Economic Survey 2017-18 Presented by Finance Minister

Finance Minister Present Economic Survey 2017-18 in Parliament

Real GDP Growth to Clock 6.75 Percent this Fiscal
Economic Survey Predicts 7-7.5 Percent Growth in 2018-19
Employment, Education & Agriculture To Be The Focus Areas In Medium Term, Says Survey

A series of major reforms undertaken over the past year will allow real GDP growth to reach 6.75 percent this fiscal and will rise to 7.0 to 7.5 percent in 2018-19, thereby re-instating India as the world’s fastest growing major economy. This was stated in the Economic Survey 2017-18 tabled in Parliament today by the Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley.

Economic SurveyIt said that the reform measures undertaken in 2017-18 can be strengthened further in 2018-19.

The survey underlines that due to the launch of transformational Goods and Services Tax (GST) reform on July 1, 2017, resolution of the long-festering Twin Balance Sheet (TBS) problem by sending the major stressed companies for resolution under the new Indian Bankruptcy Code, implementing a major recapitalization package to strengthen the public sector banks, further liberalization of FDI and the export uplift from the global recovery, the economy began to accelerate in the second half of the year and can clock 6.75 percent growth this year. The survey points out that as per the quarterly estimates; there was a reversal of the declining trend of GDP growth in the second quarter of 2017-18, led by the industry sector. The Gross Value Added (GVA) at constant basic prices is expected to grow at the rate of 6.1 per cent in 2017-18 as compared to 6.6 per cent in 2016-17. Similarly, Agriculture, industry and services sectors are expected to grow at the rate of 2.1 per cent, 4.4 per cent, and 8.3 per cent respectively in 2017-18. The survey adds that after remaining in negative territory for a couple of years, growth of exports rebounded into positive one during 2016-17 and expected to grow faster in 2017-18. However, due to higher expected increase in imports, net exports of goods and services are slated to decline in 2017-18. Similarly, despite the robust economic growth, the savings and investment as a ratio of GDP generally declined. The major reduction in investment rate occurred in 2013-14, although it declined in 2015-16 too. Within this the share of household sector declined, while that of private corporate sector increased.

  

  

The survey points out that India can be rated as among the best performing economies in the world as the average growth during last three years is around 4 percentage points higher than global growth and nearly 3 percentage points higher than that of Emerging Market and Developing Economies. It points out that the GDP growth has averaged 7.3 per cent for the period from 2014-15 to 2017-18, which is the highest among the major economies of the world. That this growth has been achieved in a milieu of lower inflation, improved current account balance and notable reduction in the fiscal deficit to GDP ratio makes it all the more creditable.

Though concerns have been expressed about growing protectionist tendencies in some countries but it remains to be seen as to how the situation unfolds. Some of the factors could have dampening effect on GDP growth in the coming year viz. the possibility of an increase in crude oil prices in the international market. However, with world growth likely to witness moderate improvement in 2018, expectation of greater stability in GST, likely recovery in investment levels, and ongoing structural reforms, among others, should be supporting higher growth. On balance, country’s economic performance should witness an improvement in 2018-19.

   

The survey highlights that against the emerging macroeconomic concerns, policy vigilance will be necessary in the coming year, especially if high international oil prices persist or elevated stock prices correct sharply, provoking a “sudden stall” in capital flows. The agenda for the next year consequently remains full: stabilizing the GST, completing the TBS actions, privatizing Air India, and staving off threats to macro-economic stability. The TBS actions, noteworthy for cracking the long-standing “exit” problem, need complementary reforms to shrink unviable banks and allow greater private sector participation. The GST Council offers a model “technology” of cooperative federalism to apply to many other policy reforms. Over the medium term, three areas of policy focus stand out: Employment: finding good jobs for the young and burgeoning workforce, especially for women. Education: creating an educated and healthy labor force. Agriculture: raising farm productivity while strengthening agricultural resilience. Above all, India must continue improving the climate for rapid economic growth on the strength of the only two truly sustainable engines—private investment and exports.

  -PIB Delhi, 29 JAN 2018

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GST Council relief to exporters, small businesses

GST Council relief to exporters, small businesses

In what should come as a relief to exporters and small businesses, the GST Council announced a slew of decisions to reduce their compliance burdens, including the eventual setting up of an e-wallet for input tax credits for exporters, and the option for small businesses to file returns and pay taxes only once a quarter.

The changes come two days after Prime Minister Narendra Modi said he had instructed the Council to find solutions to the problems being faced by the trading community. The GST Council also reduced the tax rates on 27 items, Finance Minister Arun Jaitley said.

“The committee of secretaries set up to look into the problems faced by the exporters found that the credit blockage felt by exporters was causing a liquidity problem for them,” Mr. Jaitley told reporters following the 22nd GST Council meeting.

“In light of this, we have taken three decisions… By October 10, the refunds for July will be processed and paid, and by October 18, the same for refunds for August. The Council has also decided that each exporter will get an e-wallet in which a nominal sum will be deposited for tax credit purposes, which will be offset against the credit refund when it happens.”GST Council

The third decision regarding exporters taken by the Council is to impose a nominal 0.1% GST rate for them till March 31, 2018, Mr. Jaitley said. The e-wallet system is expected to rollout from April 1, 2018, he added.

“The changes and initiatives announced by the Government following the GST Council meeting will address the problems of the exporters, particularly those in micro and small segments,” Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta said in a statement. “The refund of GST for July by October 10 and August by October 18 will address the liquidity concerns of the exporters.”

“Various relief granted by the GST Council today will be a major breakthrough in simplifying GST and encouraging fast adoption & access of GST among the trading community of the country and will clear the air of uncertainty and chaos,” the Confederation of All India Traders (CAIT) said in a note. “In the wake of current situation where traders are a depressed lot, such relief were much awaited and will change the code and colour of GST on a positive note.”

Small Businesses

“The collection pattern observed so far shows that a substantial portion of the tax is coming from the big players,” Mr Jaitley said. “However, while the small players have a low tax burden, they have a high compliance burden. So, we have taken a few decisions to reduce this burden on them.”

The Finance Minister announced that the composition scheme — meant to ease compliance for small businesses — will be extended to businesses with a turnover of ₹1 crore a year from the previous limit of ₹75 lakh.

In addition, the Council has decided that all businesses with a turnover of ₹1.5 crore or less a year, can file their returns and pay taxes on a quarterly basis instead of a monthly basis. Mr Jaitley said this would reduce the compliance burden for 90% of the taxpayers not already in the composition scheme.

Revenue Secretary Hasmukh Adhia however, clarified that this will roll out from October 1. However, the GSTR-3B form will have to be filed monthly till December, he said.

“The increase in threshold under composition scheme to ₹1 crore would bring in many more small businesses within its ambit,” Pratik Jain, Leader, Indirect Tax at PwC India said. “However, to make this scheme really effective, it needs to be liberalized more by including all service providers and allowing them to undertake inter-State supplies.”

“The benefits to the exporters in the form of e-wallet, interim benefits by manual filing and payment of 0.1% are very welcome,” Abhishek A Rastogi, Partner, Khaitan & Co said. “It needs to be seen that how the other issues which have reached different courts in the country are addressed in the days to come. Certainly, the need of the hour is to provide impetus to the business growth and it appears that the government is openly looking into the concerns of the businesses.”

Group of Ministers

The GST Council has also set up a Group of Ministers to look into various issues — including whether, when calculating the tax burden of a business, its total turnover should be considered or should exempted goods first be excluded. The GoM will also look into whether those who opt for the composition scheme should be allowed inter-state trade. The third aspect the GoM will analyse is whether the rate of tax on restaurants needs to be reduced or should they not be allowed input tax credits. The GoM is to submit its report in two weeks.

Rate Changes

The Council has decided to reduce the rates on several items, including sliced dried mangos, khakhra and plain chappatis, unbranded namkeen, unbranded ayurvedic medicines, plastic, rubber and paper waste, yarn, diesel engine parts, pump parts, e-waste, and several services.

Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta said the changes and initiatives announced by the Government following the GST Council meeting will address the problems of the exporters particularly those in micro and small segments.

The refund of GST for July by October 10 and August by October 18 will address the liquidity concerns of the exporters, he said in a statement.

Welcoming the decision to introduce e-wallet, mooted by FIEO, he said it will provide a permanent solution to the liquidity problem of the export sector. The Government has also resolved the problem of merchant exporters by putting a duty of 0.1% on any supply from manufacturing to merchant, he said, adding that these are very pragmatic decisions showing the flexible approach of the Government to ameliorate the problems of export sector and impart competitiveness.

The FIEO President said these decisions will help in pushing exports on a growth path.

NEW DELHI, OCTOBER 06, 2017 

Arvind Subramanian to continue as Chief Economic Advisor

Arvind Subramanian to continue as Chief Economic Advisor for another year

Arvind Subramanian took over as CEA on October 16, 2014 for a term of three years.

The Finance Minister on Saturday extended the tenure of Chief Economic Advisor Arvind Subramanian for another year. His term was supposed to end in October.

He took over as CEA on October 16, 2014 for a term of three years. This extension will mean his term would end in October 2018.

Arvind SubramanianThe Ministry had, earlier in the week, denied that Mr. Subramanian was resigning after media outlets reported he might do so before his tenure was completed.

Mr. Subramanian’s term as CEA has been marked by dynamic suggestions and analysis to do with the economy — including coining of the term ‘JAM trinity’ (for Jan Dhan, Aadhaar, and Mobile) and elaborating on its benefits.

The CEA has also mooted the idea of a ‘bad bank’ to deal with the persistent problem of non-performing assets (NPAs) afflicting the balance sheets of banks and corporates, and of a Universal Basic Income.

NEW DELHI, SEPTEMBER 23, 2017

Nirmala Sitharaman to focus on military preparedness

Nirmala Sitharaman to focus on military preparedness

Nirmala Sitharaman who took charge as the Defence Minister on Thursday said she would focus on military preparedness, ‘Make in India’ and the welfare of soldiers.

“My priority will definitely be the armed forces preparedness. It is important that the Indian armed forces receive the attention in terms of giving them every endowment and equipment necessary for them to perform their duty with the best of equipment available,” she said in a message after assuming charge.

Nirmala SitharamanShe took charge of the Ministry from Finance Minister Arun Jaitley who was holding additional charge since March at South Block, becoming the first full-time woman Defence Minister of the country.

Speaking later at her first engagement, at event organised by the Defence Research and Development Organisation (DRDO) said it was a privilege to hand over indigenous products on her first engagement after assuming office.

The DRDO event which also attended by Home Minister Rajnath Singh saw the handing over of armoured bus, bullet proof jacket, Unmanned Arial Vehicles (UAV) and small arms among others to Central Armed Police Forces (CAPFs).

She took charge of the Ministry from Finance Minister Arun Jaitley who was holding additional charge since March at South Block, becoming the first full-time woman Defence Minister of the country. Speaking later at her first engagement, at event organised by the Defence Research and Development Organisation (DRDO) said it was a privilege to hand over indigenous products on her first engagement after assuming office.

Mr. Singh noted that all the media has complimented Ms. Sitharaman as India’s first full-time defence minister and said with her defence Ministry will get a energy and direction.

Noting that the country’s “import dependence has gone up,” Mr. Singh said that the systems being developed by DPSUs under the ‘Make in India’ initiative will reduce the dependence. Observing that defence procurements for Home Ministry are done through defence ministry, he said these delayed for the CAPFs.

“We need a framework for the supply of defence equipment to CAPFs,” he said. Ms. Sitharaman was elevated to the Cabinet rank and given the defence portfolio.

NEW DELHI,SEPTEMBER 07, 2017 

Modi govt said no to red beacons for dignitaries, including PM

Modi govt said no to red beacons for dignitaries, including PM

The Modi govt at the Centre has decided to abolish the use of red beacons on any vehicle other than ambulances, police vehicles and fire brigade vehicles.

Modi govt, statThis will cover all dignitaries, including the Prime Minister.

This was announced by Finance Minister Arun Jaitley at a press conference after a Cabinet meeting on Wednesday. The decision was conveyed by the Prime Minister to the Cabinet, Mr. Jaitley said.

Rule 108, which says that the Centre or a State can notify categories of vehicles that can be driven with red beacons is being abolished. The Centre or any State cannot have a dignitary nominated for use of red lights from May 1.

Rule 108 (2) is being changed so that only emergency services can use blue flashing lights. There will be no exceptions to this, the Finance Minister said.

APRIL 19, 2017

GST Council clears crucial CGST, IGST laws

GST Council clears crucial CGST, IGST laws; rollout likely by July 1

GST

GST Council on Saturday fixed a 5 percent tax rate on small hotels and restaurants and approved draft of key supporting legislations to enable rollout of the new indirect tax regime from July 1.

The all-powerful Council approved the final draft of Central GST (C-GST) and Integrated GST (I-GST) and will take up for approval the State-GST and Union Territory-GST (UT-GST) laws at its next meeting on March 16.

The C-GST, which will give powers to Centre to levy GST on goods and services after union levies like excise and service tax are subsumed, and I-GST that is to be levied on inter-state supplies, will go to Parliament for approval in the second half of the Budget session beginning March 9, Finance Minister Arun Jaitley said.

The S-GST, which will allow states to levy the tax after VAT and other state levies are subsumed in the GST, will have to be passed by each of the state legislative assemblies. UT-GST will also go to Parliament for approval.

Jaitley said the model GST Law will have a clause to enable levy of up to 40 percent tax (20 percent by the Centre and an equal amount by the states) but the effective tax rates will be kept at the previously approved levels of 5, 12, 18 and 28 percent.

“The rates will be what has been decided by the Council. There won’t be a higher rate of taxation. But the cap rate in the legislation is always put at a higher level to leave a headspace, just as in the Customs Act you have a difference between the bound rate and applied rate. So the applied rate is going to be what the council has decided,” Jaitley said.

This is being done to obviate the need for going to Parliament in case the levy is to be raised on certain goods and services.

This will also help in a scenario where the cess on de-merit goods being proposed to compensate states for loss of revenue from GST, is to be merged with the tax rate itself, he told reporters after the meeting.

“As it looks like, it looks on track. Hopefully the laws would be before Parliament this session and subject to the Parliament approving them, July 1 this year now optimistically looks like the possible date for GST implementation,” he said.

The Council, headed by Jaitley and comprising representatives of all states, decided to levy a 5 percent GST (2.5 percent by Centre and 2.5 percent by state) on small hotels, restaurants and dhabas with an annual turnover of up to Rs 50 lakh.

Revenue Secretary Hasmukh Adhia said there were demands that restaurants should be included in the composition scheme, particularly those with less turnover. “So the Council decided that there would be a composition scheme for restaurants up to a turnover of Rs 50 lakh and the rate for them is 5 percent. So the remaining restaurants, they will come in the regular service tax rate,” Adhia said.

Adhia said the first meeting of GST Council had decided that composition scheme in GST regime would be applicable on trading and manufacturing units with up to Rs 50 lakh turnover.

The composition scheme provides for a easier method of calculating tax liability and allows GST registration for dealers with turnover below the compounding cut-off.

The scheme has been introduced to reduce the administrative cost associated with collection of tax from small traders. Hence, businesses below a turnover of Rs 50 lakh can pay taxes at a defined floor rate of 1 percent, and manufacturers can pay at 2 percent, much lower than the GST rate. For services, it would be 5 percent.

Jaitley said the Council will have its 12th meeting on March 16 in which SGST and UTGST bills will be cleared.

“In a nutshell, compensation law was approved in last meeting (and) today (GST Council) approved the CGST and IGST law and in next meeting we will be approving the SGST and UTGST law which will then complete the legislative exercise and enable us to take these before Parliament.

“If they are approved, then four laws — Compensation Law, CGST law, UTGST law and IGST law — will get cleared by Cabinet and taken to Parliament in the forthcoming session. SGST law will go to state legislatures,” he said.

After this, the officers will start work on putting different goods and services in the four tax slabs of 5, 12, 18 and 28 percent.

“…The exercise is substantially arithmetical except in certain products where the Council will decide to grade it accordingly,” Jaitley said, adding it would be discussed at the 13th meeting of the Council.

The GST Compensation Law provides for compensating states that incur losses because of implementation of the Goods and Service Tax (GST) in first five years. The compensation will be funded by imposing cess on demerit and luxury goods.

“The maximum cess rate will be mentioned in the compensation law. But the applicability of it would be what the Council has decided so far,” Jaitley said.

GST, which will replace a plethora of central and state taxes, is a consumption-based tax levied on sale, manufacture and consumption on goods and services at a national level. Under it, C-GST will be levied by the Centre, S-GST by states and I-GST on inter-state supply of goods and services.

Various indirect taxes of central excise duty, central sales tax and service tax are to be merged with C-GST, while S-GST will subsume state sales tax, VAT, luxury tax and entertainment tax.

-March 4, 2017, New Delhi

 

Kejriwal moves to HC on Defamation case

DEFAMATION CASE: KEJRIWAL MOVES HC SEEKING JAITLEY’S FINANCIAL RECORDS

Kejriwal supremo in his application contended that he is seeking such financial records of Jaitley and his family members

 

 

kejriwal

 

Chief Minister Arvind Kejriwal today moved the Delhi High Court seeking details of bank accounts, tax returns and other financial records of Finance Minister Arun Jaitley who has filed a defamation suit against him.

The Aam Aadmi Party (AAP) supremo in his application contended that he is seeking such financial records of Jaitley and his family members from 1999-2000 to 2014-15, “to disprove” the claims made by the senior BJP leader against him and five other party leaders who were named in the defamation case.

Jaitley had filed the suit in 2015 seeking Rs 10 crore damages from Kejriwal, Raghav Chadha, Kumar Vishwas, Ashutosh, Sanjay Singh and Deepak Bajpai.

The AAP leaders had allegedly attacked Jaitley and his family members in various fora, including social media, over alleged irregularities and financial bungling in the Delhi and District Cricket Association (DDCA) of which he was the president for about 13 years till 2013.

Jaitley has already denied all the allegations of financial bungling in the DDCA during his tenure.

When contacted, the lawyers for Jaitley said that they are yet to examine the application and “in any case, it is extremely mischievous for defendant to circulate the application in the media before it is listed before the court. They are only further adding to their defamatory remarks”.

The application was filed through advocate Anupam Srivastava.

Jaitley, in December last year, had appeared before the high court to record his evidence in connection with the defamation case.

Apart from the civil defamation case, Kejriwal and the five AAP leaders are also facing a criminal defamation case proceedings in which they had attempted to get stayed, till the civil suit is decided, but were unsuccessful in the endeavour.

The high court had on July 12 framed issues against Kejriwal and others in the matter, notwithstanding their claim that they had not made any defamatory statement against him in the DDCA case.

In a civil suit, when one party affirms and other party denies a material proposition of fact or law, then only the issues arise.

Some of the issues framed by the court include whether Jaitley was entitled for any damage for the alleged defamatory statements made by AAP leaders and what should be the amount.

“Whether the statements which are in public domain are actionable or not,” the high court had said in one of its issues.

-25 February 2017 | PTI | New Delhi

 

Need bold reforms to transforms economy: Arun Jaitley

Need bold reforms to transform economy: Arun Jaitley

Need bold reforms to transform economy: Arun Jaitley

Finance Minister Arun Jaitley on Wednesday said that bold reforms are required to transform economy.

Speaking at the 8th edition of Vibrant Gujarat Summit in Gandhinagar, Jaitely said, “India needs bold decisions, time now to clean up table.”

Jaitley said that India was substantially a non tax-compliant society and demonetisation can lead to more formal banking transactions, thus nudging the society towards more compliance.

“We are substantially in terms of taxation, a non-compliance society. The narrowness of our tax base is realised by the data. Formal transactions can lead to higher revenues, and make us more compliant,” Jaitley said.

“Difficult decisions initially pass through difficult phases,” he added.

Jaitley said that excessive paper currency has its own vices, it leads to its own temptations.

Stating that GST and demonetisation will boost growth, the finance minister said that its impact will be seen this year. Talking on the demonetisation of high value currency notes, FM added, ” After transient impact, demonetisation will lead to cleaner and larger GDP”.

-January 11, 2017, New Delhi

 

India needs lower taxes, higher compliance: Arun Jaitley

India needs lower taxes, higher compliance: Arun Jaitley

The Finance Minister said he foresaw an India in the coming decades where voluntary compliance increases.

Union Finance Minister Arun Jaitley said India needs lower taxes to compete globally and that voluntary tax compliance by citizens should be encouraged by a friendly administration.

Mr. Jaitley was inaugurating professional training of the 68th batch of the Internal Revenue Service officers at the National Academy of Customs, Excise and Narcotics.

“We have lived through the last seven decades in India under the impression that if avoidance could be done of government revenue, then there was nothing immoral about this. That was considered commercial smartness,” he said. “Payment of legitimate taxes is part of a citizen’s duty, and non-payment is visited with severe consequences.”

According to the Minister, “extraordinarily high taxation rates in the past” had encouraged people to evade taxes. “What you need is lower level of taxation, to provide services more competitive in nature.” “Competition is not domestic, it is global. This is one important change you will witness while you will be in service.”

“We have lived through the last seven decades in India under the impression that if avoidance could be done of government revenue, then there was nothing immoral about this. That was considered commercial smartness,” he said. “Payment of legitimate taxes is part of a citizen’s duty, and non-payment is visited with severe consequences.”

Voluntary compliance

He said he foresaw an India where voluntary compliance increases. “Tax authorities are judged by the quality of what they write or decide. The level of fairness followed by authorities will define the quality of interpretation of tax laws by authorities. The voluntary compliance by citizens by payment of due taxes needs to be reciprocated by authorities through a tax-friendly administration.” Mr. Jaitley also told the trainees that tax officers should have high integrity.

-DECEMBER 26, 2016

India now needs lower level of taxation; Arun Jaitley

India now needs lower level of taxation to be globally competitive: FM Arun Jaitley

 India now needs lower level of taxation to be globally competitive: FM Arun Jaitley

India need to have lower level of taxation, Finance MinisterArun Jaitleysaid on Monday that lower tax levels will make it competitive globally.

He was addressing the officers at inauguration of professional training of 68th batch of Internal Revenue Service (IRS) (C&CE) Officers at National Academy of Customs Excise and Narcotics here.

“What you need is lower level of taxation, to provide services more competitive in nature. Competition is not domestic, it is global. This is one important change you will witness while you will be in service,” Jaitley said.

He also added that the central government is working in the direction of making tax-evasion impossible.

Emphasising that as the country needs to move to a tax-friendly environment, the Finance Minister said that the authorities need to be fair in interpreting the tax laws.

“Tax authorities are judged by the quality of what they write or what they decide. Level of fairness followed by tax authorities will define the quality of interpretation of tax laws by tax authorities. Voluntary compliance by citizens by payment of due taxes needs to be reciprocated by tax authorities by a tax-friendly administration,” he added.

Officers should have a high-level of integrity, honesty, sincerity and do hard work with eagerness to learn new things, he said.

Jaitley said that payment of taxes is the basis of development of an economy.

“In many economies while they develop, payment of taxes is part of citizens` duty,” he said.

Jaitley said that tax collectors would need to sharpen their skills as indirect taxes of the Centre and the states are eventually going to converge.

“Once they (taxes of centre and states) converge into one tax, the cooperation between the Centre and the state authorities itself will have to reach very high standards,” he said, while referring to the Goods and Services Tax (GST) which is on the anvil.

He further said that standardisation of practices, injection of technology and ability to detect any infringement of violation will require very large supervisory skills.

Observing that there are no grey areas in criminal or tax laws, Jaitley said stricter principles would need to be applied to detect violation.

“There are no grey areas in taxation laws. It’s either black or white. It’s either payable or not payable. And therefore to discover grey areas in fiscal laws is not possible, that’s the same principle that applies to criminal law also, either an offence has been committed or not committed,” the Minister said.

-December 26, 2016, Faridabad