How does Krishna respond when Arjuna declares that he will not fight because fighting is evil?
I think that Lord Krishna reacts and responds to Arjuna's claim by analyzing its full nature. Lord Krishna correctly points out that Arjuna is not taking his position against fighting because of anything moral. Rather, Lord Krishna is able to fully understand that Arjuna simply does not want to act in accordance to his duty. Lord Krishna understands that Arjuna's vexations are not out of something moral. Rather, Arjuna does not want to do what he knows he must do. Arjuna has taken an existential position, believing himself to be alone in the world. It is here in which Lord Krishna instructs him as to the fault in his reasoning. When Arjuna says that fighting is wrong, Lord Krishna points out that the confrontation of evil and the need to keep an eye towards the maintenance of the world order is what must compel an individual to take action. Refusing to do this is equatable to continuing evil. Lord Krishna makes the case that one must take action in accordance to one's duty.
Arjuna's feelings of existential agony can be set aside if he surrenders attachment to being alone and understands that he is to immerse himself in devotion to Lord Krishna. In being able to understand this, Lord Krishna responds and reacts to what Arjuna initially claims as a moral position, but is actually a desire to evade action. For Lord Krishna, the response suggests clearly that human rationalization in the here and now is not a substitute for the transcendental condition in which all human beings invariably find themselves.
Krishna explained Arjun the meaning of "Deh atma Buddhi". Krishna also said to him that the reason why Arjun was against of kurukshetra battle i.e - "His deh atma buddhi". Krishna said him that -
He should not feel wrong or sin to battle with kauravas as it is necessary for Truth. Krishna explained him that above even dharma is God, who, for His own reasons, desires this battle.