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When a person in India decides to invest in a high-value asset such as a residential property he is almost always given two options by the seller: If you pay an unaccounted X amount in cash, then the seller becomes willing to drop the price significantly. To cite just one example, the property owner was willing to lower the price on a Rs. 56 lakh flat by as much as Rs. 5-6 lakhs provided the buyer was able to bring in Rs. 20 lakhs in cash. Imagine the scale of the unaccounted cash thus generated, all of which goes to run India’s humongous “parallel economy”, the flight of capital, money laundering and the re-entry of such tainted money into the country partly as FDI or foreign investments.

The Black economy is part of the unaddressed socio-economic problems of India, complicated further by a cumbersome and evasion-friendly taxation system, the burden of multiple indirect taxes, high interest rates and the unavailability or  denial of easy credit to micro-enterprises and small businesses.

This saga of the last 60 years has been continuing year after year and compounding existing complications without any attempt to improve the situation.

For more than a decade now, an out-of-box tax reforms proposal has been mooted by the Arthakranti Pratisthan based in Pune. Till a year ago, politicians and experts were content with lending their ear to this proposal and describing the effort as commendable. They would however, decline to have their names associated with it in any which way- as supporters or opponents. That has now changed in the preceding few months with at least a section of the political class and economic experts expressing their opinion publicly. They have been willing to acknowledge the Arthakranti model, accept it, oppose it or suggest changes.

This itself is significant because at least some serious thought is being applied to an issue that demands our serious attention.

All that is called for now is a serious examination of the Arthakranti proposal and a call on whether at least some of the elements of the proposal can be brought into reality.

Our Briefing section presents the proposal in a nutshell and Perspectives offers an exclusive interview with DR Pendse, former Chief Economic Advisor of 20 years to the late Tata Group chairman JRD Tata.

Arthakranti is either practical, impractical, partially practical or an idea ahead of its time. While any of this may be true, the fact of the matter is that India desperately needs change for the better on the fiscal situation, the socio-economic front and the unchallenged sweep of the black economy. Giving a fair chance to a new idea is an option that is worth considering.
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