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ArthakrantiA design towards Principled, Prosperous & Peaceful living

Thursday, April 13, 2023


Vasudhaiv Kutumbakam

Vision

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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.

स्वा�भी�मा�नी� , आंनीदी� , परि�प�ण॓� जी�वानी�चा� करु स्वा�क��, बे��जीगा��, गा�न्हे�गा��, भीष्टा�चा��, दीह्शतवा�दी�ला� दी�ऊ नीक�� - अथ॓�प�ण॓�


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!


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 Insecuritiesबे�रो�जगा�रो�


Effects of Fiscal Deficit on Credit Cycle & Government Revenue

Fiscal Deficit

Deficit Budget

InflationUncompetitive Local Industry /

TradeUnemployment

Hard Credit Policy

NPA’s 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

करो


Effects of Internal Borrowings on Fiscal Deficit

Fiscal Deficit

Internal Borrowings

Spent on Non-Developmental

Activities

Inadequate Tax Revenue to Govt.



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


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


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


Effects of Fiscal Deficit on Taxation System & High Denomination Currency

Fiscal Deficit

Inadequate Tax Revenue to

Government

Tinkering of Taxation System

Uncompetitive Local

Industry / Trade

Expensive Capital

Flawed Taxation System

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


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


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


Currency Denomination

CountryPer Capita

IncomeHighest

DenominationPer Capita Income /

Highest Denomination

USA

UK

Japan

India

40,000 $

20,000 £

40,00,000 ¥

Rs. 37,000

100 $

50 £

10,000 ¥

Rs. 1,000

400

400

400

37


Highest Three Denominations account for91% of the total Currency Money while

Per Day Income of 78% Population isLess than or Equal to Rs. 20


Cash Transactions will not attract any tax

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%)

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)


Effects of ArthaKranti Proposal

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

High Value Cash

Transactions Not Practical

Increase in Banking

Transactions

Tax Revenue Increases by Orders

of Magnitude

Adequate Revenue to Government




Tax Collection is Simplified

Opportunities for Corruption

Eliminated

Black Money Eliminated

Anti-Social and Anti-National Elements

Effectively Checked

Fake Currency Eliminated


Effectively Checked


Bank Transaction Tax:the ONLY Tax,

Deducted Automatically(say 2%)


(say above Rs. 50)




Attracts BTT



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

Increases

Market Demand Boosted

Industry/Trade Supply

Stimulated


Effectively Checked


Industry / Trade Supply Stimulated



(say 2%)


(say above Rs. 50)




Attracts BTT



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


Industry / Trade Supply Stimulated


Deducted Automatically(say 2%)


(say above Rs. 50)




Attracts BTT



Black Money is Converted into

White

Tax Revenue Increases by Orders

of Magnitude

SLR Revised

Money Supply Regulated


Stimulated



Effectively Checked



Stimulated



(say 2%)


(say above Rs. 50)




Attracts BTT





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



(say 2%)


(say above Rs. 50)




Attracts BTT


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


Stimulated


Effectively Checked

Increased Purchasing

Power



(say 2%)


(say above Rs. 50)




Attracts BTT


Jai Hind!

corruption,corruption free india,deficit,government,income tax,india,poverty,social...

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