3. 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. स्वाभीमानी , आंनदी , परिपुण॓ जीवनाचा करु स्वीकार , बेरोजगारी , गुन्हेगारी , भष्टाचार , दह्शतवादाला देऊ नकार - अथ॓पुण॓
4. 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!
5. 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 बेरोजगारी
6. Effects of Fiscal Deficit on Credit Cycle & Government Revenue Fiscal Deficit Deficit Budget Inflation Uncompetitive Local Industry / Trade Unemployment 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 कर
7. 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
8. 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
9. 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 exploitation Cost Burden Passed onto Common Man Public - Private Partnership e.g. Toll Reduced Social Spending
10. 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
11. 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
12. 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
13. 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
14. Currency Denomination Country Per Capita Income Highest Denomination Per 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
15.
16. 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
17. 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)
18. 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
19. 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
20. 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
21. 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
22. 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
23. 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
24. 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
