1. Saturday, October 22, 2011

3. Vision Vasudhaiv Kutumbakam Principled, Prosperous, Peaceful Living One Economy Capital Formation Revenue for Effective Governance

4. Social Reality

5. Economic Reality Interest on External Debt Cost of running Government National Security Infrastructure, Agriculture, Needs of Common man Complex Taxation system Black money

6. 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

7. Effects of Fiscal Deficit on Credit Cycle & Government Revenue Fiscal Deficit Deficit Budget Inflation Uncompetitive Local Industry / Trade Unemployment 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

8. 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

9. 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

10. 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

11. 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

12. Effects on Taxation System & High Denomination Currency Fiscal Deficit Inadequate Tax Revenue to Govt. 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

13. 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

14. 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 Show Show Show Show Show Show Show Show Statistics How should it be… Show

15. 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. 46,000 $100 50 £ 10,000 ¥ Rs. 1,000 400 400 400 46 Currency Denomination Distribution

16. Credit Establishment Less Use of Banking System Obstructs Credit Registration of a lot of Citizens in the National Economy

17. 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)

18. 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 Show

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 (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 Increased 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 (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 Show 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

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 Govt. Anti-Social and Anti-National Elements Effectively Checked Adequate Revenue to Government Industry Trade, Supply Stimulated 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

23. Effects of Arthakranti Proposal Adequate Revenue to Govt. 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 (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 (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

25. www.arthakranti.org

26. Jai Hind!

27. Back Direct & Indirect Tax Revenue for Central & State Governments Year Centre 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 Direct Indirect Total 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 Direct Indirect Total 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 602777 1026460 All figures in Rs. Crores 2010-2011 430000 316651 746651 174266 452881 627147 604266 769532 1161241

28. Back Distribution of Central Govt. Direct & Indirect Tax Revenue

29. Back Distribution of State Govt. Direct & Indirect Tax Revenue

30. Back Distribution of Centre & State Govt. Combined Direct & Indirect Tax Revenue

31. Back Centre & State Govt. - Direct & Indirect Tax revenue Distribution 2009-2010

32. Back 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 All figures in Rs. Crores

33. Back Currency Denomination Distribution 2010-2011 Highest Three Denominations account for 94 % of the Total Currency Money while 78% of our Population earns Rs. 20 or less a day.

34. Banks Primary Deposits Cash Reserves Loans / Derivate Deposits Credit Expansion through Banking System A 2000 1 200 1800 2 B 1800 180 1620 C 1620 162 1458 D 1458 145 1313 E 1313 131 1182 Eventually 20,000 2000 18,000 3 1 - Original Primary Deposit 2 - Original Excess Reserves 3 - Total Capital Formation through Credit Expansion with Original Primary Deposit of Rs. 2000

35. Product MFG Cost Taxes Analysis of Commodity Prices Cement 80 ~ 160 Motorbike 21,000 21,000 Petrol 24.0 / lit 26 / lit Back All figures in rupees Sales Price ~ 240 42,000 50 / lit Chinese Cost 72 25,000 - Diesel 26 / lit 14 / lit 40 / lit -

36. Sample Calculations Narrow Money ( M1 ) = Currency with public + Demand deposits For year 2010-2011 Currency with public = 9,50,000 Demand deposits = 7,18,000 Narrow Money (M1) = 16,68,000 Assuming 20% of M1 (Transaction Money) in daily transaction, Amount of money in daily transaction (D1) = 3,33,600 Amount 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%) =~ 7,31,800 Revenue for Local (0.35%) =~ 4,27,000 Revenue for banks (0.35%) =~ 4,27,000 All figures in Rs. Crores

37. Sample Calculations Assuming 20% of M1 (Transaction Money) in daily transaction, Amount of money in daily transaction (D1) = 3,33,600 Amount of money in daily transaction (Y1) = 12,17,64,000 Suppose we change the share% - Central Government 1.0%, Revenue for Central Govt. (1.0%) = 12,17,640 State Government 0.6%, Revenue for States (0.6%) = 7,30,584 Local Corporation 0.3%, Revenue for Local Corp. (0.3%) = 3,65,292 Banks 0.1%, Revenue for Banks (0.1%) = 1,21,764 2005-2006, per capita net national product Rs. 20,734 State Per capita net state product (Rs.) Delhi 53,976 Bihar 5,772 Maharashtra 32,170 Central Govt. will use this revenue to reduce disparity All figures in Rs. Crores

38. State Per capita net state product (Rs.) Greater Mumbai 65,625 Pune 54,539 Nagpur 42,016 State Govt. will use this revenue to reduce disparity Sample Calculations Nashik 29,680 Nandurbar 15,766 Per capita net domestic product of Maharashtra Rs. 32,170

39. Country Transaction Money Money Supply Currency (A) Ratio B ÷ A Demand Deposit (B) Total (A + B) 47.7 Bi Au $ 220 Bi Au $ 267.7 Bi Au $ Australia 4.61 4.73 Tr Yu 21.18 M Yu 25.91 M Yu China 4.48 75.6 Tr Yen 445.8 Tr Yen 521.4 Tr Yen Japan 5.89 35 Tr Won 101 Tr Won 136 Tr Won South Korea 2.88 4.3 Bi Nz $ 27.24 M Nz $ 31.54 M Nz $ New Zealand 6.33 4900 Bi Ru 14900 Bi Ru 19800 Bi Ru Russia 3.04 23 Bi Sing $ 94 Bi Sing $ 117 Bi Sing $ Singapore 4.09 53.5 Bi £ 1029.5 Bi £ 1083 Bi £ UK 19.24 951 Bi $ 961 Bi $ 1912 Bi $ USA 1.01 9500 Bi Rs. 7180 Bi Rs. 16680 Bi Rs. India 0.76

45. Dependency on FDI

46. Dependency on FDI India China

47. Back Revenue of Centre & State Governments (Combined) 2010-2011 Budget Probable 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. All figures in Rs. Crores

48. Back Revenue of Mumbai Municipal Corporation As per existing Tax system Ref: Corporation Budget 2007-2008 Probable Tax Collection Under T.T. System (@ 0.35% Share of Local Body) 8,550 0.0035*35,85,000 = 13,000 Cheques worth Rs.~36,85,000 Crores cleared in Mumbai in the year 2007-2008. All figures in Rs. Crores

49. Arthakranti Pratishthan 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 Show Show Show Media Show

53. 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

54. Jai Hind!

57. 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.1500 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

58. Jai Hind!

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72. Political Leaders BJP LK Advani Bhairon Singh Shekhawat Yashwant Sinha Arun Shourie Sushma Swaraj Balbir Punj SS Ahluwalia Rajeev Chandrashekhar Nitin Gadkari Gopinath Munde Sompal Shastri Vinay Sahasrabuddhe Sudheendra Kulkarni Back

77. Creative Artists Vijay Tendulkar Mangesh Tendulkar Sachin Pilgaonkar Ashok Saraf Nina Kulkarni Nivedita Saraf Mohan Joshi Kiran Shantaram Atul Parchure Prashant Damle Swapnil Bandodkar Back

79. Terrorism in India

83. How can we tackle this problem?

84. Poverty Reduced Social Spending Unemployment 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 Terrorism Analysis

85. Loss of faith in peaceful, democratic process, no hopes of getting ‘justice’ without resorting to violence Deprivation, Extreme Disparity, Envy Poverty Social Oppression (Communal / Religious / Caste / Linguistic etc.) Sense of Hurt, Damage to Self Esteem, Indignation Desperation Rebellious Tendency Terrorism Analysis

86. 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

87. Withdrawal of High denomination currency (above Rs. 50) Arthakranti Proposal Withdrawal of existing Taxation System completely (except Customs and Import duties) Every Transaction routed through a bank will attract certain deduction in appropriate percentage as Transaction Tax i.e. Single point tax deducted at source (say 2 %). This deduction is to be effected on receiving/credit accounts only This deducted amount will be credited to different Government levels like Central, State and Local (say 0.7%, 0.6%, 0.35% respectively) Transacting Bank will also have its share in this amount as the bank has a key role to perform (say 0.35%) Cash transactions will not attract any transaction tax Government should make legal provisions to restrict cash transactions up to a certain limit (say Rs. 2000)

88. Poverty Reduced social spending Unemployment 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

89. Poverty Unemployment 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 Effects of Proposal No Black Money Single point taxation system

90. Poverty Unemployment Reduced purchasing power Under-utilized banking system Inadequate money supply to economy Individual’s credibility not established Deprivation – from resources and means (credit) to acquire them No access to credit Effects of Proposal Banking transactions increased Individuals credibility established

91. Poverty Unemployment Reduced purchasing power Deprivation – from resources and means (credit) to acquire them Effects of Proposal Industry, trade, supply stimulated Purchasing power increased Cheap & easy capital Single point taxation system Individuals credibility established

92. Effects of proposal Terrorism 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 Adequate revenue with Government Individuals credibility established Single point taxation system No Black Money Purchasing power increased Poverty Industry, trade, supply stimulated

93. Effects of Proposal Terrorism 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 Adequate revenue with Government Individuals credibility established Single point taxation system No Black Money Purchasing power increased Social security Industry, trade, supply stimulated Empowered Government

95. Jai Hind!