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3 times increase! Affordable healthcare allocation under PM Swasthya Suraksha Yojana tripled in Modi-era

Even as Ayushman Bharat, popularly known as Modicare, has been the highlight this year in the healthcare sector, the Narendra Modi government, in the five budgets, steadily increased the budgetary outlay for the flagship Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), data from Budget documents show.

Launched in 2003, the PMSSY aims to correct regional imbalances in affordable tertiary healthcare services by setting up new AIIMS-like hospitals and upgrading existing medical colleges. The allocations under PMSSY were Rs 989 crore in 2012-13; Rs 1,273 crore in 2013-14; Rs 822 crore in 2014-15; Rs 1,577 in 2015-16; Rs 1,953 2016-17; Rs 3,175 in 2017-18 (revised estimate); Rs 3,825 crore in 2018-19 (budgeted estimate).

If compared the last allocation done by the UPA-II government to the budgeted estimated allocation by the NDA government in 2018-19, there is a three times increase. As pointed out by rating agency Crisil, the compound annual growth rate (CAGR) has been 47% in the last five years.

“Over the past four years, the central government has already spent Rs 7,527 crore (fiscals 2015 to 2018) on the scheme (PMSSY) and has budgeted Rs 3,825 crore for fiscal 2019. Robust CAGR of 47% in expenditure on the scheme clearly hints at central government’s emphasis on tertiary care infrastructure,” Crisil said in a report.

However, the mammoth task reviving tertiary healthcare in a country with 1.21 billion, would require more than just the public spending. India’s allocation in the healthcare sector has been the lowest in the world between 0.98% and 1.18% of the GDP. “The government will definitely need the support of the private sector in rapidly expanding secondary and tertiary care health services in the country,” the report added.

There are several schemes under which the government, in partnership with public and private insurance companies, provide healthcare coverage to, mainly, employees. The schemes are Central Government Health Scheme (CGHS) for employees of the central government, Employees’ State Insurance Scheme (ESIS) for employees of factories, and Rashtriya Swasthya Bima Yojana (RSBY), shared between state and centre for poor population.

The National Health Protection Scheme (NHPS), the Ayushman Bharat scheme will subsume RSBY and will also lead to an increase in the insurance cover from Rs 1-2 lakh to Rs 5 lakh.

India growing faster than any economy, providing opportunities, says former British PM David Cameron

Former British prime minister David Cameron said India was growing faster than any larger economy and providing opportunities. “It is important to focus on possibilities, good and bad, while remain mindful of the threats which the world is facing now,” he said at a session of the Indian Chamber of Commerce (ICC). “Relationship between the two countries was one of the priorities during my premiership. The UK invested more in India among the G20 countries and our country was one of the recipients of the biggest Indian investment by the Tatas”, Cameron said.

Cameron, who was the British prime minister from 2010 to 2016, said that trade and investment were not zero sum game. He said, there was backlash against market economy and emergence of strongman politics. “Our two countries will flourish when markets operate. India is at the potential stage of take-off with 7 per cent growth”, he said.

Cameron said that there was a growing move towards protectionism and isolationism on the premise that free trade was unfair. “What I feel is that there is no need to change the system but to reshape the course”, he said. “Let us fly the flag of trade and cooperation. India should get permanent membership in the UN Security Council as well”, he said. Criticising US President Donald Trump’s move to impose duty on Indian steel, he said, “Indian prime minister has to show that he is strong.”

Also disagreeing with Trump’s view on trade deficit, Cameron said it was normal that some country would have deficit and some surplus. “If all the countries have trade surplus, then who will have deficit”, he asked. Talking about Indian leadership, he said, “India is fortunate to have leadership with clear vision. When I met Narendra Modi in 2006, he had deep thought about the long-term problems.

Cameron also said that there was also an existential threat due to climate change, he said that environment would have to be protected and regretted the US decision to walk out of Paris climate accord. He said India was facing challenges in infrastructure and skill development.

National GST appellate tribunal on anvil, council to decide on July 21

The GST Council will consider setting up of a National Appellate Tribunal in Delhi with three regional benches with members from judiciary as well as tax departments to hear appeals against the order of the appellate authority set up by states under the GST regime. According to the proposal which will be placed before the Council on July 21, three benches of the national appellate tribunal would be set up at Mumbai, Chennai and Kolkata. The proposal is aimed at dealing with the problem faced by industry on account of contradictory orders passed by Authority for Advance Ruling (AAR) in different states.

It has also been observed that most of the AAR orders are in the favour of the revenue department as these authorities are manned by tax officials. Industry has been demanding that an independent judicial member should preside over the functioning of the national GST appellate tribunal to be set up for adjudicating disputes between revenue and taxpayers.

The Centre and state governments would have to amend the GST law if the proposal is approved by the Council in its next meeting on July 21. Under the GST (Goods and Services Tax) law, an aggrieved party can file an appeal against the order of the AAR within a period of 30 days, which may be further extended by a month.

As per the law, all states are required to set up at least one AAR for seeking advance ruling over GST levy and one appellate authority to hear appeals against the AAR order. In March, the New Delhi bench of the AAR had held that duty-free shops at airports are liable to deduct GST from passengers.

However, these shops were exempt from service tax, and Central Sales Tax in the earlier regime. Further, the solar industry too was left in a vexed situation when the Maharashtra AAR said that 18 per cent GST rate would be levied for installation works, but the Karnataka-bench of AAR passed an order levying 5 per cent GST on the same.

Tougher law on anvil: bill to attach assets of fugitive offenders gets Lok Sabha approval

The Lok Sabha on Thursday approved a Bill to attach assets of fugitive economic offenders and replace an ordinance promulgated in April. The Fugitive Economic Offenders Bill (FEOB) will make it easier to attach all the assets of economic offenders fleeing India to escape the reach of law – including Nirav Modi, Mehul Choksi and Vijay Mallya – even without conviction. It will cover all economic offences of Rs 100 crore or more. While the existing Prevention of Money Laundering Act (PMLA) has provisions for confiscation of an offender’s assets, it’s only after his conviction, and the attachment is also limited to the proceeds of crime. However, the ordinance provides for attachment of all the assets of offenders, irrespective of the proceeds of the crime.

A new Act was required as existing laws have certain inadequacies in promptly attaching assets of high-value economic offenders who fled India after committing wilful defaults or acts of fraud. Criminal proceedings in such cases take place in various courts of the country and there are chances that court orders for confiscation of assets are at odds with one another. The Bill was earlier introduced in the Lok Sabha on March 12, but could not be passed due to frequent disruptions. Subsequently, the government brought in the ordinance. “We can’t allow people to make a mockery of law – that you first indulge in loot and then refuse to submit to our legal system,” Union minister Arun Jaitley had said on March 1, after the Cabinet had approved the FEOB.

To attach foreign assets of a fugitive offender, cooperation of the relevant country would be required, Jaitley had said. The idea of the new law was first proposed by Jaitley in the Budget 2017-18. To declare someone a fugitive economic offender, an application will have to be filed in a special court (designated under the Prevention of Money Laundering Act, 2002), containing details of the properties to be confiscated, and any information about the person’s whereabouts. The person will be required to appear before the court at a specified place at least six weeks from the issue of notice. Proceedings will continue if the person doesn’t appear.

Currently, such offences are tried under multiple laws, namely the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfesi), Recovery of Debts Due to Banks and Financial Institutions Act and the Insolvency and Bankruptcy Code. The Bill provides for confiscation of property upon a person being declared a fugitive economic offender. This is different from other laws, such as CrPC 1973, where confiscation becomes final only two years after proclamation as an absconder.

According to the Bill, a fugitive economic offender is one who has an arrest warrant issued in relation to a scheduled offence and who leaves or has left India so as to avoid criminal prosecution, or refuses to return to India to face criminal prosecution. The offences covered under the ordinance include wilful loan defaults, cheating, forgery and counterfeiting government stamps or currency, among others. The government has also set up a panel under financial services secretary Rajiv Kumar to suggest ways to prevent defaulters from fleeing the country.

 

GST rate cut on sanitary napkin makes sense, making it tax exempt doesn’t

After months of outrage over not making sanitary napkins tax exempt, like bindi, sindoor, and kajal, the GST Council may finally consider tax cut on it when it meets on July 21. The GST rate on sanitary napkins is 12% now, and could be brought down to 5%. However, contrary to popular mood, this essential item should not be made GST exempt, say experts.

Given the peculiar nature of the ‘inverted tax structure’ under the Goods and Services Tax regime, GST exemption becomes costlier for manufacturers than a low or 0% tax rate slab on items that use raw materials taxed at higher rate.

Interestingly, under the GST, 0% tax rate works differently from tax exemption. Under 0%, there is no output tax but input tax credit can be claimed, while under tax exemption, the provision of claiming credit is not there. FE Online had earlier explained how the calculation works under the Inverted Duty Structure: How no tax in GST regime becomes costlier than 5% slab.

Same is the case with sanitary napkins. GST attorney L Badri Narayanan, a Partner at Lakshmikumaran & Sridharan told FE Online that tax exemption leads to break in the credit chain, eventually leading to higher cost and sale price of the goods. This could make the situation worse in India where only 12% women use sanitary napkins.

“If I have to compare the situation of a zero tax rate on sanitary napkins with a lower rate of tax, I will opt for the latter. This is because once a product becomes completely exempt, the dealer of such goods loses the input tax credit on all the input goods and services. This leads to a situation of a break in the credit chain which eventually results in an increase in the cost and sale price of the goods,” Badri Narayanan said.

More importantly, making it tax-exempt is likely to hurt domestic manufacturers as they are the ones to manufacture sanitary napkins under the GST mechanism, while foreign manufacturers taxed at 0% would be able to claim input tax credit.

Despite all the technicalities, and even as in the earlier regime sanitary napkins were taxed at 13.7%, there is room to bring it down in the lowest bracket of 5%, Kabir Bogra, Indirect Tax Partner, Khaitan & Co recently said.

The GST, since its implementation on July 1, 2017, has been heavily criticised for being too complex and for having too many tax slabs. Grouping of items, such as sanitary napkins with toys, leather goods etc at 12%, is posing a problem. Similarly, washing machines, refrigerators are clubbed with aircraft and yachts at 28%.

However, once the GST revenue settles at a comfortable level, the government would be able to address these technical issues, where an exception could be made for essential goods such as sanitary napkins, books, wheelchairs to be tax exempt with breaking the credit chain, say GST experts.

The GST Council may also consider lowering tax on handicrafts and handloom goods, also taxed at 12%, along with some services in the meeting. In November 2017, the council had cut rates on over 200 items, followed by a rate cut of 29 items two months later.

Rupee fall not enough to boost India’s exports, these 2 are other deciding factors

A weak currency is good for exports. In India’s case, the script is not so straightforward. While the rupee is Asia’s worst-performing major currency this year, a demand-killing trade war threatens Indian exports that have already been hurt by policy disruptions over the past two years. History shows the currency’s moves have hardly impacted shipments. If anything, a slide in the rupee has ended up inflating the nation’s import bill.

“The situation for export prospects is weak given the kind of trade war happening in the world,” said N.R. Bhanumurthy, an economist at Delhi-based National Institute for Public Finance and Policy and a co-author of a 2013 paper on whether rupee’s weakness matters to Indian manufacturing exports.

Unlike China, Taiwan and South Korea, India isn’t part of big supply chains globally. Trade tensions between the U.S. and China have prompted export-reliant countries like Vietnam to guard against Chinese products flooding their local markets. India’s goods exports contribute only about 12 percent of gross domestic product and government officials have blamed its poor showing on the rupee’s strength.

The currency slumped to an all-time low of 69.0925 per dollar last month as prices of crude oil — the nation’s top import — climbed and foreign funds exited stocks and bonds amid an aversion to riskier assets. The rupee touched 69 on Thursday and is down over 7 percent this year.

The rupee continues to be overvalued on a real effective exchange rate despite the slide, and there was no question about being nervous about the depreciation, said Rajiv Kumar, vice chairman of think-tank NITI Aayog. Modi’s chief economic adviser, Arvind Subramanian, also welcomed the rupee’s decline, adding that it was a natural adjustment that was taking place.

Along with rising oil prices and Indians’ love for electronic goods made abroad, an adverse terms of trade position could widen the country’s current-account deficit.

“The rupee’s weakness against the dollar along with rising oil prices has increased India’s import bill,” said Rohan Chinchwadkar, an assistant professor of finance at the Indian Institute of Management at Tiruchirappalli in southern India. “Despite the depreciation, export growth continues to be weak because of rising protectionism, sluggishly recovering global growth and disruption of domestic supply chains.”

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