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Strong revenue performance a pleasant surprise: CEA
The compensation payable to the States for revenue loss arising due to GST is just Rs. 5,000 crore, far lower than was estimated, according to Chief Economic Adviser Arvind Subramanian.
In a candid interview to The Hindu , the outgoing CEA also batted for the lateral entry of talent into the government, saying that it was a “no brainer” in a situation where demand for talent outstripped the supply within the government.
However, Mr. Subramanian added that it wasn’t sufficient to get the talent from outside, but to ensure that the person can also effectively work with and within the bureaucracy.
“Consistent with my revenue neutral report and against what everyone said, the GST compensation requirements are only about Rs. 5,000 crore for the entire first year ,” Mr. Subramanian said. “We were surprised at how strong the revenue performance has been in the first year.”
He added that while it is difficult to ascertain its exact contribution, demonetisation “certainly did” contribute to the deceleration in the economy.
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Agriculture Department wants farmers to take up cotton as an alternative to toor
The Department of Agriculture and the District Merchants’ Association have joined hands to promote expansion of cotton crop in the district as an alternative crop to toor. In this regard, a workshop is being organised at APMC yard on July 17 where over a thousand farmers will take part. Speaking at a joint press conference here on Saturday, Manjunath, Joint Director of Agriculture Department, and Ravindra Bijjargi, president of the association, said that with more area of the district getting covered under irrigation following the implementation of several irrigation projects, the farmers could cultivate cotton using drip irrigation to earn higher project as an alternative to toor.
Mr. Manjunath said that currently cotton is cultivated on around 18,000 hectares in the district and the department plans to expand it to around 40,000 hectares this year. Admitting that lack of mechanisation and pests have been discouraging the farmers from cultivating cotton in the district despite conducive atmosphere, Mr. Manjunath said that Tamil Nadu has invented handy machines to pluck cotton.
“During the workshop, some machines will also be displayed for the knowledge of the farmers who could use it in their fields for harvesting,” he said.
He also said that with the production of pest-resistant cotton seeds, they could use these without any fear.
Mr. Bijjargi said that Vijayapura APMC has large market for cotton where over 1 lakh bales worth Rs. 300 crore is purchased annually by the traders.
Bihar Deputy Chief Minister and GST Network panel head Sushil Kumar Modi on Saturday said that the traders should stop evading taxes as the government can now track them down by using data analytics developed by Infosys. He said that the government – by using data analytics – has identified a large number of defaulters while filing GSTR3B and GSTR1.
“We will use data analytics to track GST tax defaulters through its network which has 360-degree view of online transactions to detect discrepancies,” Modi said after chairing the 9th meeting of the GSTN Group of Ministers (GoM). Modi heads the GoM which was set up to address the IT-related issues of the GSTN.
In last one year of GST regime, the revenue authorities have come across numerous cases of tax evasion where companies used fake bills to claim input tax credit – an option in the GST which allows the taxpayers to claim credit for the taxes paid on purchase. To exploit this option, traders bought fake bills which enabled them to claim input tax credit on the supply which never happened.
Last month, the GST department sent notices to about 200 firms after data mining revealed that they may have evaded the taxes by under-invoicing or selling their goods in cash. According to reports, the GST department raised red flags in cases where details in GSTR3B and GSTR1 didn’t match.
This year in May, GST officers sent scrutiny notices to several companies whose tax payments did not match the final sales return. The move had come after revenue authorities detected under payment of GST by about 34 per cent. As per an analysis done by the department, 34 per cent of businesses paid Rs 34,400 crore less tax between July-December while filing initial summary return (GSTR-3B).
Warning against this practice, Sushil Kumar Modi yesterday said: “Traders and dealers should not avoid or evade paying taxes that are due from them on their goods and services, as business intelligence software (third eye) will trace the defaulters easily.”
Asked to comment on Finance Secretary Hasmukh Adhia’s displeasure over technology failure in implementation of GST, Modi said the GoM is fully satisfied with Infosys and collectively solved the problems that cropped up in the past. “We would also continue to solve the existing problems in GSTN collectively. As on today, the number of returns filed is 124.8 million and number of payment transactions stands at 42.6 million. Therefore, Infosys performance is good,” he said.
The GST Council is scheduled to hold its next meeting in New Delhi on July 21.
Union finance minister Piyush Goyal had to face criticism from the representatives of trade associations on the implementation of goods and services tax (GST) at a meeting held in Jaipur on Saturday.
Sarafa association office-bearers said that smuggling of gold and silver has increased after the GST came into effect.
Laghu Udyog Bharti president Omprakash Mittal said that 18% GST on job work was very high and should be brought down. Other association office-bearers including idol makers also urged the minister to bring down the GST. The association office-bearers compared staff of GST director general (DG) with “Yamraj” saying that they get threats of arrest. Credai Rajasthan chairman Gopal Gupta also urged the minister to bring down the GST on sale of constructed houses.
Earlier, Goyal in his address said that the GST Council could look at rationalising tax rates on some items on case to case basis after ensuring balance with revenue collection. “GST has been very successful and the rates on 328 products have been brought down since its implementation,” he said.
The council, in its next meeting on July 21, will also discuss ease of filing returns as well as ease of assessment, Goyal said. There are four GST rates at present, 5%, 12%, 18% and 28%.
Rolled out on July 1, 2017, the GST had subsumed over a dozen local levies and transformed India into a single market with seamless flow of goods. In the first year of GST in 2017-18, the government earned Rs 7.41 lakh crore from taxes. The average monthly collection was Rs 89,885 crore. In the current fiscal, the collections in April touched a record Rs 1.03 trillion, followed by Rs 94,016 crore in May and Rs 95,610 crore in June.
Kenya is banking on the modernisation of Rivatex factories and the adoption of high-yielding seeds to revive the ailing cotton sector.
Through the upgrade, whose cost will add up to Sh3 billion by the end of the year, the textile firm targets to spur production from the current one tonne of lint, equivalent to 6,000 metres, to over 12 tonnes or 40,000 metres of finished products in a day, according to the firm.
Rivatex currently consumes 10 bales of cotton daily, but this is expected to increase to 70 bales once the modernisation of the equipment is complete.
Kenya wants to take advantage of the global markets such as the African Growth and Opportunity Act (Agoa) to change the fortunes of the sector. Under Agoa, goods of more than 6,000 product lines, mainly textile and apparel, accounting for 65 per cent of the total exports, are granted quota and duty-free access to the US market.
Kenya ranks among the top suppliers of apparel to the US, having exported $340 million (Sh3.4 billion) worth of goods to the market last year.
Kenya’s total exports to the US under the Agoa plan peaked at Sh35.2 billion in 2015, before declining to Sh32.7 billion last year, according to the Economic Survey data.
Kenya is yet to fully exploit this opportunity to revive the cotton industry. But the government says this is now changing with Investment and Industry Principal Secretary Betty Maina, noting that the ministry has already rolled out initiatives to return the sector to its glory days. She called on farmers to start growing the crop again.
“If you have a parent or relative who was growing cotton but gave up, tell them to grow the crop because we are reviving this factory. We hope to double and expand the production in the coming years,” she said.
Kenya has also set sights on growing genetically modified cotton on a commercial scale, which experts say will be a game-changer. This follows the recent approval by Nema for BT cotton trials.
President Uhuru Kenyatta in January said he was betting on the sector to create 50,000 jobs and generate Sh20 billion, especially in apparel export earnings, this year as part of his final-term economic revival plan.
Treasury Cabinet Secretary Henry Rotich said the government allocated Sh1.2 billion in this year’s budget to promote the development of the crop and encouraged farmers to take advantage of a ready market to grow the crop.
Kenya produces 30,000 bales of cotton annually against spinning capacity of about 10,000 metric tonnes of lint. To bridge this gap, Kenya imports from Uganda and Tanzania. PS Maina said the government is committed to creating a ready market for textile products.
“The President last year promised all products for the police, NYS and military will be sourced locally and military and other public agencies should be exposed to the products,” added the PS.
Rivatex used to produce millions of tonnes of fabric before it was placed under receivership in 2000 following massive mismanagement. In 2007, Moi University bought the firm but has been struggling to produce finished products due to obsolete equipment.
The upgrading of the firm will cost Sh3.016 billion after the company secured a grant from the Indian government for technology transfer and purchase of new machines. The loan was extended to the country following the visit by Indian Prime Minister Narendra Modi to Kenya in 2017.
Indian High Commissioner to Kenya Suchitra Durai, who was present at the event, observed that modernisation of the factory will result in more than 2000 direct jobs. “Our partnership with Kenya and Moi University through Rivatex also involves capacity building by taking managers and some workers to India who are being trained at LMW Ltd and this will ensure that the factory will produce quality products,” noted Ms Durai.
The report said it would see Australian exports to India grow from AUD 14.9 billion in 2017 to around AUD 45 billion in the next 20 year.
The Australian government has released an India Economic strategy report recommending to lift New Delhi into its top three export markets and make it the third largest destination in Asia for its outward investment.
The report titled ‘An India Economic Strategy to 2035’ — authored by former Australian high commissioner to India Peter Varghese — was welcomed by Australian Prime Minister Malcolm Turnbull yesterday.
The report said it would see Australian exports to India grow from AUD 14.9 billion in 2017 to around AUD 45 billion in the next 20 year, and outward Australian investment to India rise from AUD 10.3 billion to over the AUD 100-billion mark, reflecting a transformational expansion of the relationship.
It noted that the opportunities however would not fall into its lap and that the government would require a sharper national focus on India, an unambiguous commitment by Australian business and a deeper understanding by both government and business of the magnitude of what is unfolding in an Indian market place which will only get more crowded.
‘They will also require an approach to the investment relationship with India that markedly differs from the trajectory of Australian investment in most other Asian markets,” the report said.
The foundations for an enhanced economic partnership with India are strong, underpinned by people-to-people ties and shared values. The report has identified ten sectors where Australia’s competitive advantages match India’s needs, and ten states in India where Australia should focus efforts.
Minister for Trade, Tourism and Investment Steven Ciobo said the government commissioned this report to look beyond the immediate horizon and provide a roadmap for unlocking the opportunities that will help India and Australia grow together.
“It is about cementing India as a priority economic partner,” Ciobo said, adding that Australia must continue to seek out new markets and opportunity.
The report said no single market over the next 20 years would offer more growth opportunities for Australia than India. By 2035, India will overtake China as the world’s most-populous country. It is poised to become the third largest economy, after China and the United States, he added.
The trade minister said that the Government will consider its response to the strategy report following consultation with Australian and Indian stakeholders.
Welcoming the strategy paper, Melbourne-based think tank Australia India Institute (AII) director Craig Jeffrey said the document outlines a confident vision for the future of economic relations between Australia and India. At the same time, it warns against complacency, urging us all to do more in pursuit of stronger ties between our two nations.
China, the worlds largest importer of cotton, has been eyeing Myanmar-produced cotton with much greater interest in the wake of its trade war with the US.China has imported cotton from the US for the past 10 years. Last month though, US President Donald Trump imposed $50 billion worth of tariffs on Chinese imports, which includes agriculture. That sparked the ongoing trade war between the two countries, with China retaliating by slapping tariffs on agriculture imports from the US.Despite being able to also import cotton from India as an alternative to the US, China has offered to buy from Myanmar instead because we do not charge import duties on cotton yet.
Myanmar exported around 4,300 tonnes of cotton to China worth $9.5 million in 2016-17 compared to just 1.6 tonnes worth $3.5 million in 2013-14, according to the government.
According to government data released on Friday, the country’s exports grew by 17.56 per cent in June to hit $27.7 billion due to robust growth recorded in sectors like petroleum products.
The country’s trade deficit continued to widen in June, with rising export growth mitigated by an even higher rise in imports fueled by costlier oil.
According to government data released on Friday, the country’s exports grew by 17.56 per cent in June to hit $27.7 billion due to robust growth recorded in sectors like petroleum products and chemicals.
However, the sharp rise in crude oil prices has pushed trade deficit even higher, recording a widened a 43-month high of $16.6 billion on the backs of a 21.32 per cent increase in imports, which hit $44.3 billion during the month.
June’s trade deficit this year is the widest it has been since November 2014 when the gap was $16.86 billion. The deficit in June last year had stood at $12.96 billion.
The rising trade deficit is a matter of concern, especially with India’s currency already weak and a rising current account deficit would exacerbate the government’s fiscal deficit challenges.
“MSME sectors of exports are still feeling the pinch of the liquidity crunch as banks and lending agencies have continuously been tightening their lending norms,” said Federation of Indian Export Organisations (FIEO) president Ganesh Gupta in a statement.
The primary factor in rising trade deficit for India has been the sustained rise in crude oil prices over the first three months of the financial year, with the crucial commodity breaching the $80 per barrel mark during June.
Consequently, Oil imports during the month were up by 56.61 per cent to $12.73 billion. These imports during the April-June, 2018 period were valued at $34.64 billion which was 49.44 per cent higher as compared to the same period last year. However, Gold imports in June dipped by about 3 per cent to $2.38 billion.
Total imports during the first quarter of the fiscal increased by 13.49 per cent to $127.41 billion. Trade deficit during that same period widened to $44.94 billion as against $40 billion in April-June 2017.
While import growth outpaced exports in June, exports of petroleum products, chemicals, pharmaceuticals, gems and jewellery, and engineering goods registered a positive growth.
However, shipments of textiles, leather, marine products, poultry, cashew, rice and coffee recorded negative growth.
Exporters concerned over unfolding trade tussle between the US and China
India’s year-on-year export growth jumped 17.57 per cent to $27.7 billion in June riding on a surge in exports of chemicals, electronics, petroleum products, cotton yarn and handloom and pharmaceuticals.
However, trade deficit widened to 43-month high of $16.60 billion compared to $12.96 billion in the same month last year, as imports increased at a sharper rate of 21.31 per cent to $44.30 billion.
Exporters were largely positive about the rebound in export growth, but some expressed concern over the growing tension in trade relations between key countries. “We must be watchful of the unfolding tariff war between the US and China. We should not be caught in the cross fire. Instead, India must devise its own strategy to deal with the fast changing global trade environment to maintain a smart growth in our exports,” said Ravi Sehgal from the Engineering Export Promotion Council.
Other items which witnessed an increase in export growth included gems and jewellery, ceramic products & glassware, coal, iron ore, fruits and vegetables and spices.
Readymade garments exports, a major item in the country’s export basket, fell yet again in June, posting a decline of 12.34 per cent to $1.3 billion. Earlier this month, the Textiles Ministry had sought assistance from the Commerce Ministry to put exporters of garments, hit by GST woes, back into business.
The sharp increase in imports for the month was led by petroleum, machinery, chemicals, iron & steel and coal.
Oil imports during June, valued at $12.73 billion, was 56.61 per cent higher than oil imports in June 2017. Non-oil imports grew 11.20 per cent to $31.58 billion in June 2018.
Total exports in the first quarter of the current fiscal (April-June FY19) grew 14.21 per cent to $ 82.47 billion compared to the first quarter exports of the previous fiscal.
Total imports for the period April-June 2018-19 were $127.41 billion which was 13.49 per cent higher than imports in the first quarter of 2017-18.
Trade deficit in the first quarter of the current fiscal was $ 44.94 billion, which was slightly higher than the trade deficit in April-June 2017-18 at $ 40.05 billion.
The West Bengal government on Thursday increased, up to Rs 1 lakh, the threshold limit for the electronic-way or e-way bill in case of movement of goods within the state from existing limit of up to Rs 50,000.
The generation of e-way bill for an intra-state movement of goods was also exempted where such goods were being sent to job workers, said state Finance Minister Amit Mitra.
“The e-way bill in respect of movement of goods originating and terminating within the state (intra-state movement but without passing through any other state) would be required where the consignment value exceeds Rs 1 lakh. Such limit was up to Rs 50,000. In this regard, a notification was issued today (Thursday),” he said.
Usually, e-way bill would be required when the value of taxable consignment, along with the tax value, is more than Rs 50,000. The Central government had launched the e-way bill system from April 1 for moving goods worth over Rs 50,000 from one state to another and the same for intra or within the state movement was rolled out from April 15 in a phased manner.
Quoting the notification, Mitra also said: “Generation of e-way bill for an intra state movement of goods is exempted where such goods are being sent to a job worker for job work or are being sent from one job worker to another or are being returned to the principal after such job work and where such transportation is not for final delivery of the finished goods.” Addressing a programme of Bengal Readymade Garments Manufacturers and Traders Welfare Association, he said a nine lakh sq ft textile hub was being set up at Nangi in South 24 Parganas for facilitating garments’ manufacturers and traders and a common facility centre would also be set up.
According to him, about 25,000-30,000 artisans and entrepreneurs including organised and unorganised have been working in the Metiabruz, a hub of garments and apparel manufacturing in the state and generating over 5 lakh jobs.
“In Metiabruz, 90 per cent small entrepreneurs and artisans are unorganised. We want to bring them in an organised set up so that they can fetch better margin and manufacture more exportable products. The common facility centre will house design, laboratory and other facilities so that manufacturers can avail that,” Mitra added.
According to him, bank lending to MSMEs in the last year was Rs 44,000 crore, exceeding the target of Rs 38,000 crore in the state. “This year, the target has been set at Rs 50,000 crore,” he added.
