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ArthakrantiA design towards Principled, Prosperous & Peaceful living
Friday, April 21, 2023
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Vasudhaiv Kutumbakam
Vision
Need not click - Auto Run
ArthakrantiA 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.
ArthakrantiA 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!
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Effects of Internal Borrowings on Fiscal Deficit
Fiscal Deficit
Internal Borrowings
Spent on Non-Developmental
Activities
Inadequate Tax Revenue to Govt.
GDP Growth Slows Down
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
GDP Growth Slows Down
Inadequate Capital
Supply to Economy
Poor Credit / Capital
Formation
High Input Costs
Tax Evasion
Fiscal Deficit
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA 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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Highest Three Denominations account for91% of the total Currency Money while
Per Day Income of 78% Population isLess than or Equal to Rs. 20
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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)
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
Adequate Revenue to Government
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Tax Collection is Simplified
Opportunities for Corruption
Eliminated
Black Money Eliminated
Anti-Social and Anti-National Elements
Effectively Checked
Fake Currency Eliminated
Anti-Social and Anti-National Elements
Effectively Checked
Adequate Revenue to Government
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
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
Anti-Social and Anti-National Elements
Effectively Checked
Adequate Revenue to Government
Industry / Trade Supply Stimulated
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Commodities and Services are FREED from Tax Influence
Prices Drop
Focus Shifted to Innovation from
Tax Manipulation
Industry/Trade Supply
Stimulated
Cheap and Easy Capital
Purchasing Power of Society
Increases
Market Demand Boosted
Anti-social and anti-national elements
effectively checked
Anti-Social and Anti-National Elements
Effectively Checked
Adequate Revenue to Government
Industry / Trade Supply Stimulated
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Black Money is Converted into
White
Tax Revenue Increases by Orders
of Magnitude
SLR Revised
Money Supply Regulated
Industry/Trade Supply
Stimulated
Adequate Revenue to Government
Anti-Social and Anti-National Elements
Effectively Checked
Adequate Revenue to Government
Industry/Trade Supply
Stimulated
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Effects of ArthaKranti Proposal
Adequate Revenue to Government
Industry/Trade Supply
Stimulated
Anti-Social and Anti-National Elements
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
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
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
Anti-Social and Anti-National Elements
Effectively Checked
Increased Purchasing
Power
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
ArthakrantiA design towards Principled, Prosperous & Peaceful living
ArthakrantiA design towards Principled, Prosperous & Peaceful living
Jai Hind!