Thoughts on economics and liberty

A comprehensive demolition of the dangerous Arthakranti/BJP bank transaction tax proposal

[ADDENDUM dated 20 November 2016: Really bad days in store for India? Chidambram claims that Modi is implementing Arthakranti. While I don’t see the substantive part of Arthakranti imposed yet, Modi would be a chump if listens to them.]


Over the years I have provided some initial thoughts on the Arthakranti proposal here: Analysis of Arthakranti and here: Arthakranti – my further comments.

I have been in touch with the Arthakranti team over email and in other ways. FTI member Supratim Basu attended their Hyderabad presentation in late 2012. The Arthakranti team participated (including Atul Deshmukh, Ashutosh Phalke, Bhushan Patil and G. Leela)
in the Haridwar National Reform Summit in April 2013 and presented a key outline of their proposal. While Supratim and I disagreed with its claims (in 2012/early 2013), I agreed to make brief mention of it in the draft SKCF reform agenda with a commitment to get it reviewed in the future.

Since then I have been busy with other activities and more or less ignored the Arthakranti idea, given its obvious limitations.

However, the group is extremely enterprising (like AAP). After first having persuaded Swami Ramdev (a simple man with little understanding of economic principles), they’ve now gone and persuaded BJP – which is a bit of a shock! – given BJP had access to people like Arun Shourie, and should have known better.

Given BJP’s (current) advocacy [at least active consideration] of this proposal, I have no choice but to take time off to thoroughly demolish this proposal, once and for all.  This blog post brings to bear almost all relevant arguments to rebut the bank credit (transaction) tax proposal.

Summary of the Arthakranti proposal

Before reviewing it, one should know the proposal. So here are the details:

  • Withdrawal of existing Taxation System completely (except customs i.e. 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%).
  • Withdrawal of High denomination currency (say above Rs. 50).
  • 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).

Or, as summarised in this article:

Essentially, everybody would get credit and debit cards, and transactions would be taxed at 2%. The receiving party would be taxed and the revenue would be sent to the government with the banking intermediary keeping about 17.5% of the collected tax given that it has a “key role to perform” in the transaction. To eliminate black money, high denomination notes (say Rs 100 and above) would be eliminated. Cash transactions will not attract any tax but would be illegal beyond a certain level, say Rs 2,000 according to Arthakranti’s website.

I had provided a link to the original Arthakranti documents in my previous posts but these links have disappeared. To make sure that the links are permanent, I’ve uploaded the following two documents on my server:

a) The Arthakranti book

b) The Arthakranti powerpoint presentation

Arthakranti is, at its heart, a Bank Credit Tax (BCT). Some call it the Bank Transaction Tax (BTT). It is intended to be a tax on the real economy, not on financial transactions. (Any Financial Transaction Tax of 2 per cent on stock/securities/forex trade would drive ALL capital out of India. However, there is a risk that BCT could apply to some financial transactions, thereby significantly dampening financial arbitrage and use of financial instruments for personal financial planning] .


1. Not based on ANY first principles

The Arthkranti proposal has no theory behind it that links its prescriptions to the social contract. Any tax model should start by asking: why should there be any tax, which types of taxes are appropriate, which are most practical, etc.

There is a huge discipline of public finance to guide us. Let’s use it. There is also a huge literature on public (collective) choice which throws useful light on this question.

I’ve outlined a theory of taxation in two articles published in Freedom First. I’d suggest you consider reading these first: A liberal perspective on taxes – Part I and A liberal perspective on taxes – Part II.

Any Tax ‘solutions’ not grounded in deep-rooted theory and empirical analysis are likely to make things worse.

The theoretically ideal is for a citizen to pay the full cost for all government services he receives. Where this cost can be easily calculated (e.g. user pays model) and collected at a low cost, a cost-recovery/ market-based recovery model is appropriate. An example is the charge for parking a car on a government road. That should not be raised through a general tax. But where attribution is either not feasible or transaction costs large, alternative methods of taxation are needed – including broad based levies and taxes. In general, the idea that there should be a single tax is pure nonsense.

When it comes to the broad-based (i.e. not user-specific) forms of taxation, the key theoretical construct is the ability to pay. The person most able to pay should pay more. Further, only individuals should pay, being voters. In that sense, a combination of wealth and income tax should be all that is needed. This generally involves a slightly progressive model, with most taxes being flat (i.e. proportionate).

Practical considerations

However, a real-life taxation model is necessarily more complex, given the impracticability of identifying and taking into account all relevant income and wealth. Further, the ease of taxation by certain methods drives the use of these methods. As a result we end up with a mix of taxes (including user charges or fees and corporate taxes). No single tax can do justice to the complexity of human activity and interaction.

Revenue efficiency or the ability of a tax to maximise revenue collected at minimal cost is also important in the design of a general tax. Objectives that determine the ultimate tax mix of a country include:

– minimising the cost of collection and compliance;

– relatively low losses in consumer welfare per dollar of revenue raised;

– minimum deadweight loss;

– minimizing the (negative) impact on household decisions about where to shop, where to live, how hard to work, whether to save and invest;

– minimising the adverse effects of a tax on the incentives to undertake commercial and economic transactions;

– encouraging (or discouraging) business location in the country or state or county, or encouraging investment and job creation in general; and

– minimising annoyance to taxpayers (Jean Baptiste Colbert observed that “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing”).

(There are significant trade-offs between efficiency and other objectives: The most efficient tax is a fixed amount per person, a poll tax, but that is both impractical and severely iniquitous. Among the more efficient taxes is a broadly based annual land tax. It can also be combined with progressivity through a threshold and different rates based on the value per square metre of land. Transfer taxes on property (such as stamp duty) are inefficient and should be replaced with such a land tax which creates a minimal distortion on incentives to trade land.)

A bank transaction tax is attractive because of its ease of collection, but it fails on almost all other grounds.

The closest theoretical foundation for this tax comes from James Tobin who ‘proposed a global tax on foreign-exchange transactions in 1972’ [Source]. But note that Tobin’s tax was a FTT, where proportions are very small (the world has extensive experience of FTTs). It was NOT a transaction tax on the real economy.

Supratim Basu of FTI notes:

I am unable to understand the basis for this taxation – why 2% of bank transactions? Why not say, 5% of all rice sales in India? Or 3% of all wedding expenses incurred?, etc – there is no rational, logical basis for creating a tax structure in this form or manner.

Their starting premise is faulty – they talk about govt expenses as developmental expense and non-developmental expenses (putting defence and interest payments here), instead of talking about essential and non-essential expenses, as you would if you derive down from first principles of liberty and functions of the state. Then, they latch on to this whole concept of taxing bank transactions, because they CAN, it is easy and SIMPLE to track – without figuring out or explaining why such transactions should be taxed – and what is the theory behind taxing such transactions (which could be single or multiple or part of a chain where one leg is in India, the others are out of India, profitable or loss, as opposed to taxing income – they have some unheard of economists (probably cranks) who they are quoting (I assume not out of context) to support a banking transaction tax as somehow part of the “social contract”.

I am unable to see why we should not say, instead have a tax solely on bananas as a replacement tax for all the current taxes in the country?

These folks … do not realise that financial transactions for goods is actually a very small portion of the total amount of “bank transactions” conducted daily. Off-hand, I won’t have the numbers, but money transfers for the “real economy” are less than 10% of total transactions. On the balance 90% transactions the spreads are way below 2% – those transactions would simply come to a grinding halt, serving to send money velocity to zero, and our economy back to the 1700’s and village markets.

2. Regressive

A tax in which the poorer (or less wealthy) sections of society pay the same share as the wealthy, is iniquitous (the idea here is simple: taking away 25 per cent of a poor person’s income as tax harms him far more than taking away a similar proportion of a rich man’s income).

The bank transaction tax is, at best a flat tax – thereby being regressive. [Note that a Financial Transactions Tax is broadly progressive because it affects only those who undertake such transactions, being generally the richest members of a society; to that extent a very small FTT can be potentially justified, but not BTT].

Supratim Basu of FTI notes:

A BTT has no connection with either the asset value or the income level of the person being charged – being a flat tax. By definition, this tax would have a higher impact on the poorer and middle class households, rather than the richer households, who would be able to pay for planning more efficiently.

3. Impossible to implement

Now, this is a fundamental issue. Arthakranti assumes that some legal mechanism can be found to force people to use cheques for amounts greater than Rs.2000. “Government should make legal provisions to restrict cash transactions up to a certain limit (say Rs. 2000)”.

As anyone with the remotest level of common sense knows, such laws are not worth the paper they are written on. The essence of public choice and economics is about understanding human incentives. Such simplistic solutions can never work. Elimination of the black market requires extremely fine understanding of the incentives of all players in a market. An example of how such false declarations can be removed from the real estate market is provided here. Without such reforms, the entire idea that people will use the banking system will fail.

People are always smarter than governments. They will find a way to evade the banking system. With bank transactions becoming a ‘nuisance’, the market will find a way to evade bank deposits entirely. Those with significant assets will now be able to hide easily.

Some of the things that people will do include:

a) Barter: One of the most likely and common ways of evasion is ‘netting out’ transactions – or, in simple language, barter. As the 1996 Inquiry into the Australian Financial System noted,

“In order to minimise FID liability, many corporations in Australia aggregate and net payments. This erodes the FID revenue base. Where it is not possible to aggregate or net payments, or firms are too small to justify the development of corporate structures to take advantage of the FID cap, FID could delay (or increase the costs of) the widespread acceptance and adoption of electronic payments in some markets.”

b) Anonymous transactions: Expect internet-based cryptocurrencies – where anonymity is the key ‘advantage’ to proliferate with Arthakranti. Hawala type transactions, backed perhaps by gold, will become common.

c) Use of gold and non-rupee mechanisms of exchange: Not just gold, but the use of foreign currency (e.g. USD/AUD, etc.) will increase. Smuggling of such types of mediums of exchange will proliferate.

In all cases it will be the wealthiest and smartest who will find a way to evade the banking system. No amount of Janlokpal will be able to unearth the increased black money.

Supratim Basu of FTI notes:

The reverse of the intended will happen due to such a poorly designed structure – increase in barter transactions, cash transactions, non-cash, non-traditional transactions (a buyer offered to pay me in gold for 30% of an apartment that I was selling in Pune, to reduce the stamp duty, and when I said I would not take a single rupee of cash!!)

They have to tell us how will everyone in India get a debit card when the formal banking system covers less than 45% of India’s population.

And as a commentator notes on this blog post:

It is highly difficult, almost impossible to implement in India for its predominantly cash trans. based economy and above all we have a dragon in parallel economy, which is double than our economy.

4. Anti-business, anti-economy

Transactions are the lifeblood of an economy. Arbitrage (trade) “oils” the economy and will be most severely affected. Speculators and arbitrageurs perform a critical function. They buy and sell in bulk across a wide range of goods and services (I’m assuming that financial securities and currencies are excluded from BCT except through net transactions). In this process, the most efficient use of any particular commodity is found and incentives set in place for the production of optimal quantities of goods and services. The most severely affected will be wholesale traders whose margins are wafer thin and who can’t possibly pay 2 per cent bank tax and still survive.

A BCT will create significant disincentives for arbitrage, trade and transactions (commerce), bringing the economy to its knees.

Supratim Basu of FTI notes:

A Tobian Tax, which this is both implicity and explicitly, has the effect of slowing down velocity of money/trades – the net effect would be to cause a slow down in the economy, possible sending it into a death spiral as people become reluctant to transact. Tobian taxes have been used successfully in so-called speculative markets, in the past – slowing down forex currency trading in France for example or our own securities transaction tax, which led to over 90% of the speculative trading to move from underlying to derivatives. So, there is historical evidence to show what Tobian taxes do.

Given that this is a tax on gross transactional value, the net effect on profits or income is likely to be of a magnitude higher than current taxation rates. The net effect would be to move these trades either offshore or to alternate markets, including barter, not covered by the BTT.

While investments that involve relatively few bank transactions or have a greater ability to access barter/ non-banking channels will be attracted to India, most other investments will flee India. Businesses have already been driven out of France due to the FTT, and out of Australia by the bank deposit tax.

The securities transaction tax is a little better – and indeed already exists in some form or shape, but Financial Transactions Tax which is broader is quite problematic: “The Chancellor has vowed to block any attempt to impose the controversial tax which has been blamed for driving business out of countries where it has been tried, including France.” [Source]

In Australia in relation to the Bank Account Debits (BAD), the following has been said [BAD is a tax on debits made to all accounts which have cheque access. Originally a federal tax, it was handed over to the States in 1990. It applies in all States and Territories except the ACT. This tax was abolished in mid-2010s]:

As the market for financial services becomes better integrated and international in scope, taxing financial transactions will become increasingly anti-competitive and inefficient. Australia is the only nation in the world to tax financial transactions directly. Its financial transactions taxes will not be appropriate in an environment where transaction costs and returns on investment are overriding factors directing the flow of investment and capital. Transactional business will be driven offshore to low cost transaction centres to avoid FID and BAD tax. Institutions able to offer low cost transaction services will enjoy a competitive advantage over their Australian-based counterparts for both Australian and international business.

Thus, 65% of businesses with annual turnovers in excess of $750 million already maintain offshore foreign currency accounts. 43% of this group cite FID as a major or decisive factor in this decision. One Australian corporate with large US denominated export revenue, established its foreign currency account in Queensland, as a result of which it saves $100,000 per annum.

Transaction taxes induce businesses to rearrange their affairs artificially and inefficiently. Thus 75% of businesses have implemented group structures specifically to minimise FID and BAD tax (rather than because these were the most efficient structures).

80% of banks consider that FID and BAD tax impede the development of new banking products. Thus, Westpac would like to introduce a cash management service which would automatically transfer funds from accounts in credit to accounts in overdraft. However, transaction taxes on the transfers would eliminate the saving.

65% of businesses occasionally or frequently change their treasury investment decisions because of the cost of FID, with the figure rising to 75% for businesses with annual turnover exceeding $1.15 billion.

FID is an explicit tax on saving. It is payable every time a customer makes a bank deposit. It also discourages savers actively managing their investments so as to maximise the return they receive, as every time a deposit is switched between accounts or between institutions, FID is payable.

The cost associated with transactions taxes reduces competition. For example, FID may make it unprofitable for funds invested with one bank to be transferred to another which offers a higher interest rate. [Source]

A study of the FTT (which is, as we have noted, far less intrusive than the BCT):

A Bank of Canada analysis of the effect of previous FTTs found that they tend to harm market quality, by increasing volatility, reducing volumes and raising the cost of capital. [Source]

Reduction in growth is an acknowledged consequence of the FTT: “Even the commission says that the tax will have a small negative effect on long-run growth.” [Source]

As a sensible commentator writes on this blog post:

Putting a tax on trade will depress the entire economy. In the present information age, the trend is towards a friction-less economy, i.e. increased trading, with very low overhead cost for each transaction. Putting a tax on transactions is like putting sand in the engine oil of a car. There was one comment that traders will, in this situation, increase their margins, and therefore would not suffer. It is true that individual traders can increase their margins to the extent allowed by the competitive environment. But the trading sector as a whole will suffer.

5. Will increase prices

With reduced trade/transactions and poor transmission of price data across the country, expect significant increase in prices. The lowest price or the most efficient form of production will no longer be feasible, as key price signals are switched off.

6. Practicality: Will fail to raise enough revenues

For this bit let me cite from this article which has researched this issue thoroughly:

At the meeting of the BJP’s brain trust, participants were informed that banking transactions are “merely a fraction of total financial transactions in the country with about 80% being in cash.” According to Mukesh Sharma of the Delhi chapter of Arthakranti, “if we account majority of these cash transactions into banking, this will amount to about Rs 40 lakh crore of annual revenue from this tax.”

Research by OECD economists Jorge Baca-Campodónico and Luiz de Mello and IMF economist Andrei Kirilenko, as well as a research paper for the World Bank by Patrick Honohan and Sean Yoder have debunked the claim that BTTs deliver the promised revenues. In a study of six Latin American countries (Argentina, Brazil, Colombia, Ecuador, Peru and Venezuela), the OECD/IMF team concluded that “for a given tax rate, revenue declines over time. Therefore, in order to meet a fixed revenue target in real terms, the tax rate needs to be raised repeatedly. However, we also find that successive increases in the tax rate erode the tax base by more than they raise revenue, and that the higher the increase in the tax rate, the more and faster the tax base is eroded. We conclude that bank transaction taxes do not provide a reliable source of revenue, especially over the medium term”.

“[T]he Latin American countries imposed these BTTs in addition to existing taxes. So, how much did they collect? Not much, is the short answer. In Argentina (2004), a BTT rate of 1.2% yielded revenues of 1.72% of the GDP. In Peru (1990), a 1.42% BTT rate yielded revenues of 0.89% of the GDP.  In Ecuador (1999), a BTT rate of 2.0% yielded revenues of 2.51% of the GDP. By way of comparison, the dreamers in the BJP and Arthakranti feel we can generate 40 lakh crore by imposing a 2% tax on bank transactions. In case you are wondering, that is 40% of the GDP!

Need to keep increasing the tax rate

Once again, let me cite this article to make clear what happens when such a bad idea is introduced:

A study by Kirilenko in 2004 indicated that there was disintermediation (aka reduction in tax base) if BTTs are levied. And, remember, the longer you keep these taxes in place, the higher the rates have to be to generate a certain tax revenue. That means the tax base gets worse over time. So, we would have double digit fiscal deficits and an increase in black money within no time if the BJP’s proposal were to ever see the light of day. No wonder these taxes were abandoned time after time in country after country.


[Addendum, 17 June 2015: Also chanced upon this paper. “Arthakranti Plan: Noble Intentions but Muddled Thinking” by Parag Waknis, 2008 – haven’t had time to read it, but have transferred a copy on my server, in case the original is misplaced.]

The Arthakranti proposal is really bad.

  • It will fail to raise the revenues needed
  • Its incidence will fall on the poorer sections the economy (the rich will pay much less than they do today)
  • It will reduce savings in the economy
  • It will reduce investment and harm business
  • It will increase prices
  • It will create a massive black money/underground economy using hawala/ gold/ cryptocurrency
  • It will harm India’s banking system by preventing it from providing a range of innovative products
  • It will bring Indian economy to its knees

NO NATION IN THE WORLD has relied solely on a bank credit tax, and for very good reason. Countries which did use bank/transaction taxes for expediency have mostly abandoned/replaced them with more efficient and progressive taxes.

Worse, it is not a sensible way to deal with corruption

As Supratim Basu of FTI notes:

Demonetisation of higher currency notes has never curbed black money, including the two attempts in India.

Arthakranti won’t remove corruption, including from the real estate market. To remove corruption/black money, a range of other proven solutions (founded in the study of human incentives) are needed.

Chanakya was an expert on corruption. Let’s learn from him. BJP claims to represent the Indian tradition. Have its economists ever bothered to study Arthashastra – one of the greatest books ever written on economics and governance?

Overall, I’d give Arthakranti a “D” as a policy proposal. It says a lot about the policy skills of our major parties that BJP has adopted this dangerously ill-informed proposal.

What should the alternative system be?

Well, it should be based on first principles, and I’ve explained at length in the two articles in Freedom First, cited above. That does require a lot more knowledge/study than BJP seems capable of.


1) Ashok Desai, 21 January 2014.

“But the country may get as finance minister Baba Ram Dev, who thinks all taxes can be replaced by a Tobin tax on cheque clearances. Little does he realise that the tax would have to be 25 per cent. If he imposes such a tax, everybody, including his acolytes, would take their money out of banks and settle all transactions in cash. But the economy would collapse much before that. After that, history would certainly look back nostalgically on Manmohan Singh.”

2) Sharad Bailur’s analysis in 2001

Arthakranti by Anil Bokil: An assessment By Sharad Bailur

Over the last several decades we have had a number of attempts to consider radical measures to revamp the tax structure with the aim of containing black (unaccounted) money and to give taxation a more equitable face, if not form. All have failed or not lived up to their promise up to now.

Among them:

1. Abolish all personal taxation. Make Excise and indeed all indirect taxes progressive.

2. Have a system to tax expenditure instead of income.

This attempt by Chartered Accountant Anil Bokil, must fall into the same category of instant solutions and that itself makes me suspicious. Among the things that it does not address:

1. If transactions below Rs 2000 are to be permitted in cash, what is to prevent everyone from treating every transaction above Rs 2000 as more than one transaction? To give just one example: My wife goes to buy herself a sari which, she is told, is worth Rs 2015/- Under the Bokil law she cannot pay for it in cash. She must pay for it either by cheque or by credit/debit card. What is to stop her paying Rs 20/- in cash and the remaining Rs 1995/- also in cash since now the price of it is below Rs 2000/-? How many billions of such transactions will take place all the time to circumvent the transaction tax?

2. The whole panacea does not take into account the huge unorganized sector. How are the transactions in this sector to be accounted for in the case of all those billions of transactions above Rs 2000? The Bokil panacea seems to have been created by those who live in the cities and are totally unaware of the realities of commerce or what goes for commerce in Kalahandi or Santhal Parganas. Or for that matter in all the Bimaru states,

3. And what about the billions more below Rs 2000. Remember, we are a large country and the villager understands the value of money just as well as his city cousin.

4. The reason for bringing out Rs 500 and Rs 1000 currency notes now has been the inflation. The falling purchasing power of the rupee makes for transactions at an increasingly faster speed to take place in the marketplace. The Rs 1000 note which was demonetized in 1978 has therefore had to be brought back. But that again is taking a different tack. How will demonetising currency notes of smaller denomination help?

5. If the number of transactions have to multiplied in proportion to the amount that is to be spent to avoid tax, this involves that much more effort. Will this not fuel inflation at a runaway best?

6. Since all taxes other than the transaction tax are supposed to be abolished, this will bring into the legitimate marketplace a large amount of spending money, now legal, which will add fire to the inflation.

7. The storm of paper that will result in the banking system will bring it to a grinding halt. Everyone, me and my grandfather included will deal only in cash.

8. The entire monetised economy will come to a halt, with all transactions in cash above Rs 2000 being made illegal.



Financial Transaction Taxes hit people not banks

Baba Ramdev could be the next Adam Smith

Why there is no kranti in Arthakranti’s rather radical tax proposal but it is plain stupid.


Sanjeev Sabhlok

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46 thoughts on “A comprehensive demolition of the dangerous Arthakranti/BJP bank transaction tax proposal
  1. Shravan

    1. Why ‘taxes’?

    Human Beings are social animals (nature). We inevitably but also voluntarily form societies. We interact, form a communal identity. We trade and generate wealth for ourselves. Like any big interacting system human society is complex, unintended things happen also forces of nature, rogue people etc. are harmful to us physically, economically and communally.

    We by nature look up to and crave leaders. Couple this with earlier stated things we ‘Elect’ leaders. Nothing comes for free, we have to pay for our protection and upkeep. Freedom is not up for grabs though. We Employ these Elected leaders, pay them well for doing a good job and also give them funds required for doing their job.

    These funds are Taxes. The best and fairest tax is in my opinion is one that has a degree of choice / willingness of the payer. A Goods and Services Tax on the End payer is the only one that falls in this category.

  2. Shravan

    The fairest tax would be a wealth tax (more wealth you have more is the protection you want, only as far as wealth is concerned) but not all people hold their wealth in the same form, tax paying to be made easier must look at a measure of wealth, buying goods and services is a good measure of this. Therefore a goods and services tax. A flat rate, all goods and services carry the same tax is best an x%.

    About food, medicine, education etc. these too must be taxed the x%.

  3. Alex C.

    Do you need any further proof of the BJP’s sheer incompetence? I keep hearing from BJP apologists, “So what if their social policies are regressive, at least they are economically liberal!” *This* is their economic liberalism? A known anti-minority, homophobic party with such blatant economic blunders for a policy? Exactly what does the BJP have going for it? How is this better than Congress or AAP? Being anti-Congress, people assume I have an affinity towards BJP, but WHY should I support this party?

  4. kangkan

    I was really surprised that a right wing think tank will propose such a distortionary tax system…and one important thing that they have completely missed out if the role of proportional income taxes as an automatic stablizer…also, the the progressiveness of taxation is required to deal with the externalities of consumption..a person with higher income has a bigger footprint on the environment than somebody with less income and hence less consumption

  5. Shravan

    Mr Alex, BJP is homophobic? BJP is a Hindutva party and therefore NOT Homophobic!. BJP like the Republicans in US or islamic parties does not want to exterminate Homosexual people.

    Please do not project western Homophobia onto the BJP, they are two different things, BJP opened its mouth on Homosexuality only after the supreme court decision, Homophobic people go out of their way to target homosexuals politically and socially, have you ever seen the BJP do anything like that?.

    Economically speaking they are better than ALL mainstream parties, maybe not the best.

    BJP is NOT anti minority, is it against Jains? Sikhs? Buddhists? Is it against atheists? frequently you can hear western christian leaders as well as elected leaders in muslim countries say absolutely horrible things about people who do not believe in their god, have you ever heard any BJP leader say jesus is evil or allah is evil?.

    Minorities are responsible for their own plight just to give you an example, when the kandhamal riots broke out the media made it out to be Hindus oppressing christians, the reality is christian tribal people had Murdered a Hindu saint, his fault? he was actively bringing converted Hindus back to the Hindu fold. The christian church is still involved in a lot of subversive activities, it had a hand in the LTTE struggle (the australian anglican church had some hand some say), it was solely responsible for creating the social conditions that lead to the massacre in Rwanda in 1994, it is deeply involved with the maoist struggle, it is deeply distorting the History education in India, it is actively involved in DESTROYING buddhist culture in South Korea, just look up some youtube videos and you will know what I am talking about. We Hindus are not all fools and blind to tolerate this behaviour.

    Now business wise the BJP is more business friendly, Modi certainly is more enlightened in that he has created a better business environment in Gujarat. He deserves a shot at the PMs office and I will vote for Modi. You are free to decide but I have only one thing to add, millions of Hindus are no fools to think that a lot of these so called secular parties are ACTUALLY anti Hindu, we know this to be a fact so please do not sell me the minority victimhood certainly not when the minorities have shown what kind of people they are when they come to power example in Kashmir, Kerala and Nagaland. I basically consider minorities to be the local representatives of foreign ‘parasitic cultures’.

  6. Shravan

    Prabhakaran aka Pirapaharan (Christian convert, a lapsed Methodist)
    S.P. Tamil Selvam A Christian
    Balraj (Balasegaram Kandiah) Christian
    Pottu Amman (Christian)
    Prabhakaran son Charles Anthony Christian
    Anton Balasingham – a Roman Catholic
    Soosai (Thillaiyampalam Sivanesan) \Christian
    Thenmozhi Rajaratnam (nickname Dhanu), Rajiv Gandhi’s suicide bomber assassin – Christian

    Even Pushpa Kamal Dahal’s family is Christian, seeing all this why should the BJP not distrust christians and muslims?

  7. Alex C.

    Shravanji, I commend you for your spirited defence of BJP!

    BJP could have claimed that it was not homophobic, and that the absurd comments from its esteemed supporters/members like Swami Ramdev ji (“Homosexuality is a disease”), Yogi Adityanath ji (MP! “I welcome the Supreme Court verdict. When the bill is brought in Parliament, I will oppose it. I oppose any move to decriminalise homosexuality and endorse Ramdev’s comments”), recent convert Subramaniam Swamy ji (“Being Gay is a Mental Disorder”), but then it was only before its spokesperson Meenakshi Lekhi ji (the debate over Art. 377 is “superfluous”), then its President (no less) Rajnath Singh ji (“We will state that we support Section 377 because we believe that homosexuality is an unnatural act and cannot be supported.”) shot their respective mouths off. If any doubt remained (I don’t know how), Mukhtar Abbas Naqvi ji comes alon (“What Rajnath Singh has said on section 377 is correct. We can’t bring western culture into our society and culture.”)

    I’m not projecting “western homophobia” on BJP. The bigots are only showing their true colours themselves. The Law itself targets homosexuals in India, and the BJP is the ONLY major political outfit to support that blatantly discriminatory law so vociferously. Even the President of the party has to speak out!

    It would be funny that you equate “religious” minorities with ALL minorities, if it were not so disingenous. The concept of Minority has nothing to do with religion, but with opinion. Religion is one of the many opinions that can make a group in a minority. BJP only tolerates minorities, and that too only as long as they do not say something contrary to the majority opinion. The moment some contrary thought emerges, it shows its true nature. This is all the more shameful as the esteemed founders of RSS were agnostics and atheists. How did the “Nationalist” organisation get swamped by “Hindu Nationalists” is a long story.

    Re: Muslim countries, Rwanda, South Korea—So you’re for taking revenge for alleged atrocities committed there by different people by attacking a different set of people, in a different location, who happen to share the same fan-club membership? The next time you’re in a fight with a Rotary Club member, by you logic, your supporters would “retaliate” against their neighbour Rotarians? This is not retribution. This is goondagardi or worse. In the Kandhamal case, you claim “Christian tribals” (whatever that means) had murdered a “Hindu saint”. Then this is the justification for indiscriminately attacking *other* people, who possibly had nothing to do with the crime? Do you understand criminal justice at ALL? BJP evidently doesn’t.

    I too was under the impression that BJP is business friendly, but not after reading Arthakranti. That Shri Modi has “transformed” one of the richest and most developed states in India into one of the richest and most developed states in India (wait…), has not registered with the majority of his supporters. Shri Modi’s leadership is efficient and strong, doubtless. But you also have to see that the whole party behind him is the same socialist, regressive dinosaur it has always been. You “think” you’re voting for Modiji, but you’re actually voting for BJP, which is very different. It is not a direct election after all! Do you expect him to singlehandedly transform BJP?

    Re: I basically consider minorities to be the local representatives of foreign ‘parasitic cultures’

    If you really believe this, you’re well on the road to Fascism, and I’m afraid I’ve wasted my time. Oh well. Please think deeply about this. Muslims in Army, Christians in the Navy are foreign parasites? Begum Aizaz Rasool (who supported Sardar Patel’s proposal and denounced reservation for religious minorities in the Constituent Assembly) was more of a patriot (despite being a Muslim Leaguist before they called for Partition) than any number of Hindutva fanatics. A lot of Muslims *chose* to remain in India, despite Partition. You believe them to be foreign parasites? The innumerable Muslims who laid down their lives in 1857 were foreign parasites? Do you see no difference between Ajmal Kasab and former Chief election Commissioner SY Quraishi ji? If you believe patriotism is a private fief of Hindutvawadis, I pity your smallmindedness. Kshudra-hriday, as we would say in Hindi. Please re-evaluate your position, sir!

  8. Sanjeev Sabhlok

    I fundamentally and vehementally disagree to have a criminal as India’s PM. The corrupt politicians of India are criminal but at least they aren’t involved in bloody games – for the most part; or in destroying the concept of privacy. Here we have a man (Modi) who has no sense of any basic principles of why a government exists. Instead of protecting liberty, he is its greatest enemy.

    Arthakranti might not even be accepted by BJP. That doesn’t give Modi any credibility.

    BJP is far more credible than Modi. And all (BJP/Congress) are far less credible than AAP.

    But AAP is a disaster. So we need something radically different.

    I am fully behind Nav Bharat Party for 2014.


  9. kangkan wrote a paragraph to say waht you could have said in a hate everybody but people who share the same faith as you…i guess that puts you in the same league as Osama BIn Laden and Mullah Omar and Adolf Hitler..enjoy the company

  10. Shravan

    @Mr. sabhlok : we have had prime ministers with blood on their hands before. Indira Gandhi and Rajiv Gandhi. Modi has not been proven guilty in any court of law, let that happen first. The snooping allegations are just that, allegations, that is all, nothing has been proven in that case too, I truly think these are accusations without any basis.

    Modi is an enemy of liberty because of the way you define liberty, not the way I define it. He is not perfect in my books but he is the best. What I do find funny though is that here is a guy that does not believe in the right of the people to bear arms but is pointing fingers at others, similarly your views on homosexual people fall short of ‘libertarian’ is some people’s books. Also you have written in one of your earlier post that Privacy is not a right / is overrated and that it will be dead soon any way but now you say this??!!

    As I said Hindus are not all of them fools, we SEE what is happening in the name of secularism. We see what kind of politics is practiced by minorities, we see how they vote and what actually matters to them. We see what is being taught in the name of Hindu history etc etc etc. We also see right now how KPs in refugee camps are treated.

    I too fundamentally and vehemently disagree to VOTE for any political party that is inimical to Hindu society.

  11. Shravan

    Alex, Homophobic is not fear of homo people, it specifically means HATRED. Also No BJP leader has called for making the issue of Homo people an election issue, their is more like don’t ask don’t tell. Tell me how many times have you see any Hindu BJP leader rail against Homosexual people? NEVER.

    The congress is the party that is actually against liberal laws, they will lose muslim votes and christian votes if they remove article 377, let them remove it now then.

    I am not seeking revenge for what happened in foreign countries, I am merely pointing out that ‘minorities’ are subversive and as proof I showed what they had done abroad. also what about Jains, Sikhs, Buddhists, Atheists? has BJP done any thing to hurt these groups? NEVER.

    Exceptions will always be there also I made a general statement regarding minorities which is quiet obvious. 80% of the nation did not vote for Congress still they are in power, it is the system as a whole that I am talking about. As a whole or as a group muslims and christians are NOT friendly/fair towards Indic religions examples abound, Kashmir, Kerala, Nagaland.

    Also Mr Sabhlok I find it strange that you are willing to have a ‘Mass Murderer’ as a C.M of a very importat state but not as P.M.
    Modi will show the BJP it’s place just as he showed Advani his place both in laws related to article 377 and also economically. There is no way any Hindu can be against homos living together, there is no scriptural basis.

  12. Shravan

    @ Alex C : You said “BJP only tolerates minorities, and that too only as long as they do not say something contrary to the majority opinion. The moment some contrary thought emerges, it shows its true nature.”. Please elaborate with an example.

    You are right on the mark, I have no knowledge of criminal justice but I have a strong sense of fairness and so I want to put things in perspective, I did not call for killing children or any innocent person which is what I am afraid you made out my post to be. I am saying how successive ‘secular’ governments and institutions have been anything but secular. Also many activities which are being carried out now are clearly an act of war against the Hindu community. It is about putting things in perspective, Maoists for example are mainly getting recruits from christian tribals and are actually working against Hindus. Whenever there is any such act as the killing of a Hindu Sadhu the media, the government, the NGOs a lot of which have deep connections to the church waste no time in twisting facts. I strongly believe the christian as well as muslim communities are inimical towards Hindus, Of Course there are exceptions plenty of them maybe but what good is that?, tey have to fight against their own subversive co – religionists (not violently but spreading awareness which they seem not to care about).

    Reservations are another example.

  13. Shravan

    It is not I who am fascist but many christians and muslims who are because they bring in religion into politics not Hindus. example: kerala, Kashmir, Nagaland and many many places abroad.

    I like many Hindus do not CARE if anybody even believes in God or which God or pray how many times etc. When has Hindu community made Homosexuality an election issue? Never, neither the BJP has. All this is the work of these semitic religions.

  14. Shravan

    @Kangkan : What is my faith? Do you even know what sect of Hinduism I belong to? Do you even know if I believe in God? You know nothing about me and yet you blurt nonsense.

  15. Vivek Saxena

    They call Baba Ramdev a simple man with little understanding of economics, but I call Supratim Basu as ” economists with no understanding of Economics”. Nothing to say much more, as these types of people are highly biased for no reason.
    their main problem is that they accept any idea /technology/proposal etc. only if it is generated/supported by European countries( I treat USA and UK as extension of Europe).
    Actually economics a very simple thing , but made highly complicated by so called the progressive Economists of the present time.
    I am a man of Electronics and had never studied Economics ,but I feel what Artha Kranti is saying is actually possible and can be implemented.
    To understand BTt you simply need to have common sense and a little bit of IQ rest one should not be biased.
    Any way I thank Artha Kranti for their revolutionary idea. god bless them

  16. Sanjeev Sabhlok

    Vivek, Supratim’s ideas are excellent and his credentials impeccable. Most of the analysis was my personal opinion, peppered with other views to substantiate my points.

    Let me say that economics is the MOST COMPLEX and MOST DIFFICULT of all disciplines. Very few – even among the West – understand the basic concepts of this discipline. However, there was one Indian long ago who understood it very well: Chanakya.

    Arthakranti is not fit to debate. It is like “taka seer bhaja, taka seer kaja” – a one size fits all model, which is never going to work in the real world which is complex at a level the creators of Arthakranti don’t comprehend. The complexity is created by the human being – the most complex creature ever invented. He will short-circuit anything you design; you need to understand the human being first, and that is not something trivial.

    In brief, please don’t blame Supratim. Blame me, if you don’t like the critique. I thoroughly oppose the Arthakranti proposal.


  17. Ajay Kale

    Your claims that ArthaKranti ( ) “1. Not based on ANY first principles and 2. Regressive” are totally baseless. The ideal tax system is based on cannons of taxation defined by western experts which are followed in Indian context as well. If that is the ideal thing to do, Arthakranti proposal fits well into cannons of taxation (reference to ArthaKranti book – An Ideal Tax System is based on the canons of – equity, productivity, simplicity, certainty, elasticity
    and economy). I personally feel that a tax system followed by majority countries need not be ideal to follow only because of number of countries following it. ArthaKranti is an innovative proposal which can even be an alternative tax system for many countries other than India. Experts in World economies have started to research into alternative systems due to changing nature of the business and globalization. Traditional complex tax systems simply don’t work due to multi-national nature of the business now days. There are already similar proposals like Arthakranti out there e.g. [Ref – and
    Another similar-sounding proposal has been put up by an American Professor, primarily aimed at
    reducing complexities of the taxation system. (] Somehow we Indians feel that unless the idea is either originated in foreign country or it is endorsed by US or European experts, it is not taken seriously. To mention it here, Arthakranti proposal is published in Handbook of Hindu Economics and Business coming through Fordham University, New York USA. ArthaKranti wouldn’t have got recognition form Department of Economics Fordham University without any merits in the proposal. ArthaKranti proposal is backed by relentless effort and economic research. It is always very obvious to provide complex solutions to complex problems. But it is always only genius to provide simple solution to complex problem. ArthaKranti proposal is a very simple proposal to complex problems in India. The proposal itself is simple but have very deep and far reaching positive impacts on Indian economy. It can’t be reduced to such a simplistic analysis on a blog. Because of simplicity of the proposal, it needs open minded attention to understand the proposal itself. I do unrest request to Mr. Sanjeev to first study the proposal with open mind before writing misleading blogs.
    Further in the blog, Mr Sanjeev states that, ArthaKranti is “Anti-Business and Anti-economy” and it is impossible to implement. There are all misinterpretations which don’t have any technically valid basis. They are logic deduction based on incorrect understanding of the proposal.
    In the national Interest, I sincerely request Mr. Sanjeev to first study the proposal properly before misleading public opinion with harsh words used in the blog.

  18. Sanjeev Sabhlok

    Dear Mr Kale

    I had been avoiding the harsh words till BJP started giving it some weight. To suggest that I’ve not understood the proposal would mean that it is even more complex than it needs to be.

    An example of its anti-business approach is its absence of distinction between GROSS PROFIT (which can be taxed) and BUSINESS TRANSACTIONS.

    If I’m a wholesaler who buys grains in bulk from Panjab and sells in bulk in Assam, each time I am paid for these grains – say Rs.200 crores worth – I will get charged 2 per cent. My gross profit margin on these grains might only be 0.2 per cent (difference between buying and selling price less transport costs). Insted of being charged a tax on this gross profit, I’m now out of pocket by four times my profit margin.

    Imagine that I do this 500 times in a year. In this process my entire business goes bust, or I am forced to pass on this cost to receiving wholesalers who then have to pass on similarly to other intermediaries till by the time the grain reaches the buyer, its price has shot up by more than 10 per cent of what it would otherwise been.

    Most businesses operate on wafer thin margins, such as large retail stores. They are constantly buying and selling (thousands of transactions) in which money is received in the bank, and only after the year can they calculate whether they have made a small gross profit.

    What this does is simple: it hits certain businesses (transactional businesses) very badly and others very less. So it seriously distorts investment and prices. A more distortionary form of taxation on the real economy can’t be imagined.

    There are 10s of other objections to this, and I can clearly see you haven’t read the two articles I published in FF.





  19. A

    As a non-economist it is easy for me to see the long term impact of taxing *every* transaction.

    It will drive all small players (traders, stockists, distributors, farmers) etc out of business. How so? Assume that profits are thin, no monopoly. To continue to stay on in a competitive market, they will have to vertically integrate. For example someone selling wheat will have to think of selling chapatis — totally different game. E.g. Someone buying wheat and making it into chapatis would have to think of either owning a farm or becoming just a cook (skilled labourer). In the end you will end up with bigger players, e.g Pilsbury owning wheat farms. Many will have to give up their means of production and be reduced to labour. That doesn’t look good for liberty.

    I also believe that *if* taxes are the only way for govts to raise revenue, it should be on *profits* not on revenue. (Under-declaring of profits, siphoning off etc are other problems, to be solved by other means!)

  20. Subhash Mittal

    Thankyou Sanjeev for providing this analysis. It is quite useful. I would want to know about the arithmetic of revenues that can be generated from BTT. I have no information about banking transactions in the country, arethese likely to be more than the GDP of the country. GDP of the country is estimated to be around Rs 100 lakh crores. Even if 75% is represented through banking transactions, 2% of the same would only yield around Rs 1.5 lakh crores, while as per last budget almost Rs 13 lakh crores was required from tax revenues (both direct & indirect) to meet GoI as well as states tax share. How BTT proposal of Arthkranti is feasible, I am not really clear. Perhaps you could provide some insights on this.

    Let me also also state that I am happy to put my comments on this blog, since most commentators have used their name and not aliases to hide their identities. The new trend of abusing fellow commentators with whose opinions one may disagree under hidden identities is a very unfortunate trend.

  21. Sanjeev Sabhlok

    Re: comments, you are free to choose either option (disclosure/anonymity). I’m firm on deleting abusive/offensive comments, or any comment (even if it is not abusive) that is not on topic or that doesn’t add SOME value (even a good question is useful). So only a fraction of comments on this blog get published.

    Re: the amount, this has to do with the concept of velocity or circulation/transaction. GDP (GNI) can be thought of as the gross income earned by each sector after meeting costs. The concept has therefore much to do with total output, which is distributed among various factors.

    In producing that income, a society undertakes numerous transactions. Many intermediary transactions occur based on the level of specialisation in the economy. Some of these are arbitrage, i.e. buying in bulk and selling in smaller quantities. The same product (wheat) can therefore be passed on through a chain, each time adding value through transportation/distribution/storage, etc. Each time it passes through this process, bank transactions can/should occur, transferring ownership. In that sense a “shadow” quantity MUCH LARGER than GDP is bought and sold. The same 100 tonnes of wheat shows up in bank payments 10 times in the process, till it reaches the final consumer. In this manner the transactional economy is much larger than GDP. Therefore 2 per cent transaction tax can accrue a larger share of the total.

    That’s a problem though – for its incidence falls largely on the wholesale distribution, logistics and retail sector, thereby significantly incresing prices of consumer goods. On the other hand, assume that I produce 1 tonne of gold with a machine, then cut it and directly sell 10 gm gold biscuits to the population. In that case my 1 tonne gold is only taxed once at 2 per cent. So producers of high-value commodities that are largely purchased by the rich will be taxed at 2 per cent while common (bulk) consumer goods can potentially be taxed 10 times that value.

    If I can buy iron ore and then process and produce steel and then a car with a single machine/process, I will pay just 2 per cent tax on iron ore (low value) – originally payable by the seller of ore – and on the car’s sale price, thereby the car would experience only 2.1 per cent of its value as tax, but if I make a bicycle from spare parts (on each of which 2 per cent tax is already payable), total tax on that could be 10 per cent or more.

    Raising tax is one issue, its regressiveness is the other. This is a hugely distortionary tax in every way.





  22. Subhash Garg

    The following are my comments on your so-called analysis:

    1. Not based on ANY first principles
    REJECT a priori: out-of-the-box thinking begins with rejecting experts’ solutions.
    The mocking, hostile tone of several expert quotes confirms my hunch.

    2. Regressive
    Your objections boggle the mind. The WHOLE POINT is to NOT tax the poor, who subsist on cash transactions is small bills!! Secondly, the tax is a FIXED PERCENTAGE, regardless of income. It is neither progressive nor regressive.

    3. Impossible to implement
    Where there is a will, there is a way. Allow unlimited cash transactions (in small bills) as long as they are documented. Cash bank deposits will be taxed. Similarly, allow documented tax-free barter; the value added is taxed at point of sale.

    No 2,000 rupee limit, but limits on cash (any currency) and gold at home and on your person, enforce by means of random raids and anonymous tip-offs.

    Use fingerprint and camera equipped mobile phones as banks, to receive as well make all payments including wages. YOU HAVEN’T THOUGHT HARD ENOUGH!.

    4. Anti-business, anti-economy
    There will be NO TAX on trades or transactions, only on settlements, and not to exceed taxes under the present system. Hence, no impact on arbitrage. Once it is clear that there are NO OTHER TAXES, corporations will embrace the BTT.

    5. Will increase prices
    The BTT is a fixed tax known in advance on all payments, no exemptions, deductions, loopholes or progressivity. It will do NOTHING to price signals.

    6. Will fail to raise enough revenues
    Your Latin American example might appeal to professionals threatened by drastic tax simplification, but not me. They did NOT abolish ALL OTHER TAXES!

     Finance and tax professionals’ views are to be taken with a grain of salt.

     You have ignored the radical originality of this concept because you can’t let yourself admit that a NGO might have a better idea. That’s why you resort to citing irrelevant foreign studies instead of even a simple Indian example.

  23. Subhash Garg

    Subhash Mittal: India’s gdp is USD 1.83 trillion, i.e. Rs. 109,800 lakh crores. The total short-term (<90 days) bank deposits, per RBI data, is Rs. 850 lakh crores. If you equate them to recent receipts, 2% would yield Rs. 17 lakh crore per year.

  24. Shiv Muttoo

    CIA ranks India at 176 of 180 countries on tax to GDP ration, so would you admit that the current tax collection system (if any) has failed? In April to August 2014, tax collections are increasing by 5% while nominal GDP is up 13% so its going still lower. How can we increase tax collections?

  25. Sanjeev Sabhlok

    It is good to have a low tax to GDP ratio. But not too low.

    SKC agenda outlines many ways to increase tax revenue. But increasing revenue under the current system is a recipe for further corruption.


  26. Sanjeev Sabhlok

    As far as I know Keynes did not have any paticularly atypical view on the types of taxes. His views on taxation were largely consistent with standard economic theory. In any event, taxes are never perfect but a combination of many factors and theorie. Efficiency is one of the key factors. Transction taxes are the most inefficient taxes because they directly reduce the incentive to produce. The anlalysis on this blog post should be addressed on specific points, not through random and wide generalisations. 

  27. Ram Jadhav

    Today black money, tax evasion, corruption these are big issues for this country. Corruption can be minimized by making process transparent and monitoring it but to stop tax evasion hence black money generation we have to make either tax low such that everyone will pay it without any hesitation or by making every transaction accountable.
    That is the principle behind ‘Arthakranti’ but what I think (I not an expert still 24 but these are my views) they want to make banks as tax collection departments of branch.
    I think this is very good for country but except the tax collection part:
    1) By encouraging transaction above 1 lakh ( 2k is impractical) through banks will make taxation more accountable. So this will make less generation of black money within India.
    2) Hawala and fake money can control by withdrawal of High denomination currency.
    3) It is good for country to have less cash transaction.

    But BTT I think is not a good thing because:
    1) So they will become king (control)of our government with all the government revenue coming from them.
    2) At some point there will be a situation like in 2009 so with no transaction no tax and no money for social work.
    3) Purpose of banks are not tax collection (Pencil kan khujane ke liye use karte he ki likhne ke liye)
    And Last
    Just because BJP RSS are listening it is not good to oppose this. What is called as Nehruvian mentality is not good for this country we need leaders like Shastriji ,Indiraji , Vajpayeeji AND MODIJI

  28. Sanjeev Sabhlok

    Ram, I’m unable to make out what you are saying. You are actually right about one thing: by clubbing “Indiraji , Vajpayeeji AND MODIJI” together. These are all SOCIALISTS who have diligently destroyed India.

  29. Ashutosh Phalke

    Dear Mr. Sanjeev,

    This is Ashutosh Phalke, a volunteer of Arthakranti for 12 years.
    Hope you remember our meeting in April-13 at Patanjali. We represented Arthakranti at the National Reforms Summit anchored by you.
    At that point itself we tried to approach & explain Arthakranti Proposal but you did not have time!!
    Many comments on this blog represent an adamant stand and lack of openness, to understand the Proposal or get into the details. We have a simple solution in this situation.

    1. We invite the interested sensible intelligence here to Pune. (Since Arthakranti’s Research
    center is located at Pune).
    2. There will be an audience of 15+ for a day-long session on Arthakranti.
    This is just to ensure a rational debate, avoiding any conflict arising out of adamancy.
    3. In case Arthakranti team is not able to satisfy the doubts of a person coming for the event,
    Arthakranti will reimburse logistics expenses from any part of India, to and fro Pune.
    4. In case all the doubts of the person are satisfied, then he/she will bear the
    expenses on his own.
    5. All the Conversation / debate will be recorded and shall be floated on You-tube.
    6. Same rules will apply in case anybody wants Arthakranti team of two people to visit any part
    of India. (Audience 15+ and logistics expenses of AK team to be reimbursed if all the doubts
    are satisfied. Recording of the event to be floated on You tube).

    Mr Sanjeev, I am sure you will post this invite on the blog as I believe you support the openness of mind for a constructive dialogue.

    With Regards,
    Ashutosh Phalke

  30. Sanjeev Sabhlok

    Dear Ashutosh

    I told you upfront that I disagree with your approach, but had everyone listen to your views.

    I’m afraid the Arthakranti proposal just doesn’t make sense from any angle.

    Please get over it. Let’s get to the core of the problems in India. Taxation is the least of the problems. We have just too many skewed incentives.


  31. Sudheer Barve UK

    Dear Mr Sanjeev,
    I think you should pick up this idea of a constructive debate and floating it to the world on youtube.

    Above all, Arthkranti had declared a huge award amounting to few lakh rupees to anyone who would prove that this idea has basic flaws or cant be implemented. You may win it and the project will be shelved. OR you will become a very ardent supporter of the idea and together make it a success.
    How is the challenge? too scary or worth a try?
    Please do not attach it to BJP. They have nothing to do with it. The proposal was also presented to many other political leaders and scholars in this country.
    thanks and regards
    Sudheer Barve

  32. Sanjeev Sabhlok

    I’m afraid the proponents of the scheme don’t have it in them to understand basic concepts of economics. I rebutted their idea in Haridwar when the presented it in April 2013, thereafter this more detailed post. That should be more than sufficient for anyone.

    But this case is like someone who claims he can see a Holy Ghost, – saying that he will award money to someone who can disprove what he (alone!) sees. Proponent, judge, jury, executioner – all in one!

  33. Sudheer Barve UK

    Mr Sabhlok, you did not answer my question.
    If it is such a stupid idea, why not take them with horns and demolish once and for all.?
    You say that taxation is least of the problems…that’s the root cause Sir. !!

    Anyway I would be happy to organise an open debate in a Pune /Mumbai hall or college of repute if you wish.

    Now Come on . Dont shy away.

    Please reply soon to me or Arthkranti .
    thanks and regards

  34. Sanjeev Sabhlok

    There are millions of bad ideas in the world, for every good idea. No time to individually demolish all bad ideas.

    This blog post itself took a fair bit of time. I’ve invested more than enough time on this bogus proposal. If this doesn’t give you sufficient reasons to trash Arthakranti, then I’m afraid nothing will help.

  35. S.V.R.Murty

    This blog writer hasn’t clearly understood the proposal of Arthakranthi and this is visible clearly. Too much of worrying might have became a habit and is viewing in that direction only. I suggest to go through the Arthakranthi proposal several times, if required by heart it, so that it can be understood that no more parking fees required to pay if implemented and so on.

  36. Sanjeev Sabhlok

    What makes you think I’ve not understood the proposal? Please rebut the CLEAR rebuttal of the Arthakranti proposal, instead of making useless claims that don’t add any value to the discussion.

  37. Navin

    It was good to read contrary views on Arthakranti. However, I will still support the proposal as a common man (neither rich nor poor).The proposal may need modifications/tweaking.
    Agriculture tax was abolished at the time of independence. The other taxes were nothing at that time.
    Would you have supported it at that time?

  38. Amit

    I am not super qualified economist but to me the blog is all jargon about how taxation is complex and we dare not simplify it. something is complex does not make it mandatory that it should remain complex.
    As far as people still making cash transactions you are missing the point that currency will not be available in excess even you have purchasing power.
    your wife may pay for sari in 2 transactions but she will have to roam with suitcase full of rs. 10 notes which will be hard to come by anyways.

  39. Ashish Killedar

    The pdf here
    Looks like a good resource to look into what is BTT in details with simulation. I know things are different in Brazil & INDIA, but we also know that the differences at acceptable level. And I find no reasons for avoiding “SINGLE TAX ” in INDIA. I am a very common citizen a Mechanical engineer with MBA in Finance but really not so fundoo on economics. But this PDF is really great knowledge source on SINGLE TAX . It also opens our eyes on the paradox of failed SINGLE TAX attempts and firmly answers the negatives that have been stressed by so many in INDIA today. I am fairly optimistic about the good results in general -though just demonetizing may not have 0 to 100 result ( I think every one knows that) . But the Path that is set out looks much more promising than what is happening with today’s system for TAX -evasion and Tax extraction. Both painful only to Common man…….

  40. Pratap

    I support Arthakranti, as it will be simple for people to understand the calculate tax. Deduct flat tax from salary. charge money on transaction or max money is 50 to 100 rs. Crime will reduce. CA, lawyers , doctor, politicians, black money business man will oppose it.

  41. Sanjeev Sabhlok

    You, Sir, are an idiot. Simplicity is not how society progresses. SENSE is how a society progresses.

  42. Parth Joshi


    Now, like many here, I too am no expert in Economics and most of what I know is from general reading and the limited syllabus that we had as a CA and CS student.
    I read about the Arthakranti Proposal for the first time in a WhatsApp message in 2014 just after BJP was elected to the Government. It also said that Mr Bokil was given 9 inutes and the PM was so intrigued by his proposal that he listened to him for 2 hours. I did not agree with this one bit what I first read it and I dont agree with it even today. However going as far as saying that the BJP endorsed this idea and hailed it is a bit too much i feel. Even with ‘demonetisation’ I cannot see how the Government has or is trying to implement Arthakranti. The only thing common between both the schemes was the scrapping of 500 and 1000 currencies but the they were actually replaced by another 500 and 2000 Rupee notes. I dont wish to go into the highs and lows of demonetisation here or even how good(?) or bad the BJP and other political parties are. My point is just that the Government has never adopted Arthakranti even a bit. Furthermore Mr Bokil is clearly an opportunist to claim all the credit when every one was going gaga during the early days of demonetisation and conveniently washed his hands off saying ‘this is not what we had suggested’ as the ills of demonetisation became more and more apparent. But we are a democracy and thus we have to take people like Mr Bokil and his Arthakranti team in our stride as we move along the path of progress.

  43. Pradipta Guha

    Hi There,

    No where I saw Mr. Bokil claiming any credit to himself as someone has written in the comment section. However, the author of this blog has expressed his concerns about people choosing to “barter exchange”. I request him to elaborate how one in today’s word, will set a standard for barter exchange which will be globally or at least nationally acceptable. Lets take an example –

    I wish to buy a property for 30L. I want to avoid the BTT, so I decided to trade in gold. So, I agreed to give the seller gold worth 30L. Sounds simple – huh? Did you consider that gold price changes in daily basis? So, which day’s rate shall I agree upon? Fair enough, you said – for the day that transaction will take place. Now, I handed over the gold to the buyer and he gives me the possession or the property. You see, since the gold transaction is covertly make, it will be treated as cash transaction. And, according to ArthaKranti, such “cash” transaction will not be protected by any govt. body. So, before doing so, the buyer will think twice if sime dispute arises later, no authority will come for his rescue hence for him this will be simply a bad idea. Now, think from a different perspective. The property you are going to buy for 30L, the manufacturing cost of it has reduced significantly as all taxes were abolished. The cost of cement, bricks, irons all were bought for much less cost (remember, as of now, the total of different taxes are 30%-40%, and after ArthaKranti, it will be merely ~2%). So, in a sanse, the property you are going to buy would have costed in present tax system 40L-55L.


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