Tuesday, October 14, 2014

ArthaKrantiA design towards Principled, Prosperous & Peaceful living

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Thursday, April 20, 2023


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Presentation

Vision

Social Reality

Economic Reality

Current Reality Loops

Proposal

Effects of Proposal

Strategy

Social Security Scheme

Linked Proposals

Empowering Democracy

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

Terrorism Analysis Strategy


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Vision

Vasudhaiv Kutumbakam

One Economy

Capital Formation

Revenue for Effective

Governance


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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 44:56

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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Cash Transactions will not attract any tax

ArthaKranti Proposal

Withdrawal of Existing Taxation System Completely* (except Customs/Import Duties)

* All Central, State and Local Government Taxes – Direct and Indirect

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

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

Government should make legal provisions to restrict cash transactions up to a certain limit (say Rs. 2,000)

This means, Cash Transactions above this limit will NOT enjoy any legal protection.


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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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BackDistribution of Central Government’sDirect & Indirect Tax Revenues

All figures in Rupees Crores


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BackDistribution of State Governments’Direct & Indirect Tax Revenues



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BackDistribution of Central & State Governments’Combined Direct & Indirect Tax Revenues



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BackDistribution of Centre & State Governments’Combined Direct & Indirect Tax Revenues for the Year 2010-2011


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Highest Three Denominations account for 95 % of the Total Currency Moneywhile 37 % of our Population is below Poverty Line with Poverty Line = Rs. 20/-


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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.

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

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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 Bag

90 ~ 160

Motorbike

21,000 21,000

Petrol 35 / liter 38 / liter

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All figures in rupees

Sales Price

~ 250

42,000

73 / liter

Chinese Cost

72

25,000

-

Diesel 25 / liter 20 / liter 45 / liter -


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Sample Calculations

Narrow Money (Transaction Money) (M1) = Currency Money + Demand Deposits

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

Assuming 20 % of M1 to be active in Daily Bank Transactions, Amount of Money in Daily Bank Transactions (D1) = 3,33,600Amount of money in Yearly Bank Transactions (Y1)= D1*365 = 3,33,600*365 = 12,17,64,000

Consider Bank Transaction Tax as 2% (notional) with shares of Central Government=0.7%, State Government=0.6% and Local Government=0.35%.

Combined Revenue for Centre (0.7%) and States (0.6%) = Y1 * 1.3/100 = 12,17,64,000 * 0.013 = ~ 15,83,000

Revenue of State Governments (0.6 %) = ~7,31,000 Revenue of Local Governments (0.35 %) = ~4,27,000Revenue for Banks (0.35 %) = ~4,27,000



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Dependency on FDI


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Dependency on FDI

India

China


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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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• Implementation of ArthaKranti proposal. Its Effects are– Enough revenues with government to make legal provision of funds for political system– High valued cash transactions difficult– Increase the use of the banking system– Effective taxation system leading to eradication of black money.

• Provision for funding of the political system– Funding of the political parties based on a per person amount for the entire population for a five year period. Say Rs. 100/person– Total population is to be considered while making this provision– The actual fund availability will be in proportion to the actual voting percentage– This funding will be available only to Registered political parties securing more than a certain minimum percentage of votes cast Sample Calculation for funding political parties

• Giving healthy monthly allowances to the elected representatives The proposal for allowance of elected representatives

Empowering Democracy


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Empowering Democracy Calculations

• At the Central Level:– Total provision for the entire population for the period of 5 years - 121 Cr. * 100 (per Person Amount) = Rs. 12,100 Cr.– Provision per year – Rs. 2,420 Cr.

• The total Amount available in proportion to a total valid votes percentage - Say 60%

– Amount available for 5 year period = 12,100 * 60/100 = 7,260 Cr.

• At the State Level:– State population say 10 Crores– Funds provision for 5 year period = 10 Cr. * Rs. 100 = Rs. 1,000 Cr.

• At the Local level:– Population of the urban areas is say, 10 Lakh– Funds provision for 5 year period = 10 L * Rs. 100 = Rs. 10 Cr.

• Actual funding will depend upon the total percentage of votes cast.

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Empowering Democracy Allowance for Elected Representatives

• For MPs at Rs 10 Lakh/month • For MLAs at Rs 5 Lakh/month

• For Corporators at Rs. 1,00,000/month

• For Village Development Officer at Rs. 10,000/month

• The spending with these provisions will be - At the central level -- 785*10L*12 = Rs. 942 Cr. against a projected revenue of ~Rs. 7,46,651 Cr. = ~0.13 % of the revenue

- At the state level (e.g. Maharashtra) – 366*5L*12 = ~Rs. 220 Cr. against a projected revenue of

~Rs. 50,000 Cr. = 0.44 % of the revenue

- At the local corporation level (e.g. Aurangabad) –100*1,00,000*12 = Rs. 12 Cr. against a revenue of ~Rs. 250 Cr.

= 4.8 % of the revenue

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Eradication of Black Money

Appropriate remuneration for

elected representatives at all levels

Legal provision of funds for politics at all

levels

Provision of funding for political parties

based on population

Effective funding available for political parties depends

upon voting percentage

Funding to political parties based on the percentage of votes

won

Decreased dependence on

corruption and criminals

Assured clean

funding

Transparency in politics

Dignity & public trust restored

Politics professionalized

as the qualified people

will take it up

Decreases ill-influence

of local parties in national politics

Political parties interested

in increasing voting

Politics focused on real issues

and national interests

Increased stability of

government

Improved functioning and decision making

Increased law and order

Improved governance

Empowering democracy


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Jai Hind!


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• A Social security identification (SSID) is issued to every Indian Citizen.

• To begin with the beneficiaries of the Social Security Allowance Scheme will be all adult citizens of India beneath the poverty line.

• For every deserving adult, a fixed amount (linked to DA), Social Security Allowance, is credited per month into a unique bank account linked to the SSID - Say Rs. 2,000/ pm -- Based on Food (Rs. 900/-) + Shelter (Rs. 500/-) + Clothing (Rs. 300/-) + Health (Rs. 300/-)

• Government will remove all non-merit subsidies thus freeing up revenue to pay the Social Security Allowance to the deserving citizens

• All Social security allowance beneficiaries can get credit of Rs. 50,000/- (upper limit) from banks

• Restrictions to ensure correct usage – - No rights to SSA beneficiaries on income for hereditary property - SSA amount can’t be used as security against any other loan

• Uniform implementation throughout the country

Social Security Proposal


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Social Security ProposalCalculations

• In first phase, scheme will be implemented for people below poverty line.

• Number of people below poverty line (monthly income below Rs. 300/-) is 30 Cr

• Total monthly expenditure = Rs. 2,000 * 30 Cr = Rs. 60,000 Cr

• Total yearly expenditure = Rs. 60,000 Cr * 12 = Rs. 7,20,000 Cr

• Excluding current expenditure of Government over subsidies of - Rs. 1,50,000 Cr, additional yearly expenditure will be - 7,20,000 - 1,50,000 = Rs. 5,70,000 Cr

• Considering current national income of Rs. 40,00,000 Cr, this additional expenditure would be ~15% of national income


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SSA beneficiaries will not have right on

income from hereditary property

Bank account for SSA

(associated with SS Code)

SSA can’t be used as

security for any other loan

Unique SS code for

every citizen

Maximum Credit Limit

For SSA beneficiaries up to say, Rs. 50,000

Withdrawal of Non-merit subsidies

(Central and State)

Social Security Allowance (Say Rs. 2,000 monthly)

(linked to DA)(Food, clothing, shelter,

health insurance)

Saved Gov. Revenue Expenditure

Effective implementation of child welfare laws & schemes

Increase in Purchasing

power of the poor people

Increased use of

Banking system

Credit available

to the poor

Credit / Capital expansion

in the banking system

as a whole

Opportunities of Corruption are

reduced (PDS, fuel etc.)

Price distortion removed

Assured dignified

existence for every citizen

Hugely increased demand

for goods and services

(Necessities)

Establishment of Individual credibility with bank

Increased Business / Employment opportunities

locally

Farmers’ suicide checked

Decreased Social Unrest (reduced

Naxalism, terrorism, extremism, etc.)

Balanced Development

(Rural and Urban)

Dissemination of Population

Social security

Market driven quality supply

of goods & services

Improved quality of life


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Jai Hind!


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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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Terrorism in India


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How we can tackle this problem?


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Poverty

Reduced Social

SpendingUnemployment

Reduced Purchasing

Power


Tax Evasion

Under-utilized Banking System

Inadequate Money Supply to Economy

Individual’s Credibility not

Established

High Commodity Prices due to Heavy

Indirect Taxes

Deprivation – from Resources and Means

(Credit) to Acquire Them

No Access to Credit

Lack of Education &

Skills

Terrorism Analysis


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Loss of faith in peaceful, democratic process, no hopes of getting ‘justice’ without resorting

to violence

Deprivation, Extreme Disparity, Envy

PovertySocial Oppression

(Communal / Religious / Caste / Linguistic etc.)

Sense of Hurt, Damage to Self Esteem, Indignation

Desperation Rebellious Tendency

Terrorism Analysis


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Loss of faith in peaceful, democratic process, no hopes of getting ‘justice’ without resorting to violence

Religious Dogma

Terrorism

Perceived Historical injustice

Political / Economic / Philosophical ideology

Propaganda for masses, Indoctrination of

individuals

Birth of a militant

Public sympathy, Weak national Character

Lack of clear and firm Foreign (therefore,

Defense) policy

Physical constraints (Porous borders, unregulated coastlines)

Parallel economy, Corruption, Fake / high denomination currency

Logistic support, funding and training etc from

hostile foreign organizations / nations

Systemic Administrative weaknesses in governance

and law enforcement


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

ArthaKranti Proposal

Withdrawal of existing Taxation System Completely (except Customs/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 its share in this deducted amount (say 0.35 %) as the Bank has a key role to perform

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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Poverty

Reduced social

spendingUnemployment

Reduced purchasing

power

Flawed taxation system

Tax evasion

Under-utilized banking system

Inadequate money supply to economy

Individual’s credibility

not established

High commodity prices due to heavy

indirect taxes

Deprivation – from resources and means

(credit) to acquire them

No access to credit

Lack of education &

skills

Effects of Proposal

Adequate revenue with Government


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Poverty

UnemploymentReduced

purchasing power

Flawed taxation system

Tax evasion




not established

High commodity prices due to heavy

indirect taxes



No access to credit

Effects of Proposal

No Black Money

Single point taxation system


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Poverty

UnemploymentReduced

purchasing power




not established



No access to credit

Effects of Proposal

Banking transactions

increased

Individuals credibility

established


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Poverty

UnemploymentReduced

purchasing power



Effects of Proposal

Industry, trade, supply

stimulated

Purchasing power

increased

Cheap & easy capital



established


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Effects of proposal

Terrorism

Birth of a militant



Defense) policy






and law enforcement



established


No Black Money

Purchasing power

increased

Poverty


stimulated


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Effects of Proposal

Terrorism

Birth of a militant



Defense) policy






and law enforcement



established


No Black Money

Purchasing power

increased

Social Security


stimulated

Empowered Government


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Jai Hind!

Documents

Tuesday, October 14, 2014