CEA Arvind Subramanian says need clear protocol for sharing GST data
Chief Economic Advisor Arvind Subramanian made a case for developing a clear protocol for sharing of GST data with government departments, saying it is a reflection on state’s capacity and can also be used to estimate GDP in a better manner. He further said that the introduction of e-way bill and matching of invoices will enormously help in increasing tax buoyancy and revenue collection. Speaking at an event to mark GST Network Foundation Day, Subramanian said GST data will provide better insights into economy, formal sector employment and exports and has the potential to improve statistical indicators on a real-time basis. “The GST data, which GSTN is compiling, will truly transform the way we estimate all our numbers… On monthly basis we can produce high frequency numbers on the economy which we could not do earlier. “That means that you (GSTN) and other parts of government will have to develop clear protocol on how you share the data, what are the conditions under which it should be shared because it’s also about state capacity,” he said. GSTN is handling the IT backbone for the new indirect tax regime. So far 1.05 crore businesses have registered on the portal and are required to file GST returns periodically.
He said most countries compute economic growth data from demand side, as against the consumption led estimates by India. The GST data, Subramanian said, could help in computing GDP growth based on demand side data on quarterly basis. “We (GSTN) are just at early stages. In terms of what kind of skill and training the GSTN have to acquire, the breadth will have to be increased much more than what it is. In initial stage it (GSTN) is much more IT focussed, fire fighting focussed. Over time this is going to evolve much more,” he said. The Rs 86,000 crore monthly revenue collection under GST reflect a “decent performance”.
“I think there is going to be enormous scope for increasing tax buoyancy because we are only beginning to start (getting) the benefits from (invoice) matching, e-way bill and further simplification… I expect GST to be a highly buoyant source of revenue over the medium term,” Subramanian said. Observing that honest bureaucrats are often not willing to take bold decision because of the fear of investigative agencies, he said GSTN “is a genius of public private partnership where you actually facilitate bold decision making, which I think has been exceptional”.
Inflation fears overdone; RBI likely to go for rate cut in August, says report
Inflation risks are overdone, and the Reserve Bank is expected to go for a rate cut in August, even as it may strike a “balanced tone” in the ensuing policy review meet next month, says a report. According to Bank of America Merrill Lynch (BofAML), inflation risks are overdone and March inflation is likely at 4.2 per cent, down from December’s 5.2 per cent and well within RBI’s 2-6 per cent mandate. The CPI inflation fell to a 4 month low of 4.44 per cent in February. RBI takes into account retail inflation while formulating monetary policy. The report said a normal monsoon is expected to contain agflation. Besides, the MSP hike in Budget 2018, will have limited inflation impact as the revised MSPs are below the market price for many kharif crops. “We grow more confident of our call that inflation risks are overdone,” the report said. Moreover, there is a good possibility of a normal monsoon dousing agflation in the second half of 2018.
The central bank’s next monetary policy review is scheduled for April 5. It had kept the policy rate unchanged in the February meeting on fears of inflation. “We expect the RBI MPC to strike a balanced tone on April 5, with March quarter inflation set to average 4.6 per cent, 50 bps below their 5.1 per cent forecast. This backs our call of a final 25 bps cut in August if rains are normal,” the report noted.
E-Way bill: slow pace worries govt
With just three days to go before the rollout of electronic way bill (e-way bill), the government is concerned about the slow pace at which taxpayers are readying themselves for it. The portal for the e-way bill, an anti-evasion mechanism to track cargo movement in the GST regime, has witnessed just 11 lakh registrations so far, while the GST taxpayer base is over a crore. The mechanism requires taxpayers to electronically generate e-way bill on the designated portal for transportation of goods worth over Rs 50,000. The taxpayer would have to provide details of cargo, its origin and destination among other specifications to obtain the bill. Speaking at the fifth foundation of GST Network (GSTN) — the IT backbone for GST — finance secretary Hasmukh Adhia said, “I’m not too sure whether traders, dealers and transporters are still ready. I would like to appeal to them to register themselves on the e-way bill portal as early as possible; they should not then tell us that we didn’t inform them.”
Fewer registrations mean that as many as 90 lakh taxpayers could register on the portal in the next three days, which is likely to put the portal under heavy strain. “So far only 11 lakh of the existing taxpayers have registered for e-way bill. The fear is that many will come on the last day to register as all businesses would need e-way bills except some service providers,” Prakash Kumar, CEO of GSTN said at the event. In a bid to check revenue leakage in business-to-consumer (B2C) transactions, the implementation of e-way bill was advanced to February 1 but the portal lacked the capacity to handle the load and crashed on the first day itself prompting the GST Council to delay rollout to April 1. From April 1, the system will be implemented in a phased manner starting from applicability on inter-state movements firstly, followed by intra-state transport in states in a staggered manner.
“The main problem is there is no data to suggest how many bills will be generated daily. So earlier, it was based on experience from one state (Karnataka), which proved to be inadequate. Now we have tripled the capacity and based on live experience, we can ramp up capacity further as actual numbers of e-way bills generated daily becomes visible,” Kumar told FE. He added that currently 6-7 lakh e-way bills were being generated daily in the trial phase.
The e-way bill portal has been designed and developed by National Informatics Centre (NIC). After the failed launch on April 1, the system has been strengthened to handle 75 lakh inter-state e-way bills daily. Separately, Kumar said that GSTN is ready to implement the new and simplified return-filing mechanism, which is currently under deliberation at the GST Council. He added that GSTN would need time to make changes for the new mechanism if it is vastly different from the current forms that include GSTR-3B, GSTR-1,2 and 3.
For a change, disinvestment target met
Bucking the trend of missing targets since the disinvestment began seven years ago, the Centre achieved the 2017-18 revised disinvestment target of Rs 1 lakh crore. Thanks to the plans laid out sufficiently early in the year — the Centre mopped up Rs 1,00,056.91 crore. Besides Rs 36,915 crore (37% of total disinvestment receipt) from government entity HPCL’s stake sale to ONGC, bulk of the disinvestment receipt were from a clutch of IPOs (Rs 23,570 crore), Bharat 22 ETF (Rs 14,500) and offers for sale (Rs 14,119 crore). Buyback of shares by PSUs and management of Suuti holdings in several firms fetched the balance amount to the exchequer this year.
Against the initial disinvestment target of Rs 56,500 crore and revised target of Rs 45,500 crore, the government had collected Rs 46,247 crore in FY17. The original disinvestment target for 2017-18 was Rs 72,500 crore. Higher disinvestment revenue was crucial for stepping-up spending without inflating fiscal deficit too much, even though the deficit target was revised upwards from 3.2% to 3.5% as the Reserve Bank of India paid nearly Rs 27,341 crore less dividend than projected for the year. Even as concerns remain on the tax revenue front as well due to the goods and services tax’s transitional problems, the government could still meet the deficit target for the year as nominal GDP is expected to be higher than estimated earlier.
CCEA approves continuation of credit guarantee fund scheme for education loans
The Cabinet Committee on Economic Affairs (CCEA) approved continuation of the Credit Guarantee Fund Scheme for Education Loans and continuation and modification of the Central Sector Interest Subsidy (CSIS) Scheme with a financial outlay of Rs 6,600 crore for the period from 2017-18 to 2019-20, an official release said. This will provide education loans to 10 lakh students during this period, it added.
The Credit Guarantee Fund Scheme for Education Loans provides guarantee for the education loan disbursed by banks without seeking any collateral security and third-party guarantee, for a maximum loan amount of Rs 7.5 lakh per student. Under the CSIS Scheme, which was launch in April 2009, full interest subsidy is provided for education loans taken from scheduled banks for all the professional/technical courses in India.
Students with annual gross parental income up to Rs 4.5 lakh are eligible for the scheme and the loans are disbursed without any collateral security and third-party guarantee. An amount of Rs 9,408.52 crore has been disbursed towards interest subsidy and 25.10 lakh students have benefitted till date. The CCEA also approved a proposal of the Department of School Education and Literacy to formulate an integrated scheme on school education with an estimated allocation of Rs 75,000 crore over a period.
Pradhan Mantri Suraksha Bima Yojana covers 13.41 cr subscribers: government
The number of subscribers under the Pradhan Mantri Suraksha Bima Yojana has gone up to 13.41 crore, Parliament was informed. Number of enrolments in Pradhan Mantri Suraksha Bima Yojana (PMSBY) has increased from 8.85 crore in 2015-16 to 13.41 crore in 2017-18 through auto-debit under the scheme, Minister of State for Finance Shiv Pratap Shukla said in a written reply in the Rajya Sabha.
Launched in May 2015, PMSBY provides a cover of Rs 2 lakh for accidental death or total permanent disability and Rs 1 lakh in case of permanent partial disability. The cover period under this scheme is June 1 each year to May 31 of the subsequent year and the accidental insurance policies under implementation with different central government departments have been converged to PMSBY from June 1, 2017.
PMSBY is offered/administered through both public and private sector general insurance companies, in tie up with banks, regional rural banks and cooperative banks. It gives a renewable one year accidental death-cum-disability cover to all subscribing bank account holders in the age group of 18 to 70 years for a premium of Rs 12 per annum per subscriber to be auto debited from the subscriber’s bank account.
The minister said the scheme is meant for common people, especially poor and the under-privileged sections of the society. Shukla said government regularly monitors the progress of settlement of claims under the scheme and any complaints are dealt in coordination with banks and insurance companies in getting them resolved expeditiously.
Inadequate infrastructure to impact trade facilitation measures: parliamentary panel
A Parliamentary panel has expressed concerns over inadequate infrastructure and non-coordination between stakeholders to promote trade facilitation measures initiated by the government. It suggested to the Department of Commerce to prepare a plan for trade facilitation for next five years for reducing transactions costs further.
It said that lack of infrastructure like port to road connectivity and “non-coordination between all the relevant stake holders for improving the infrastructure were adversely affecting the trade facilitation measures initiated by the government”. Public Accounts Committee in its report said that efficiency at the ports needs to be improved by updating ICEGATE (Indian Customs and Central Excise Electronic Commerce/Electronic Data interchange Gateway) to minimise breakdown, making e-filing of bill of entry and full use of 24×7 facility .
The world trade is around USD 40 trillion and out of this India contributes about USD 1 trillion but the strategic plan of the department of commerce estimates a huge impact on the transaction cost due to poor facilitation, it added. The committee suggested that the department “may carry out an analysis of the impact of the measures taken by it for trade facilitation, take stringent steps against those who have not adhered to the timelines”. It also called for imposing penalties for delay in clearing goods by various authorities like customs and FSSAI.
FY18 disinvestment receipts exceed Rs 1 lakh cr: Finance Minister Arun Jaitley
Finance Minister Arun Jaitley said the government has collected over Rs 1 lakh crore through PSU disinvestment in the current fiscal, higher than Rs 46,250 crore mopped up in the previous financial year. In the Budget, the government had set a revised target of Rs 1 lakh crore from PSU disinvestment, which was higher than the budget estimate of Rs 72,500 crore. So far, the Department of Investment and Public Asset Management (DIPAM) has raised Rs 1,00,056 crore through disinvestment. “The disinvestment receipts for finance year 2017-18 exceeds Rs 1 lakh crore which is higher than the figure of last year at Rs 46,250 crore,” Jaitley added.