What is paramārtha? This question has been asked by many, so this must be answered first. In the case of of Śrī Puruṣottama-kṣetra, many people are divided into smārtas and paramārtha. Talking to them, it seems that only those that do not follow the smārta rules and follow vratas etc. according to the Hari-bhakti-vilāsa are paramārthi. Elsewhere, we have heard that those who abstain from eating meat are paramārthi. Sometimes, old-fashioned people impress upon us so many external signs as paramārtha. Due to this kind of conclusion, the original paramārtha–tattva has been obscured for a long time. Thus we will try to explain the meaning of the word ‘paramārtha’.
The word paramārtha is made up of two words, parama and artha, which have two connotations. The word parama means ‘greatest,’ and the word artha means ‘necessity’ or ‘objective.’ When one performs some action, there is just one objective. The purpose of a house is to live in it. The purpose of cooking is to eat. The purpose of gathering knowledge is to teach. The purpose of performing good deeds is to accumulate puṇya. All these are the objectives of these actions. We can observe that the purpose of one action again becomes another action and gives rise to another purpose. The purpose of cooking is to eat. After the action of eating, the purpose of appeasing hunger is fulfilled. Appeasing one’s hunger again becomes a form of action and results in the power of action and nourishment of the body. As a result of this chain of action and necessity, life gradually acquires a purpose. Yet beyond simply living, one’s objective should be to inquire into spiritual truths (tattva–jijñāsa). Such (spiritual) activities and their purpose appear gradually—in other words, such an objective has no connection to mundane activities and no mundane functionality—such an artha is paramārtha (the highest objective). Paramārtha is the ultimate objective of all activities. Those who perform activities in search of a mundane purpose are known as arthī. Those who perform activities in search of paramārtha are known as paramārthī.
There is no external difference between an arthī and a paramārthī, the difference is only internal. This we find in the Bhāgavata:
dharmasya hy āpavargyasya nārtho ‘rthāyopakalpate
nārthasya dharmaikāntasya kāmo lābhāya hi smṛtaḥ
kāmasya nendriya-prītir lābho jīveta yāvatā
jīvasya tattva-jijñāsā nārtho yaś ceha karmabhiḥ
vadanti tat tattva-vidas tattvaṁ yaj jñānam advayam
brahmeti paramātmeti bhagavān iti śabdyate
“Sūta said, ‘O ṛṣis! Many think that the result of dharma is to attain some mundane objective (artha). The result of artha is kāma (desire), and the result of kāma is happiness. That being said, all jīvas are enticed into performing dharma. However, those persons who are paramārthī do not engage in such a deceitful philosophy. Such persons declare that dharma must be apavarga–dharma (purely transcendental). That dharma awards the highest objective and gives liberation from the material world—in other words, that which is apavarga–dharma reestablishes the jīva in his own intrinsic svarūpa. Just as in nīti–dharma (the dharma of mundane morality) —the result of such dharma is only artha, and the result of that artha is kāma—it should not be so! In observing dharma, artha must be generated, and when artha is generated, it gives birth to kāma; but when kāma arises, it should not result in gratifying the senses. In other words, the dharma, artha and kāma of a man who performs apavarga–dharma to sustain his life is welcome. If his life is preserved in this way, then through tattva–jijñāsa he will attain the stage of paramārtha. Those persons who are knowledgable in advaya-jñāna-tattva (knowledge pertaining to the non-dual Absolute) speak about this tattva. This tattva is threefold, in other words, brahma–tattva, paramātmā–tattva and bhagavat–tattva.”