India’s Q4 GDP grows at 7.7%

India’s Q4 GDP grows at 7.7%, touches 6.7% for entire 2017-18 

Showing signs of fully coming out of the shadows of demonetisation and Goods and Services Tax (GST), India’s Q4 GDP  of 2017-18 grew at 7.7 per cent, while for the full financial year 2017-18 it touched 6.7 per cent, official data showed here on Thursday.

India's Q4 GDPThe GDP growth during the third quarter of the fiscal was at 7 per cent. “GDP growth has been increasing continuously every quarter with growth of 7.7 per cent in Q4 of 2017-18. Shows that the economy is on the right track & set for even higher growth in the future. This is the Sahi Vikas under leadership of PM Narendra Modi & @ Arun Jaitley,” Finance Minister Piyush Goyal said via Twitter.

“GDP at 2011-12 prices in the fourth quarter (Q4) of financial year 2017-18 registered growth rate of 7.7 per cent as against 5.6 per cent , 6.3 per cent and 7 per cent respectively, in the first three quarters, Q1, Q2 and Q3 of 2017-18, a statement by Ministry of Statistics and Programme Implementation said.

Rapid growth in agriculture (4.5 per cent), manufacturing (9.1 per cent) and construction sectors (11.5 per cent) contributed to the overall growth of the GDP, the statement added.

“Q4 was expected to be good and that is reflected in the numbers. Rise in manufacturing and construction sectors indicated turnaround in the growth story, which will provide further boost to the economy going forward,” Economic Affairs Secretary Subhash Chandra Garg told reporters at a press meet while decoding the GDP numbers.

Asked about recent GDP growth downgrading by Moody’s from 7.5 per cent to 7.3 per cent, he said the government would not revise GDP estimate of FY19, which is at 7.5 per cent.

Chief Economic Adviser Arvind Subramanian, who also present at the press meet, said “the impact of GST is behind us.”

At the sectoral level, the growth rate of gross value added (GVA) in Q4 of 2017-18 for agriculture and allied sectors, industry and services sectors was estimated at 4.5 per cent, 8.8 per cent, and 7.7 per cent, respectively.

GVA includes taxes but excludes subsidies.

The statement said the sectors which registered growth rate of over 7 per cent are ‘public administration, defence and other services’ (10 per cent), ‘ trade, hotels, transport, communication and services related to broadcasting’ (8 per cent) and ‘electricity, gas, water supply & other utility services’ (7.2 per cent).

The growth in the ‘agriculture, forestry and fishing’, ‘mining & quarrying’, ‘manufacturing’, ‘construction’, and ‘financial, real estate and professional services’ is estimated to be 3.4 per cent, 2.9 per cent, 5.7 per cent , 5.7 per cent and 6.6 per cent, respectively, the statement said.

It said: “The Gross National Income (GNI) at 2011-12 prices is now estimated at Rs 128.64 lakh crore during 2017-18, as against the previous year’s estimate of Rs 120.52 lakh crore. In terms of growth rates, the Gross National Income is estimated to have risen by 6.7 per cent during 2017-18, in comparison to the growth rate of 7.1 per cent in 2016-17.”

The per capita income in real terms (at 2011-12 prices) during 2017-18 is estimated to have attained a level of Rs 86,668 as compared to Rs 82,229 for the year 2016-17. The growth rate in per capita income is estimated at 5.4 per cent during 2017-18, as against 5.7 per cent in the previous year.

Reacting to the GDP numbers, secretary general of Assocham, D.S. Rawat, said: “While Indian economy is in cyclical recovery led by both investment and consumption, however, higher oil prices and tighter financial conditions will weigh in on the pace of acceleration.”

“As India imports over two-thirds of its crude requirement, any surge in crude prices has the potential to upset growth projection,” he added.

– IANS |01 June 2018 |  New Delhi

Economic Survey Draws Attention to 10 New Economic Facts

Economic Survey Draws Attention to 10 New Economic Facts on Indian Economy 

The Economic Survey presented by the Union Finance Minister Shri Arun Jaitley in Parliament today has relied upon analysis of the new data to highlight ten new economic facts:

 

1.      Goods and Services Tax (GST) has given a new perceptive of the Indian economy and new data has emerged.  There has been a fifty percent increase in the number of indirect taxpayers. There has also been a large increase in voluntary registrations, especially by small enterprises that buy from large enterprises wanting to avail themselves of input tax credits.

 The Survey also stated that fears of major producing states that the shift to the new system would undermine their tax collections have been allayed as the distribution of the GST base among the states got closely linked to the size of their economies.

Similarly, there has been an addition of about 18 lakh in individual income tax filers since November 2016.

2.      India’s formal sector, especially formal non-farm payroll, is substantially greater than what it currently is believed to be. It became evident that when “formality” was defined in terms of social security provisions like EPFO/ESIC the formal sector payroll was found to be about 31 percent of the non-agricultural work force. When “formality” was defined in terms of being part of the GST net, such formal sector payroll share was found to be 53 percent.

3.      For the first time in India’s history, data on the international exports of states has been  dwelt in the Economic Survey.  Such data indicates a strong correlation between export performance and states’ standard of living.  States that export internationally and trade with other states were found to be richer.  Such correlation is stronger between prosperity and international trade.

4.      India’s exports are unusual in that the largest firms account for a much smaller share of exports than in other comparable countries. Top one percent of Indian firms account only for 38% of exports unlike in other countries where they account for substantially greater share – (72, 68, 67 and 55 percent in Brazil, Germany, Mexico and USA respectively).  Such tendencies were also found to be true for the top five or ten per cent of the Indian companies.

5.      It was pointed out that the Rebate of State Levies (ROSL) has increased exports of ready-made garments (man-made fibers) by about 16 per cent but not of others.

6.      The data highlighted another seemingly known fact that Indian society exhibits a strong desire for a male child.  It pointed out that most parents continued to have children until they get number of sons.  The survey gave details of various scenarios leading to skewed sex ratios and also gave a comparison on sex ratio by birth between India and Indonesia.

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7.      The survey pointed out that tax departments in India have gone in for contesting against in several tax disputes but also with a low success rate which is below 30 per cent. About 66 per cent of pending cases accounted for only 1.8 per cent of value at stake.   It further stated that 0.2 per cent of cases accounted for 56 per cent of the value at stake.

8.       Extrapolating the data the survey indicated that growth in savings did not bring economic growth but the growth in investment did.

9.      The survey mentions that collections of direct taxes by Indian states and other local governments, where they have powers to collect them is significantly lower than their counterparts in other federal countries. A comparison has been given between ratios of direct tax to total revenues of local governments in India, Brazil and Germany.

10.  The survey captures the footprints of climate change on the Indian territory and consequent adverse impact on agricultural yields.  Extreme temperature increases and deficiency in rainfall have been captured on the Indian map and the graphical changes in agricultural yields are brought out from such data.  The impact was found to be twice as large in un-irrigated areas as in irrigated ones.

– PIB Delhi, 29 JAN 2018

Arun Jaitley hopeful of GST Bill in ensuing Budget session

Arun Jaitley hopeful of GST Bill in ensuing Budget session

After hitting the Congress wall in two successive Parliament sessions, Finance Minister Arun Jaitley today exuded confidence that landmark GST Bill will be passed in the next session as numbers in the Rajya Sabha will tilt in favour of the new indirect tax regime.

“The next session is going to be extremely important. And half way through the next session, the numbers of the Upper House are also going to change. So I am reasonably optimistic, as far as the next session is concerned, that we may be able to push it through,” Jaitley said.

Parliament’s Budget session will start in last week of February.

Addressing the officer trainees of the Indian Revenue Service, he said there is virtually a consensus for GST among political parties and “everybody supports it”.

“…Parliamentary obstructionism has prevented it from happening in the last two sessions”.

The Goods and Services Tax (GST) that will subsume all indirect taxes like excise duty, service tax and sales tax into one uniform rate, is stuck in Rajya Sabha where main opposition Congress wants three changes.

Congress stalled the passage of the Constitution Amendment Bill in last two sessions, derailing government’s plan to roll out GST from April 1, 2016.

Jaitley said the concept of GST was first conceived in 2006 and the Constitution Amendment Bill was first introduced in 2011, but the UPA government could not build a consensus with the states.

“The GST is already delayed. Ideally it should have come much earlier,” he said, adding that the tax regime will render India into one big market, make tax evasion difficult, ensure seamless movement of goods and services and push up GDP.

Jaitley said the NDA Government after coming to power built broad consensus among the states and following that brought the Constitution Amendment Bill again in Parliament.

“I continue to discuss with the states and with all political groups, so that we can ensure its safe passage in the Upper House,” he said.

The idea of GST was born in the earlier part of the last decade, he said. “Though people have been discussing this since the 1990s, radical idea of this kind takes time before a consensus can develop”.

He said after the Constitution Amendment Bill is passed in Parliament, there are three more legislations – Central GST (CGST), State GST (SGST) and Integrated GST (IGST) – which are required to be passed.

“And those have been worked out. We are in the stage of readiness as far as those legislations are concerned which will have to be passed then by the Central Government and by the State governments,” he said.

-02 January 2016 | PTI | New Delhi

Govt set to end taxation woes as roadmap ready for exemptions

Govt set to end taxation woes as roadmap ready for exemptions

In a bid to resolve various taxation issues, including Goods and Services Tax (GST), the Government has prepared a roadmap to end taxation pain and will come out with a list of exemptions in the next few days. As part of the plan, the Government has decided its first step to gradually reduce corporate tax to 25 per cent in the near future and the first tranche of which will be announced in the Budget in February.

“I have announced a roadmap for direct taxation to bring corporate tax down to 25 per cent by phasing out some of those exemptions. We are going to put in the public domain in the next few days some of those exemptions that we intend to phase out in the first round. The first tranche of reduction of corporate tax will be announced in the Budget,  Finance Minister Arun Jaitley said on Wednesday while participating in an interactive session at the ‘National Strategy Day in India’ organised by the World Economic Forum (WEF) and the Confederation of Indian Industry (CII).

“The signs of growth are visible and promised to carry out legislative reforms by bringing in a bankruptcy law and modifying the Specific Relief Act,” Jaitley added.

The Finance Minister in his last Budget in February had announced the Government’s intention to reduce corporate tax to 25 per cent from 30 per cent over the next four years. “The Government has been able to address various tax legacy issues, including those pertaining to retrospective tax amendment, though two-three problems remain. Systematically, one by one, we have been resolving taxation issues. That fear of retrospective taxation has gone. Two-three of those problems remain and they remain because of legal reasons. I have publicly announced that we are looking for processes by which we can resolve some of these,” Jaitley said.

On GST, Jaitley is of view that ‘considerable headway’ has been made and he would discuss the issue with the Congress again to ensure passage of the Bill in the Rajya Sabha. “I am willing to discuss with the Congress Party. I have so far discussed with their leaders and I can’t find, at least, conceptual opposition to it. I will once again speak to them and try to make them see reason,” he said.

Talking about growth prospects, Jaitley said the increased indirect tax collections suggest economic recovery. “I can now see trickles of growth. One of the greatest positives is a huge increase in indirect tax revenues,” he said, adding that the collection grew 36.5 per cent during the first seven months of the current fiscal ended October 31.

After discounting additional tax measures, the growth works out to 13.5 per cent. “Excise duty, customs, service tax on a year-on-year basis increased 13.5 per cent. With additional revenue measures, it is much more. This is a real increase. This actually indicates that manufacturing itself is picking up,” he said.

Referring to challenges on account of global problems like devaluation of Chinese currency and possibility of a Fed rate hike, Jaitley said, “There are some crises which impact us much lesser, some impact us much directly. Our strategy has been to strengthen the basis of our economy so that impact of the crisis is transient and temporary,” he said.

The Minister spoke of an improvement in macroeconomic data, going forward, which will enhance the country’s ability to deal with global problems. “The impact of Fed rate hike certainly would be there. I think rather than actual change, its suspense which has been impacting us for the last few years,” he added.

On the bankruptcy law, which will make it easier for companies to exit businesses, Jaitley said the endeavour would be to introduce the Bill in the next session of Parliament.

The committee, which has been assigned the task of drafting the bankruptcy law, will be submitting its report in the next couple of days.

The Government, Jaitley said, is working on updating certain other legislations, especially the Specific Relief Act. Besides, the Government has come out with an ordinance to fast-track dispute resolution through arbitration.

To queries on power sector reforms, Jaitley said, “In the next couple of days, we are likely to announce some major policy decisions in that regard to take the sector out of stress. Once that happens, I am quite sure the private sector will also start participating. That is an infrastructure issue, which we are going to be addressing literally in the next couple of days, if not in the next couple of hours itself.”

The efforts, he added, would be to address financial problems of the distribution companies, which had to suffer on account of reluctance of state governments to raise tariff.

On relaxation of the land acquisition law, Jaitley said states will be encouraged to come up with their own laws which will be ratified by the Centre. “There is a change in strategy that let the states bring about any change. The first state has already sent its proposal to the Centre, we have accepted it and they have notified it,” Jaitley said.

 -05 November 2015 | PNS | NEW DELHI