arun Shourie Sushma Swaraj

Balbir Punj SS Ahluwalia Rajeev Chandrashekhar

Nitin GadkariGopinath Munde

Sompal Shastri Vinay Sahasrabuddhe

Sudheendra Kulkarni

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Political Leaders

Shiv Sena

Mohan Rawle Suresh Prabhu

Political leaders MNS

Raj Thackeray Rajan Shirodkar

• Shweta Paralkar

• Shishir Shinde

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Political Leaders

NCP

Sharad Pawar Jayant Patil

Political leaders CPI

D Raja

• Dr. Kango

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Industrialists

Deepak GhaisasI-Flex solutions

Narayan MurthyInfosys

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• Arvind Padhye – TCS Pune – Center Head


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Media Experts

Kumar KetkarLoksatta

Raju ParulekarE TV

Prem Shankar JhaHindustan Times

• Rajeev Khandekar – Star TV

• Yamaji Malkar - Sakal

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Creative Artists

Vijay Tendulkar Mangesh Tendulkar Sachin Pilgaonkar Ashok Saraf

Nina Kulkarni

Nivedita Saraf

Mohan Joshi Kiran Shantaram Atul Parchure Prashant Damle

Swapnil Bandodkar

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Educational Institutions

• Goa Commerce college

• Osmania university

NGOs

• Loksatta

• Maitri

• i-Watch

• Prayas (Reli group)

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Jai Hind!

Arthakranti 2012 June 10 English

Documents

Transcript of Arthakranti 2012 June 10 English