The organisation, which had made a detailed representation on alternate model of economy before Prime Minister Narendra Modi in 2012, when he was the Chief Minister of Gujarat, wants the complete suspension of Rs 500 and Rs 1,000 notes gradually. This alternate model of economy, according to the organisation, will lead to “principle, prosperous and peaceful living” in the country.
“The government’s decision to demonetise higher denomination currency notes is a welcome step. We understand ‘complete withdrawal’ of Rs 500, Rs 1000 and now the new Rs 2000 notes is not possible at the moment. But we hope that these currency notes will be out of circulation in the next few years,” said Mukesh Sharma, a senior Delhi-based official of ArthaKranti, while speaking to The Sunday Guardian. Sharma is an MBA (Finance) and runs a construction business.
“The banking system is not fully developed yet. Internet banking system and Aadhar enrollment are not complete. We also lag behind in terms of literacy rate. In this situation, we understand that ‘complete withdrawal’ of higher denomination notes is not possible. It will take some time. But we are glad the government has taken the first step in this direction,” he added.
After the demonetisation, the organisation would like the government to work towards simplified taxation by scrapping all 56 taxes, except import and customs duties, and introduction of a flat Banking Transaction Tax (BTT).
“We have done enough research in the last 14 years and concluded that a straight transaction tax of 2% would be sufficient to run the country. This will bring down inflation and make the life easier. The proposal will not lead to loss of revenue for the government, but will plug tax evasion and avoidance,” said Sharma.
The new notes should be a stop-gap arrangement and should be demonetised or withdrawn after a smooth transition from the current cash-based, non-transparent system to a well-banked, transparent economy, according to the organisation. It says the new Rs 500 and Rs 2,000 notes should be introduced in a calculated way and Rs 2,000 notes should be introduced only to control the number of pieces and provide adequate value for transaction balancing.
Sharma said: “As per Reserve Bank of India (RBI) data, our economy is cash-driven. About 70-80 % transactions are cash. The cash transaction is seven times higher than the banking transactions whereas in developed countries, it’s just the opposite, where banking transactions are 4-5 times higher than the cash transactions.”
According to him, “We should also take into account that 77% of population spends less than Rs 30 per day. An average middle class person spends Rs 100–Rs 500 per day. So where is the need of higher denominations?”
There is a great disparity between the per capital income and highest denomination. In US, per capita income is $53,000, the highest denomination is $100; in UK, the per capita income is 25,000 pound and highest denomination is pound 50; in Japan, the per capita income is Yen 5,000,000 and highest denomination is Yen 10,000.
If per capita is divided by highest denomination, it comes 530 for US, 500 for UK, 500 for Japan. But in case of India, PCI is Rs 90,000 but highest denomination (till now) was Rs 1,000. So the value comes to a poor 90.
Just before the Lok Sabha elections in 2014, the organisation members had several rounds of meeting with senior BJP leaders like Nitin Gadkari, Arun Jaitely, L.K. Advani, Rajnath Singh, Sushma Swaraj.
They had appealed to them to incorporate ArthKranti proposals in the party’s vision document or the election manifesto. However, at that time, a final view could not be taken.