GST Council meet: Extension of compensation cess to states to be in focus

 

The much-anticipated 47th Goods and Services Tax (GST) Council meeting, with its attention on GST rate rebuilding and augmentation of GST remuneration cess, will presently perhaps be held in the principal seven day stretch of May, when the Union Finance Minister Nirmala Sitharaman gets back from her 10-day visit to the US in the wake of going to the World Bank-IMF meeting recently.

Among the numerous things on the Council's plan, the expansion of the GST remuneration cess to states could end up being an antagonistic issue assuming the public authority won't agree to the solicitation, given its vociferous interest from a few resistance rules states.

The states have asked the Center to broaden the five-year remuneration period under the GST regulation before its end by June-end. Any transition to expand the GST remuneration cutoff time, nonetheless, will require an alteration to the Indian Constitution, which should be taken up in the following parliamentary meeting in light of the fact that the Constitution's 101st amendment, states must be made up for quite a long time, beginning 2017....Read More

MTaI seeks reduction in GST on medical devices, cold chain units

 

The Medical Technology Association of India (MTaI) has urged the government to reduce GST and customs duties on medical devices, cold chain units and spare parts used in the healthcare appliances in the upcoming Union Budget.

The organisation noted that the reduction of GST on medical devices and medical cold chain from 12 per cent to 5 per cent would lead to the expansion of the healthcare sector through reduced costs improving patient accessibility, MTaI said in a statement.

The organisation, which represents research-based medical technology companies, also sought streamlining of Customs Duty and GST on spare parts.

Currently, the custom duty and GST on spare parts of medical equipment are currently charged at a higher rate than the equipment itself, it added.

MTaI has also suggested amendment in the Health Cess ad valorem imposition by removing the word 'Ad-valorem' so that the cess is implemented on Basic Customs duty (BCD) rate only.

Read More on Budget 2021

Atmanirbhar Bharat 3.0: FM announces measures to boost employment

 

Account Minister Nirmala Sitharaman on Thursday declared another arrangement of improvement measures to help work under Atmanirbhar Bharat Rozgar Yojna to boost the formation of new business openings. The new declarations target profiting organizations and people, who lost their positions because of Covid-19 instigated lockdown.

Under the plan, if organizations acquire workers who had lost their positions between March 1, 2020 and September 30 or new representatives who get enrolled in EPFO they will be qualified for benefits under the new declaration. To profit of befits under this plan, the associations with less than 50 representatives should recruit in any event two workers, and those with in excess of 50 representatives should employ at least 5.

Here are the other significant declarations made by the Finance Minister

1. Expansion of Rs 3 trillion Emergency Credit Line Guarantee Scheme till March 31, 2020
2. Declaration of ECLGS 2.0 for 26 focused on areas distinguished by Kamath Committee
3. Rs 1.46 trillion lift for assembling Production Linked Incentives (PLI) for 10 boss areas
4. Rs 18,000 crore extra cost endorsed for PM Awas Yojna
5. Unwinding of execution security on contracts from 3% to 5% to help land and foundation

The FM began the public interview by citing the most recent monetary information. "A solid recuperation is arising in the economy and the Covid-19 cases have descended. A few markers hint that the economy is improving with energy utilization developing at 12 percent year-on-year, GST assortment has contacted 1.05 trillion, every day railroad cargo weight has grown 20% year-on-year among others," the account serve said.

The pastor additionally said that the FDI inflow among April and August was at $35.37 billion, a 13 percent rise year-on-year. Markets are at a record high while market capitalisation is likewise at record levels, added the FM.

The FM advised about advancement made under the Atmanirbhar Bharat activity. The One Nation - One Ration Card conspire has seen interstate conveyability and been executed in 28 states, said the FM. In the interim, over 2.6 million credit applications have been gotten under PM Street Vendor Atmanirbhar Bharat Nidhi and Rs 1373.33 crore advances endorsed in 30 states and six association domains. Work has additionally started on the entrance for transient specialists.

Capex measures to deliver the goods rather than the consumption booster

 

The financial declarations made by the Finance Minister (FM) on Monday are a mix of frontloading of utilization use with some positive capex spending by both the focal and state governments. The methods being utilized for the two targets are very unique, accordingly dilutedly affecting the monetary adjusts. Generally the effect will be positive, however the degree will be restricted.

The more forceful move is on the capex where the states and focus would spend more on ventures that have been sketched out in explicit territories like streets, metropolitan turn of events, guard and water flexibly. States have been the given alternative of utilizing these assets to make installments for existing tasks, just as for speeding up the equivalent. Consequently the Rs 12,000 crore that is distributed to them to be reimbursed more than 50 years with no premium may not really go in for new activities – however would add to the venture stream. Likewise, the per capita state portion may not be enormous to change the speculation structure in many states, and such assets might be exceptionally helpful in finishing slowed down undertakings by virtue of absence of assets. As it is connected to consummation before March 2021, a littler extent may stream to new undertakings.

The middle is to spend Rs 25,000 crore on venture, which would be more straightforward and help the related businesses. In the event that the middle builds its capex from Rs 4.12 trillion to Rs 4.37 trillion, there could be positive effect on ventures like steel, concrete, capital merchandise and so on. The joined effect would be around 0.2 percent of the (GDP) and to this degree the financial shortage would increment.

The utilization push isn't generally any new cash in the framework, however a situation where government or public segment undertaking (PSU) workers are being boosted to spend their leave travel concession (LTC) on purchaser products with specific conditions. It is a current advantage which is being channelised to utilization, which again is a choice and not required. Workers could want to utilize the office for movement as and when it would be conceivable – perhaps a year down the line as opposed to go through the cash now.

Coronavirus impact: Amit Mitra writes to FM Sitharaman, demands GST dues

Facing aggravated fiscal woes due to the lockdown, states have demanded an immediate release of their pending goods and services tax (GST) dues by the Centre, besides a hike in the borrowing limit. To tide over the crisis, states have sought an increase in the fiscal responsibility and budget management (FRBM) limit to 4 per cent, from 3 per cent.
With over four months of GST compensation of more than Rs 40,000 crore still pending, some states even plan to drag the central government to the Supreme Court.
West Bengal Finance Minister Amit Mitra wrote a letter to Union Finance Minister Nirmala Sitharaman on Thursday, urging for an immediate release of pending compensation dues.
Compensation cess, to be released on a bi-monthly basis, is pending for about five months. The central government had released 65 per cent of the compensation due for October and November. The central government is of view that it will only release compensation out of what has been collected by way of levy of cess on luxury and sin items like automobiles, tobacco, and aerated drinks.
“The spread of Covid-19 has created a havoc to the state finances… non-receipt of GST compensation from the central government has further aggravated the already stretched state finances,” Mitra said in the letter. West Bengal's pending dues of Rs 2,875 crore include compensation for some part of October and November and months till March.
Mitra said a “serious cash management situation and fiscal problem” would arise in the coming months with GST revenues, which contribute up to 70 per cent of the state's revenues, getting locked up due to deferment of GST return filing dates.
States have demanded an increase in borrowing limit even if fiscal deficit reaches 4 per cent of state GDP, against the norm of 3 per cent, with most states planning to front-load the exercise to the first quarter of FY21.

Bihar Deputy Chief Minister Sushil Modi said the state had demanded a hike in FRBM limit to 4 per cent and an additional 1 percentage point increase in the market borrowing limit.

Doubling farmers' income by 2022: Status check on govt's ambitious plan

Budget 2020
Spending limit 2020 lands in the midst of authentic evaluations that India's general economy will develop at a 11-year-low of 5% and its farming and associated division at 2.8%, 0.1 rate point not exactly a year ago. Agribusiness supports 600 million Indians, a large portion of the nation's populace, however creates 18% of the total national output.
Could the window be shutting on the Bharatiya Janata Party-driven government's guarantee to twofold ranchers' pay and patch up the farming economy by 2022? We look at some official declarations and approaches that fundamentally influence rancher profit to discover an answer- - the draft seeds charge, salary move conspire, least help value (MSP), rancher maker associations (FPOs) and zero-spending common cultivating (ZBNF).
MSP update still bamboozles ranchers: Experts
Least help costs (MSP) are critical to shielding ranchers from trouble offer of homestead produce and giving verifiable signs to empower certain yields.
As the horticulture segment pondered low profitability, the administration reported an expansion in the MSP of kharif (storm) and rabi (winter) crops for the 2019-20 season. The recipe utilized carried the MSPs to "in any event 1.5 occasions of the all-India weighted normal Cost of creation (CoP)" of the yields concerned.

The equation was condemned by agribusiness specialists for scamming ranchers. The resultant costs fell beneath those landed at utilizing the equation prescribed by the M S Swaminathan Committee, said R Ramakumar, NABARD seat teacher at the School of Development Studies at the Tata Institute of Social Sciences, Mumbai. The Swaminathan board had suggested a MSP half more on the genuine expense of cultivating, including the cost of seeds, composts, enlisted work, family laborers' own remuneration, and land lease....READ MORE

Budget 2020: Healthcare sector allocation rises to Rs 69,000 crore

Budget 2020
Medical clinic and medicinal services segment stocks were in center after Finance Minister Nirmala Sitharaman declared the Center's arrangements to grow the administration's lead medical coverage conspire Ayushman Bharat-Pradhan Mantri Jan Aarogya Yojana (PMJAY). The FM reported an assignment of Rs 69,000 crore for the social insurance part in the 2020-21 Union Budget, marginally up from a year ago. Of this, around Rs 6,400 crore would be for AB-PMJAY plot, level from a year ago.
In 2019-20 the FM had reported a Rs 62,659.12 crore cost for the human services segment.
Other than dispensing Rs 6,400 crore for the plan, the FM additionally said that the AB-PMJAY plan would be extended by setting up more medical clinics in the level II and III urban areas under the open private-association (PPP) course. Continues from charges on restorative gadgets would be utilized for advancement of hospitals.The government will give practicality hole financing to the procedure. Portions of Apollo Hospital Enterprises, Aster DM Healthcare were insignificantly down around evening subsequent to picking up at first toward the beginning of the day.
"Suitability hole subsidizing window to be set up to cover clinics, with need given to optimistic regions that don't have emergency clinics empanelled under Ayushman Bharat. The administration will open medical clinics in level II and level III urban areas secured under optimistic locale conspire, which despite everything don't have an Ayushman-empanelled emergency clinic," Sitharaman said.

On-boarding of emergency clinics for the plan has been a lasting test for the plan. At present, around 16,000 emergency clinics are empanelled under the plan of which around 50 percent are private part medical clinics.....READ MORE

Budget 2020: Govt looks to increase turnover of GeM portal to Rs 3 trillion

Budget 2020
Account Minister Nirmala Sitharaman on Saturday said the administration hopes to expand the turnover of the trade service's open acquirement gateway GeM to Rs 3 trillion. The service propelled Government e-Marketplace (GeM), an online stage for open acquirement, in August 2016 with the goal of making an open and straightforward obtainment stage for government divisions.
"Pearl is pushing forward for making a brought together obtainment framework in the nation for giving a solitary stage to acquisition of products, administrations and works. It additionally has an extraordinary open door for MSMEs. It is proposed to take its turnover to Rs three lakh crores," she said while exhibiting the Budget for 2020-21.
She said that as of now 3.24 lakh merchants are enlisted on this stage. Open acquirement worth Rs 50,000 crore is relied upon to occur through GeM during 2019-20, up from Rs 33,366 crore in the earlier year. The pastor likewise proposed to give about Rs 27,300 crore to advancement and advancement of industry and trade for 2020-21. At present, government offices, services, open division units, state governments, and Central Armed Police Forces are permitted to help out exchanges through this entryway.
As per GeM, 3,24,225 venders and specialist organizations have enlisted with the entryway so far to sell 18,50,045 items and 20,470 administrations. The legislature has made it required for all the offices and services to source merchandise and enterprises from its e-commercial center.

The gateway gives a wide scope of items from office stationery to vehicles. Cars, PCs and office furniture are as of now the top item classes. Administrations, including transportation, coordinations, squander the executives, web throwing and expository, among others, are recorded on the gateway....READ MORE

No fresh investment, redemption for mutual fund investors on Budget day

Budget 2020
Shared finances financial specialists won't have the option to make crisp speculation or sell their units on the Budget day since membership and reclamation are shut on Saturdays and Sundays, industry authorities said.
Shared supports memberships and recoveries won't be allowed on the grounds that all the reserve houses in their plan data reports have announced Saturday and Sunday as "non-business day".
Thus, shared supports speculators won't have the option to partake like others members in financial exchanges. On Saturday, stock trades are open however shared assets are shut for membership and recoveries, said Omkeshwar Singh, head of common reserve circulation business at Samco.
Financial specialists through value and subordinates can partake yet speculators through shared supports won't have the option to take an interest, he included. If there should be an occurrence of any change in non business day, finance houses need to give notification to speculators and distribute notices in driving papers which is a protracted procedure.
Securities exchanges will be open for typical exchanging on February 1, Saturday, when the Union Budget will be exhibited by Finance Minister Nirmala Sitharaman.
Exchanging would be directed during typical hours from 9 am to 3.30 pm.

As indicated by business sectors sources, the choice has been taken after solicitations made right now advertise members as Budget contains a few market-moving declarations. In 2015, stock trades were open for exchanging on February 28, Saturday, when at that point Finance Minister Arun Jaitley had displayed the Budget...Read More

India Inc's low confidence reason for drop in investments: Analysts

Current Affairs
Starting on Monday, YouTube will overhaul its systems to comply with a landmark privacy ruling, a move that could dent revenue for the Google video giant and thousands of its creators.
Alphabet Inc.’s Google settled with federal regulators in September for violating laws on collecting data from minors, and YouTube agreed to a series of changes. Videos designed as “made for kids” would be stripped of targeted ads, which fetch higher prices, and other valuable features, such as user comments and live chats.
The Federal Trade Commission, which fined Google over the Children’s Online Privacy Protection Act, or COPPA, has given broad directives about what it considers child-directed video, including clips with popular animations and kids play with toys. Individual video creators will face fines for violating COPPA going forward, which has sparked panic.“YouTube now treats personal information from anyone watching children’s content on the platform as coming from a child, regardless of the age of the user,” the company wrote in a Monday blog post.
These changes have been expected for months, but their impact is still unknown. Google has warned that some video creators could lose a bulk of their ad sales. The company hasn’t shared its sales or how much of its massive catalog comes from videos “made for kids.”“We’re committed to helping creators navigate this new landscape and to supporting our ecosystem of family content,” YouTube said.
“We’ll share more in the coming months.”

In addition to the restrictions on videos, YouTube will begin placing a text below “made for kids” videos directing viewers to YouTube Kids, an app that’s designed for children. The app has a much smaller audience than the main YouTube service....Read More

GST Council unlikely to back tax cuts for automobile sector: Reports

International News

The goods and services tax (GST) panel is unlikely to approve lowering the tax for the auto and allied components sector this week, as a study has warned of major revenue losses, two government officials said.
A government study, attached to the agenda of a Sept. 20 GST panel meeting, has said the total annual revenue loss could be as much as Rs 50,000 crore ($6.95 billion), if the panel decided to lower tax rates for the auto sector to 18% from 28%.
Meanwhile, state officials in Kerala, Punjab and West Bengal say they are also opposed to any cut in tax rates in the autos sector, or even consumer goods, because of lacklustre tax collections this fiscal year.
In the April-July period, total tax revenues of 20 states fell 7% to Rs 4.9 trillion compared with the same period last year.
Some states were particularly hard hit, with data showing Andhra Pradesh, Rajasthan and Punjab tax collections plunged 59%, 35.5% and 12.5%, respectively.
"I will oppose any reduction for the simple reason that it won't be revenue neutral," said Thomas Isaac, finance minister of the southern state of Kerala.
The auto sector, which has been reeling from the worst slump in nearly two decades, has pushed for a lowering of tax rates at the Sept 20 GST panel meeting, in a bid to revive vehicle demand.
The GST panel is chaired by the finance minister and all state finance ministers are members. The panel makes decisions by vote.

 Still, those states ruled by the Bharatiya Janata Party may be willing to support a GST cut if the government pushes such a proposal...Read More

As animal spirits sag, FM's announcements may fall short of spurring growth

Current Affairs

Weakness in India’s investment and consumption activity worsened in July, with economic growth showing little signs of recovery from a five-year low.
A gauge measuring overall activity moved one notch toward weaker territory, as six of the eight high-frequency indicators compiled by Bloomberg fell from the previous month. Car sales slumped the most in almost two decades and latest data showed infrastructure sector output grew at the slowest pace in more than four years.
The weakening came about a month before Finance Minister Nirmala Sitharaman announced a slew of steps to revive Asia’s third-largest economy. While the measures boosted market sentiment, they are expected to fall short of spurring growth.
The dashboard measures “animal spirits” — a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action — and uses the three-month weighted average to smooth out volatility in the single-month readings.
Here are the details of the dashboard:
Business Activity

 After contracting in June, India’s purchasing managers index for services rebounded into growth territory in July. The index rose to 53.8 from 49.6 in June, with the upturn in business activity linked to the budget presented in early July and improved work orders. A reading above 50 indicates expansion.Manufacturing activity also picked up, a separate PMI survey showed, pushing the composite index to an eight-month high of 53.9 in July from 50.8 in June...Read More

Auto LPG body asks govt to cut GST, offer level playing field to spur usage

Current Affairs

The government should reduce GST on LPG used in automobiles to 5 per cent to provide the environment-friendly fuel a level playing field and spur its usage, the association of auto LPG has demanded.
The Indian Auto LPG Coalition (IAC) wants the government to treat auto LPG at par with any other clean fuel like CNG and provide similar fiscal regime as a mix of such fuels would be needed to curb urban pollution in the world's fastest-growing economy, its director-general Suyash Gupta said.LPG is a clean fuel like compressed natural gas (CNG) and has cost advantages over diesel or petrol. Auto LPG is used in 70 countries world over as compared for 4-5 nations including Iran, India, and Pakistan using CNG as automobile fuel.
Auto LPG requires a lighter cylinder than CNG and takes almost similar time as petrol/diesel for a refill, he said.
"We have written to Union Finance Minister Nirmala Sitharaman as well as all members of the GST Council for considering reducing GST tax on auto LPG to 5 per cent from 18 per cent currently," he said.LPG used for domestic purposes is taxed at 5 per cent and high incidence of tax for its usage in automobiles provides an incentive for illegal diversion, he said.
IAC also sought a reduction in GST on auto LPG kits to 5 per cent from 28 per cent."Providing policy level support and enabling a quicker growth of environment-friendly fuels is imperative now and just not an optional issue anymore," he said.

 He said, while the government is providing Rs 10,000 crore subsidy to push for sale of electric vehicles, auto LPG does not need any subsidy allocation - just a level playing field through policy interventions such as lowering GST...Read More

With no major fiscal support, govt's growth measures seen falling short

Current Affairs

India’s steps to boost financial market sentiment and support businesses could fall short of shoring up growth in Asia’s third-largest economy.
Finance Minister Nirmala Sitharaman announced a number of measures on Friday to help re-ignite an economy that’s slowed sharply on the back of weak consumption and a deteriorating global environment. However, she didn’t outline any major fiscal support -- as businesses had been calling for -- focusing instead on steps to spur foreign funds and lending.
Economists, finance leaders, industry executives and local media raised questions about the effectiveness of the measures, which included scrapping a tax on foreign funds, allowing concessions on vehicle purchases and hastening infusion of an already announced 700 billion rupees ($9.8 billion) of capital in state-run banks.
“These are short-term palliatives,” said Priyanka Kishore, head of India and Southeast Asia economics at Oxford Economics in Singapore. “What India needs is structural reforms to take growth to above 7 per cent.”
Consumers have cut spending in India as they turn more pessimistic about jobs amid a slowdown in growth to a five-year low.
Data due this week is likely to show the economy expanded 5.7 per cent in the quarter ended June, below the 5.8 per cent pace seen in the previous three months.
The withdrawal of the additional tax on foreign portfolio investors may help to spur sentiment in the equity markets. Overseas investors pulled out more than $3 billion from the nation’s stock and bond markets since July.

 But businesses had been hoping for more...Read More

Budget 2019 to boost investments without any comprise in fiscal goals: FM

International News

Finance Minister Nirmala Sitharaman Friday said the big picture presented in the Budget is backed with a plan to increase investment without compromising on the fiscal consolidation roadmap.
Replying after a general discussion on the Union Budget 2019-20 in the Rajya Sabha, the minister said, "Comprehensive steps" have been envisaged for the next 10 years.
Sitharaman said the mid-term target of the government is to make India a $5 trillion economy.
The target of putting India in the $5 trillion club is not "without a plan", she said and listed out measures proposed in the Budget.
To boost investment, she said FDI norms would be further liberalised, extension of lower corporate tax to companies with Rs 400 crore turnover, incentives for boosting use of electric vehicles in the country.
She further said the government has expressed intention to invest Rs 100 trillion in the infrastructure sector over the next five years.
Also, the Budget reflects firm commitment to boost investment in the country.
In the Budget presented by Sitharaman in the Lok Sabha on July 5, the government said it aims to mop up Rs 16.49 trillion in net taxes during 2019-20, up 11.13 per cent over previous year.

 She maintained that every projection of revenue and expense in Budget 2019-20 is realistic and has been adequately provided for.

Full text of Finance Minister Nirmala Sitharaman's Union Budget 2019 speech

Budget 2019

Finance Minister Nirmala Sitharaman Friday announced a slew of measures in her maiden Budget 2019-20 speech in the Parliament today. Among key announcement, Sitharaman said the government will launch an inter-opearable ATM-like One Nation One Card for pan-India travel, new rental laws for affordable housing, interest subvention scheme for MSMEs and women.
Here's what Finance Minister Nirmala Sitharaman said in her Budget 2019 speech:
The recent election which brought us to this august House today, was charged with brimming hope and desire for a bright and stable New India. Like never before, India celebrated its democracy by coming out to vote in large numbers, like never before. Voter turnout was the highest at 67.9%. Every section – young, old, first time voters, voters since the first General Election, women – all turned up to stamp their approval of a performing Government. Through their unambiguous and firm mandate they have reaffirmed “putting the nation first”. The people of India have validated the two goals for our country’s future: that of national society and economic growth.
The first term of Hon'ble PM Narendra Modi-led-NDA-Government stood out as a performing Government, a Government whose signature was in the last mile delivery. Between 2014-19, we provided a rejuvenated Centre-State dynamic, cooperative federalism, GST Council, and a strident commitment to fiscal discipline. We had set the ball rolling for a New India, planned and assisted by the NITI Aayog, a broad based think tank. We have showed by our deeds that the principle “Reform, Perform, Transform” can succeed.

 Mega programmes and services which we initiated and delivered during those 5 years will now be further accelerated...Read More

Budget 2019: Key takeaways of Nirmala Sitharaman's maiden budget speech

Budget 2019
Finance Minister Nirmala Sitharaman on Friday said that the country is well within its capacity to become a $5 dollar economy in the next five years.
Here are the key takeaways:

• From $1.85 trillion in 2014, the economy has reached $ 2.7 trillion

• We are well within our capacity to reach $ 5 trillion in the next few years

• Economy will grow to become a $3 trillion economy in the current year itself

• Reform, perform, transform

• India Inc is India's job creators

•   Between 2014 and 2019, we provided a rejuvenated centre-state dynamics, cooperative federalism, GST council and strident commitment to fiscal discipline.

Economic Survey bats for a 'rationalised' tax regime to boost start-ups

Budget 2019

Acknowledging the contribution of start-ups in growth of the economy and job creation, the Economic Survey batted for a “rationalised” tax regime and “predictability of policy action” for them in order to spur innovation and attract private investment.
The policy document, which was tabled in Parliament on Thursday, said the “outlook of the Indian economy appears bright with prospects of a pick-up in growth in 2019-20 on back of the pick up in private investment and robust consumption growth". It said the government is playing a proactive role in investment promotion through a liberal foreign direct investment (FDI) policy. During 2018-19, total FDI equity inflow stood at $44.36 billion as compared to $44.85 billion during 2017-18. According to government data, start-ups raised $7.5 billion in 2018, a majority of which was foreign capital, an increase of 74 per cent over the previous year. India now has 10 unicorn start-ups, collectively valued at over $35 billion, it said.
The Survey said that in order to further catalyse the growing ecosystem, taxation for start-ups must be rationalised.
“Tax policy and its implementation for start-ups must be rationalised to foster innovative investments in the Indian economy. Countries across the world recognise the need to evolve a tax system that can foster innovation.”

 It also suggested a re-look at capital gains tax, levied on profits from the sale of shares in unlisted companies. The high rate of capital gains tax in India — 30 per cent (for short-term holding) and 20 per cent (long-term holding) — has pushed some Indian start-ups to shift their headquarters abroad, mainly in Singapore where capital gains tax is nil. In this case, investors and promoters of these start-ups skip paying capital gains to India, resulting in a loss to the exchequer. It is also a deterrent to local M&As...Read More

Economic Survey 2019: Aadhaar-linked payments checked leakages

Budget 2019
In a bid to rev up the economy, the government might enhance the Start-Up fund in the Budget 2019-20.
According to highly-placed sources, the government is likley to come good on its poll promise of enhancing the fund to Rs 20,000 crore.
The Start-up India programme had created the 'Fund of Funds for Startups (FFS)' with a corpus of Rs 10,000 crore to provide support for Start-ups, over a period of XIV and XV Finance commission cycles.
The Fund was set up with the approval of Union Cabinet in June 2016 and is managed by Small Industries Bank of India (SIDBI) and contributes to the corpus of Alternate Investment funds (AIFs) for investing in equity and equity linked instruments of various start-ups.
Even the Economic Survey which was presented on Thursday highligthed the importance of the segment.
It recommended that the government rationalise the tax policy and its implementation for start-ups to foster innovative investments in the Indian economy.

 "Several studies have also suggested that capital gains tax can have significant economic consequences for individual investors in terms of its lock-in effects and associated deterring incentives to use capital gains into riskier investments," the survey said...

Investment-driven growth model must have aggressive export strategy: Survey

Budget 2019

Any investment-driven growth model must have an aggressive export strategy, the government said in its Economic Survey of 2018-2019.
The onus of rescuing economic growth has been placed squarely on exports, since the share of consumption in gross domestic product (GDP) remains constrained by a high level of savings, the Survey said. Goods exports rose 8.8 per cent in 2018-19, after a 10 per cent rise in the previous year.
However, it mentioned weak exports growth in 2019-20 as a key downside risk to the economy, taking note of continuing heightened US-China trade tensions. The Survey sounded a stark warning that prospects of export growth remain weak for 2019-20 if status quo is maintained.
The World Economic Outlook in its April 2019 issue had projected growth in world output at 3.3 per cent in 2019, down from 3.6 per cent in 2018.
Rupee devaluation
The Survey pointed out that the desired export growth required to deliver the 8 per cent real GDP growth rate may require a depreciation in the real effective exchange rate. "But we emphasise export growth stemming from increases in productivity rather than currency depreciation," the Survey countered. However, the government stressed that a higher growth rate for exports has been seen in Rupee terms due to the depreciation of the currency, while that of imports declined in 2018-19.

 In view of the demand by industry to re-assess India's existing free trade agreements (FTA), the Survey noted that India's imports from FTA nations have been on the rise, accounting for 52.0 per cent of India’s total imports. On the other hand, exports continue to trail. Outbound trade with trade partners accounted for 36.9 per cent of total exports.