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Demonetisation Day 50: Expect no clear winner in this drawn Test for Indians

For a nation that loves cricket, the demonetisation drive launched by Prime Minister Narendra Modi on November 8 to pull out 86% of the cash floating in India’s economy has been like a one-day match, with roughly 50 days to the core deadline set by the government to swap bad cash with good resembling the number of overs in a game full of twists and turns.

As Modi gets ready to address the nation on December 31 in a stock-taking speech, sober watchers of the game may find no nail-biting finish or clear winner. We might need to use something resembling the Duckworth-Lewis method that cricket scorers use when rains or disruptions mar a match.

PTI file photoPTI file photo

PTI file photo

We can expect the prime minister to announce on Saturday some populist handouts that would make the headlines on the New Year Day as he declares partial victory in a long-term war on black money that he will vow to carry on. But the real ammunition may be held back until the February 1 budget.

What is clear is that there is no fairy tale El Dorado of a huge pile of unambiguously wasted black cash as it was being made out soon after the government pulled the plug on old 500 and 1,000-rupee notes. There was talk of a fiscal bonanza for the government through a windfall dividend from the Reserve Bank of India then. The RBI has since virtually ruled out such a possibility.

Of the Rs 15.4 lakh crore worth of scrapped currency, some Rs 14 lakh crore has been deposited in banks or exchanged already. Some more money may trickle in through the ambiguous Pradhan Mantri Garib Kalyan Deposit Scheme window over the next three months or in last minute deposits on Friday. Clearly, there is no winning shot in this match in sight.

What we can expect next is a patient round of bean-counting in the Finance Ministry as taxmen zero in on high-value cash deposits. Some 60 lakh depositors have put in deposits totalling Rs 7 lakh crore since November 8 in instances exceeding Rs 2 lakh each. But toothcombing these and actually calling the bluff on tax evaders may take months or years and in cases involving big fish, involve appeals to income tax tribunals or even high courts.

However, we can reasonably expect Finance Minister Arun Jaitley to announce a very comfortable fiscal deficit situation for the 2017/18 financial year when he rises to present the budget on February 1. This would be largely though anticipated income tax gains from the deposits made in banks. The minister is already setting the mood by pointing to robust growth in tax collections..

A low deficit will give the government enough elbow room to play shots – be it in the form of lower taxes for citizens, populist schemes, recapitalising banks scarred by bad loans or fresh spending on infrastructure.

A Robin Hood-like transfer of a big chunk of fiscal gains to the poor holders of Jan Dhan Yojana may be the most romantic outcome of the demonetisation drive.

This, in fact, may become a political necessity because the government has been bitten badly on two fronts. A fall in the current year’s GDP growth resulting from the demonetisation is an economic scar, while stories of millions of industrial workers and farm hands suffering due to the cash squeeze resulting from demonetisation spell political wounds ahead of state elections in UP and Punjab.

To this we may add the image damage caused by a slew of ad-hoc measures linked to the drive – the latest of which is a Quixotic ordinance to fine those who may be caught with more than 10 outlawed notes. The international media has hit Modi where it hurts.

The government also faces a 5-judge bench of the Supreme Court on the Constitutional validity of the demonetisation. In the judiciary and in election rallies, the after-effects of demonetisation may drag on – long after the queues in front of ATMs vanish. That would make it seem like a drawn test match, not a one-day sizzler.

(The writer is a senior journalist. He tweets as @madversity)

First Published On : Dec 30, 2016 07:56 IST

Budget 2017: Brace for higher short-term capital gains tax, dividend income

The Union Budget 2017 is still over a month from now but the stock market is known to exhibit wild swings in the weeks before the D-day. While investors take a view about various sectors and what budget could mean for the industry, this time they need to be more worried about their own backyard if things are anything to go by.

According to a Business Standard report, the government is looking at the possibility of increasing the short-term capital gains tax or STCG on profits made on sale of shares in less than a year.

Currently, the short-term capital gains tax is fixed at 15 percent, but the BS report suggests that the rate could be increased to 20 percent during this year’s budget announcement.

ReutersReuters

Reuters

With regard to long-term capital gains tax on shares sold after 12 months which at present is nil, the government is mulling with the idea of increasing the period to 36 months i.e. an investor can enjoy tax exempiton, if shares are sold only after 3 years and not the current one year period, the BS report said.

Further, based on the tax slab, the government may even look at taxing the dividend income. Currently, companies pay dividend distribution tax, and individuals earning more than Rs 10 lakh as dividend income in an financial year are taxed at 10 percent. This tax rate may go up to 30 percent for individuals coming under high-tax bracket.

As it is, stock market players are already dealing with securities transaction tax (STT) and any move to increase tax rate on short-term capital gains could severely dent the sentiment, caution investors.

For several years, capital market industry experts are lobbying the government to completely abolish the securities transaction tax, but the government has not paid any heed to their demand. The government collects Rs 7,400 crore as STT every year.

Recent developments indicate that government could take stern measures in next year’s budget to increase tax rate on returns made by stock market investors.

Prime Minister Narendra Modi on Saturday in a veiled threat indicated that the government may look at investors deriving huge income from stock market returns.

Calling for wider inclusion, Modi had said our markets must show that they were able to successfully raise capital for projects benefiting the vast majority of our population, particularly related to infrastructure.

“The true measure of success (of the stock markets) is in its impact in villages, not on Dalal Street or Lutyens Delhi. Sebi should work for closer link between spot markets like e-NAM and derivatives markets to benefit the farmers,” Modi urged.

A day after the PM’s statement Union Finance Minister Arun Jaitley clarified on Sunday that there is no plan to impose long-term capital gains tax on securities investments, after a statement by prime minister raised such a suspicion.

“This interpretation is absolutely erroneous. The Prime Minister has made no such statement directly or indirectly. I was present at the function in which this speech was given. I wish to absolutely clarify that there is no occasion or opportunity to anybody to reach such a conclusion because this is not what the Prime Minister said nor is it the intention of the government as has been reported in some section of the media,” he said.

First Published On : Dec 27, 2016 13:14 IST

Two-day GST Council meet to end today: Key points over the vexed dual control issue

The two-day GST Council meet that began on Thursday (22 December) and will continue today would take forward the discussion on the remaining 7 chapters of the model GST law.

The council headed by Finance Minister Arun Jaitley, which is meeting for the seventh time so far, will also take up the dual control issue and try to iron out differences on the vexed issue of jurisdiction over assessees in the new indirect tax regime.

Consensus has so far eluded on the model GST law in the previous meetings of the all-powerful GST Council. The subsequent GST legislations — CGST, IGST and compensation law — could not be introduced in the Winter session of Parliament that ended last week, and this has threatened the April 2017 rollout target of the GST.

Experts now say that implementation of GST should be postponed by three months to July next year as industry would need time to prepare their IT infrastructure.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

Although, the Centre plans to implement the GST from 1 April, due to Constitutional compulsion the GST now could be rolled out by 16 September next year as the existing indirect taxes will come to an end, and it would not be possible for either Centre or the states to collect indirect taxes.

Day one of the two-day Council meet ended on Thursday with no discussion on dual control but discussed the GST bills.

However, Friday’s meeting will be important as the integrated GST Bill will discuss the contentious issue over the dual control of assessees. Besides this, the three GST bills – Central GST (cGST), Integrated GST and State Compensation Law – need to be approved by the Council before they can be tabled in the Parliament.

Failure to get a consensus on the issue would make it impossible for the government to implement the ambitious indirect tax reform from its target date of 1 April 2017, said a report in the Mint.

Already, finance minister Arun Jaitley has been emphasising that the luxury of time is not available for the GST implementation for the reason that if 1 April 2017, is the first possible day it can be implemented, then the last date also is constitutionally defined as 16 September, 2017.
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“So the discretion as to when to implement is only five months and 16 days and that’s why we don’t have the luxury of time because after five months, the curtains will come down on the old taxation powers,” Jaitley had said earlier.

The dual control has been a sticking point between the Centre and the states, which has so far delayed consensus amongst the council members.

Here are the key points over this vexed issue.

1) The government wants to weigh on the pros and cons on the issues of cross empowerment to ensure single interface under GST, which will subsume excise, service tax, VAT and other local levies.

2) Dual control pertains to the issue of administration of transactions above Rs 1.5 crore. At the September meeting, it was decided that states would have exclusive jurisdiction over transactions below Rs 1.5 crore. For transactions above this amount, it was decided that a mechanism would be worked out to ensure that the same transaction would not be subject to dual audit/inspection by the centre and the state. This has resulted in tug of war between the Centre and states and has become a contentious issue.

3) State governments of Uttar Pradesh, West Bengal, Uttarakhand, Tamil Nadu and Kerala want exclusive control over small taxpayers below Rs 1.5 crore threshold. While the Centre has agreed to forego control on goods, but it is not yielding on services.

4) The GST council also arrived at an option of two proposals– horizontal division and vertical division to overcome the issue. a) Horizontal Division means tax payers would be divided both for administrative and audit purposes based on a cut off turnover. Those with a turnover over Rs 1.5 crore would be administered both by the Centre and states, while those with below Rs 1.5 crore would be administered solely by the state. b) The Vertical Division based on ratios assigns tax payers to a tax administration, Centre or state, for a period of 3 years for all purposes including audit. Tax payers could be divided in a ratio which would balance the interest of the Centre and the state, both with respect to revenue and spread of numbers.

5) The Centre, however, feels that horizontal division would be lopsided as 93 percent of Service Tax assessees and 85 percent of the VAT tax payers have a turnover below Rs 1.5 crore.

6) Last month, GST Council had failed to reach any conclusion on the dual control issue as states objected to non-availability of updated data on assessees of service tax, excise and VAT.

7) The updated figures shared by the Centre with the states shows the likely taxpayer base in GST would be 107 lakh, of which states account for 67 percent (71.7 lakh) and Centre is estimated to account for 33 percent (35.3 lakh). There are around 81.4 lakh VAT dealers, out of which active dealers are 66.5 lakh. For service tax, there are 38 lakh assessees, out of which 26 lakh are active assessees, while there are around 4,00,000 assessees for excise. Around 4,00,000 taxpayers are common to the Centre and the states, The Indian Express report said.

With PTI inputs

First Published On : Dec 23, 2016 12:56 IST

Govt will impose limits on tax exemption for political parties, says Arun Jaitley

New Delhi: The central government plans to set a threshold criteria for political parties to enjoy tax exemptions to check money laundering by outfits that do not contest elections, Finance Minister Arun Jaitley said.

Finance Minister Arun Jaitley. Reuters file imageFinance Minister Arun Jaitley. Reuters file image

Finance Minister Arun Jaitley. Reuters file image

Jaitley said the revenue secretary has been asked to look into the issue in the wake of Election Commission’s recommendations
in this regard. Jaitley’s remarks at a Times Now event assume significance in the context of the Election Commission’s recommendations to the government to amend laws to bar tax exemption to parties that do not contest elections and win seats in Lok Sabha and Assembly polls and to ban anonymous donations above Rs 2,000 to political parties.

“I can point out one is invisible donation which Election Commission says is anonymous and the second is when political parties got exemptions. There are about 40/50/60 political parties which effectively contest elections in Centre and the states, (but) you have a large number of political parties which got registered not for contesting election but for availing tax exemption,” he said.

“Now this part is easier to tackle. I have already asked the revenue secretary to look into this and therefore we will have to put a threshold criteria so that we are able to eliminate those which are not real political parties but only for money conversion which have come in,” Jaitley said.

He said many political parties do not contest elections but only accept donations and convert money. “I have already told the Revenue Department to look at them and therefore some threshold criteria could be fixed and number of these could be eliminated,” Jaitley added.

First Published On : Dec 20, 2016 22:25 IST

Arun Jaitley clarifies that political parties enjoy no exemptions from demonetisation rule

Finance Minister Arun Jaitley has clarified that the government has not made any changes to the laws, and there aren’t any exemptions granted to political parties post demonetisation. A statement released by Jaitley’s office said there was no change made to the taxation laws (Second Amendment) Act, 2016, which came into force on 15 December, 2016.

Arun Jaitley. PTI file imageArun Jaitley. PTI file image

Arun Jaitley. PTI file image

On the controversy regarding tax scrutiny of political parties, Jaitley said, “This is a complete media creation and there are no changes made in the law in that regard. Has a single change made in the last two months or so or in the last two-and-a-half years with regard to taxation of political parties? The answer is ‘No’.”

“Nothing has been done, whatever was the existing system which has been existed for the last 15 years is continuing and if somebody creates a political party for the purposes channelising funds, then obviously the law will step in,” he said.

“I implore all journalist friends to be fully outraged against any step of the government, if it is not against corruption. But in equal measure, I would also implore them to do adequate research before jumping the gun. Under Section 13A of the IT Act, 1961, political parties have to submit audited accounts, income and expenditure details and balance sheets,” he said.

“Post demonetisation, no political party can accept donations in Rs 500 and Rs 1000 notes since they were rendered illegal tenders. Any party doing so would be in violation of law. Just like anyone else, political parties can also deposit their cash held in the old currency in banks till the 30 December deadline provided they can satisfactorily explain the source of income and their books of accounts reflect the entries prior to 8 November,” he added.

“And if there is any discrepancy in the books or records of political parties, they are as liable to be questioned by the Income Tax authorities as is anyone else. They enjoy no immunity whatsoever. There is no question of sparing anyone, and the political class is no exception. In fact, PM Modi is setting a new example of propriety in public life, by asking all MPs and MLAs to submit their bank account details post demonetisation. We would like to urge the other parties to do the same and prove their intentions against corruption,” Jaitley said.

With inputs from PTI

First Published On : Dec 17, 2016 22:14 IST

Jaitley hints not all scrapped notes will be remonetised, digital currency will fill gaps

New Delhi: On SaturdayFinance Minister Arun Jaitley hinted that not all of the Rs 15.44 lakh crore worth of currency junked will be remonetised through issuance of new notes as he said digital currency will fill the gap.

Calling the scrapping of old 500 and 1,000 rupee notes as “a courageous step”, he said the government could do it as India today has the capacity to take such decisions and experiment boldly.

The move will create a new Indian normal as the one that existed for the past seven decades is “unacceptable”, he said, adding that demonetisation will help rid the economy of high cash circulation that had led to tax evasion, blackmoney and currency being used for crime.

Arun Jaitley. PTIArun Jaitley. PTI

Arun Jaitley. PTI

“One of the efforts of this exercise has to be that even though a reduced cash currency could remain, our conscious effort… (is) to supplement the rest with a digital currency,” he said while addressing annual general meeting of industry chamber FICCI.

As many as 17,165 million pieces of Rs 500 denomination and 6,858 million pieces of Rs 1,000 banknotes were in circulation on 8 November when the government made the surprise announcement.

Jaitley further said: “The whole process of remonetisation is not going to take very long time and I’m sure very soon the Reserve Bank by injecting currency daily into the banking and postal system will be able to complete that.”

Also, the push to use the digital mode to make payments has been gaining ground. “The manner it has taken place in the last five weeks is indeed commendable. Only a section of Parliament seems unaware of what is happening,” he said.

Once the remonetisation process is complete, it will mark “the creation of a new Indian normal because the normal that existed for 70 years is an unacceptable normal,” he added.

“The 70-year normal had become a way of life for almost every Indian. It was not merely a fact that you had a lot more cash currency, far larger cash currency as part of your GDP… the economic and social consequences of that are extremely adverse.”

He made a point that dealing in that cash currency had led to a lot of aberrations in terms of tax non-compliance, currency being used for collateral purposes like crime, escaping the tax net and not getting into the banking system.

The government took “a somewhat courageous step” of withdrawing high demonetisation currency and went in for a large currency swap.

“The fact that India today has the capacity to take these decisions and capacity to enforce them, to experiment boldly even when at a time when the world is looking more inwards, marks an exception as far as India is concerned,” the finance minister asserted.

Jaitley also spoke of the country’s “stamina” to sustain a decision like demonetisation, which has “clear long-term gains even at the cost of short-term inconveniences”.

“Therefore, once we have that stamina notwithstanding fringe positions taken by national parties, one would always be able to implement these extremely successfully. Long-term benefits of these are going to be absolutely clear even if we bear the short-term pains,” he said.

He seemed confident that the existing almost 75 crore debit and credit cards in the market, besides e-wallets, will help increase digital transactions. He also made a pitch that these transformations will have to be carried to their logical conclusion.

“There are, of course, even as we reform, domestic trends which are being visible on digitization of payments,” Jaitley said, adding that the government has clarity of direction as well as a broad shoulder and stamina to sustain these decisions.

First Published On : Dec 17, 2016 12:31 IST

Cyclone Vardah: Oppn in RS demands special financial package for Tamil Nadu

New Delhi: Opposition Congress, Left and DMK on Wednesday sought immediate sanction a financial package to provide relief to cyclone ravaged Tamil Nadu, a demand which Finance Minister Arun Jaitley said will be considered by the government.

Jaitley said the government shares the concerns over the devastation caused by cyclone Vardah in Chennai and surrounding districts. “It is serious crisis.”

While some advance preparation was done by moving the NDRF teams and deploying army columns, the Centre will do whatever is needed to provide relief, he said.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

“I have heard the members. I will take into consideration their suggestions and the government will decide on relief after consultations with the concerned authorities,” he said.

Earlier, former Finance Minister and senior Congress leader P Chidambaram said the Centre should immediately respond to Tamil Nadu government’s request for financial aid.

State government usually ask for more and central government gives less, he said adding the Centre must announce the package today itself.

Chidambaram said it should be ensured that ATMs and bank branches are replenished so people can draw their own money.

D Raja (CPI) said the cyclone has devastated many districts of Tamil Nadu including Chennai, leaving a number of people dead, uprooting thousands of trees, snapping telecommunication lines and plunging several cities into darkness.

The tragedy has been compounded by demonetisation, leaving no cash with the people to buy necessities, he said asking the government to reconsider its decision to junk old 1000 and 500 rupee notes.

Raja said the Centre should not delay in agreeing to provide Rs 1,000 crore sought from the National Disaster Fund.

Tiruchi Siva (DMK) said 24 persons have so far been reported killed in the cyclone. Because of demonetisation, there is no cash with the people, he said, adding “a litre of milk is being sold at Rs 200.”

He put commercial loses at Rs 8,000 crore and demanded that a central team be sent to assess the damage.

TK Rangarajan (CPM) and Subramanian Swamy (BJP) demanded that crisis management teams be sent to Tamil Nadu to access the damage.

First Published On : Dec 14, 2016 13:16 IST

Demonetisation: ATMs run out of money, but people get ladoos for standing in lines

Long queues outside banks in Delhi and the National Capital Region (NCR) were a common sight on Tuesday, as they opened after a three-day gap; after banks were shut for the second Saturday of the month on 10 December, it was followed by a Sunday and Milad-un-Nabi on Monday.

Once they opened, most banks ran out of cash within a couple of hours of opening, causing great disappointment for those gathered there since hours.

Ironicaly, it was also the day Union Finance Minister Arun Jaitley descended on the streets to interact with the people standing in lines. As reported by India TodayJaitley went to Cannaught Place (Rajiv Chowk) in the national capital to take stock of ATMs.

The NDA government has remained confident that demonetisation will be good for the Indian economy. As this is coming while people have been complaining about the prospect of standing in long lines, the frustration has only increased.

Arun Jaitley. PTIArun Jaitley. PTI

Arun Jaitley. PTI

“Why there is no cash for people in the banks?” an agitated Ram Krishna Mahto, who failed to withdraw cash after waiting in the line since 10 am asked.

Pointing a finger at the bank personnel, he alleged, “They must be passing on money from the back door.”

An ICICI Bank ATM at Connaught Place was one of the many in the nation’s capital which went cashless within hours of opening.

Disappointed, some people started questioning the very rationale of the demonetisation decision, saying they were also feeling that banks were colluding with businessmen to change money, leaving the banks “dry”.

People were also seen arguing with bank guards and other staff members after they were told that the cash was over.

Meanwhile, BJP leaders took to distributing sweets to people standing in lines as a reward for participating in this government scheme.

“Despite facing some inconvenience, people supported the move. Now, it is our turn to thank them and show our appreciation and respect for their patience,” Delhi BJP chief Manoj Tiwari told The Indian Express, while praising Prime Minsiter Narendra Modi‘s move.

With inputs from IANS

First Published On : Dec 13, 2016 20:10 IST

Goodbye April GST: Missing the deadline is better for all in demonetisation season

It is now fairly certain that the 1 April roll out of the grand indirect tax reform, Goods and Services Tax (GST), isn’t happening. The plan is comfortably put on the backburner at least till September, when the time given by the constitutional amendment will automatically expire for GST roll out, meaning that the new regime will have to kick in by then.

There are two clear reasons why GST isn’t happening now as planned. One, till now, there is no consensus on the contentious issue of dual taxation between the centre and state governments. States, especially the likes of Tamil Nadu and Kerala, are hell-bent on their demand that control of companies with annual turnover of less than Rs 1.5 crore should rest with them. A data goof up by the centre has worsened the relation (read here ). Centre isn’t too comfortable with the idea of giving up too much to states.

This was evident when the GST council met on Sunday. With no consensus in sight on the crucial issue, GST is unthinkable for 1 April since two important supportive legislations, central GST and integrated GST, is yet to pass the House test. The current session gets over on 16 December and there is no time to pacify the states and opposition by then. The next likely meeting of GST is planned for end-December.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

The second reason is the change in political climate post demonetisation. Though states wouldn’t flag the political displeasure on demonetisation for slowing the GST bandwagon (as it would be seen as a regressive step), the hardening of resistance by states like Kerala on the revenue sharing issue is because of the adverse impact of the demonetisation. Demonetisation has triggered political and economic impacts in different states in different ways. This has also, states allege, gone against the centre’s promise of cooperative federalism . States like Kerala are in a sort of political crisis with the key sector of cooperative banks (a big employer and key institutions for low-income groups/ farmers) being hit hard. There are enough evidences around to believe that services, manufacturing too would have taken hit in the demonetisation resulted cash-crunch.

The hard-won political consensus on GST by finance minister, Arun Jaitley, is now on shaky grounds due to the ongoing tussle between the Narendra Modi-government and key opposition parties on the demonetisation issue. The opposition parties have been harping on prime minister’s persistent reluctance to speak on the issue in the House and use that a reason to take the House business to a standstill. The Modi-government too, so far, has not been able to justify the the demonetisation exercise with hard evidence. With no immediate monetary gains in sight, recovering black money—the originally highlighted objective of the operation—looking a tall order and ‘cashless economy’ turning the only savings grace, the Modi-government will have a tough time explaining the opposition, the negative economic impact and the prolonging pain to common man. This is an uncomfortable situation for the government.

But, in the post-demonetisation scenario, it is good both for the centre and the state to have a late GST, rather than facing another mammoth implementation challenge. In the post demonetisation days, the Indian economy is already having a tough time in manufacturing, services sector and even on discretionary consumer spending—all of these has taken a hit. Auto sales numbers and November PMI data offer enough evidence of the near-term growth impact. The Reserve Bank of India’s (RBI) fiscal year 2017 growth downward revision (from 7.6 percent to 7.1 percent) , which doesn’t even take into effect the demonetisation impact fully , adds to the worries.

The most optimistic expert assessments (except from the government) of the economy returning to normal cash conditions are March. In such a scenario, the immediate disruptions GST roll out by April will have a double whammy effect on the economy. September sounds more realistic. Also, the industry isn’t ready for an early GST roll out, especially in the aftermath of demonetisation shock. What does a delayed GST means to the investor? It is not a surprise, said D K Joshi, chief economist at Crisil rating agency, Indian subsidiary of Standard and Poor’s. “Anyway, we were of the view that April roll out lacks the necessary preparedness. Right now the focus should be on the roll out of demonetisation,” Joshi said. But yet again, how soon the government can contain the impact of the demonetisation cash crunch is critical, before the Modi-government can even think of readying to welcome the GST juggernaut. For now, it’s a goodbye to April GST and the delay is good news to all in demonetisation days.

First Published On : Dec 12, 2016 11:59 IST

Manmohan Singh’s warning to Narendra Modi: Is demonetisation already a ‘mammoth tragedy’?

The choice of words of Manmohan Singh, former prime minister and an economist, for his column in The Hindu on demonetisation impact on India’s economy, beginning with the title, Making of a mammoth tragedy, should worry the average Indian. Even if one tend to discount the politics of Singh’s article, the former RBI governor’s warning on an impending economic crisis, that according to him, will mainly hit the poor, is worth paying a great deal of attention by his successor in PMO, Narendra Modi.

Singh begins the piece by lauding Modi’s intention—addressing black money, fake currency problems—but later goes on to say that what he has done to achieve this task will not only work but its ‘unintended consequence’ will harm the poor greatly. Singh said. “All black money is not in cash, only a tiny fraction is. Against this backdrop, the decision by the Prime Minister is bound to have obverse implications by causing grievous injury to the honest Indian who earns his/her wages in cash and a mere rap on the knuckles to the dishonest black money hoarder.” Singh, who had just recently warned about a 2 percent GDP decline following demonetisation, ends his article saying “It is my humble opinion that we as a nation should brace ourselves for a tough period over the coming months, needlessly so.”

Prime Minister Narendra Modi. AFPPrime Minister Narendra Modi. AFP

Prime Minister Narendra Modi. AFP

Is the former PM overstating the short-term pain caused by the demonetisation calling it ‘a mammoth tragedy’, launching a political attack intended to bulldoze a massive economic reform shouldered by his political rival–something and a missed opportunity for his government? Or is it an important caution from an economist-cum former central banker that should be an eye-opener even to his political enemies and the finance ministry?

It is too early to talk about the actual impact on the economy and its various stakeholders from the artificial cash crunch that is a consequence to PM Modi’s massive currency crackdown that has parallels in India only to the 1978 currency ban by Morarji Desai Government. But, some indications have begun to flow in, which indeed shows things have taken a bad turn for the economy though no one is sure how things will pan out from this point.

Let’s look at the available data so far and try understanding Singh’s caution.

Services/manufacturing

The demonetisation announcement happened on 8 November. The only real numbers that gauge the economic activity in the month of November that is out is the Nikkei India Services Business Activity Index for manufacturing and services sectors. This is an important index economists and central bank track to fathom the trends in these key areas. The services sector PMI sharply fell to 46.7 in November from 54.5 in October—that is the biggest monthly drop since November 2008, just two months after the global financial crisis hit the economy following the US investment bank Lehman Brothers going bust in September. A reading of PMI above 50 typically shows economic growth, while a figure below 50 indicates contraction. “The latest set of gloomy PMI figures for the Indian service sector shows that companies were heavily impacted by the 500 and 1,000 rupee notes ban. Cash shortages resulted in fewer new business intakes, which in turn caused a fall in activity and ended a 16-month sequence of expansion ,” said Pollyanna De Lima, Economist at Markit and author of the report.

A decline, though not to this extent, was seen in the manufacturing PMI as well with the index shrinking to 52.3 in November from October’s 22-month high of 54.4. But, the PMI numbers do indicate both manufacturing and services have taken a major hit in November. One needs to wait and watch how things will pan out from here on when more data comes.

November auto sales

Then we have the auto sales numbers, which is a good indicator to know what is happening on the ground. According to PTI report, the vehicle sales across categories registered a decline of 5.48 per cent at 15,63,665 units, from 16,54,407 in November 2015. It is the steepest decline in 43 months when total sales had declined by 7.75 per cent in March 2013. Two wheelers and commercial vehicles are the segments that are hit most. According to Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales last month were at 2,40,979 units, as against 2,36,664 in November last year. Domestic car sales ticked up to 1,73,606 units as against 1,73,111 in November last year while that of commercial vehicles (CVs) was down 11.58 per cent at 45,773 units in November, SIAM said. According to this report, total two-wheeler market sales dropped by five per cent, with market leaders like Hero MotoCorp and Bajaj Auto witnessing major fall. Hero MotoCorp sold 4,79,856 units of two-wheelers in November, marking a fall of around 12.9 percent year-on-year, while Bajaj Auto saw sales dropping by 12 percent in November, and others reported a flat growth.

The RBI cues

The RBI’s approach to the demonetisation impact on the economy is bit perplexing, but the obtrusive caution is hard to ignore. In its latest bi-monthly policy review, the central bank has already cut the FY17 growth forecast to 7.1 percent from 7.6 percent, but not taking into account the full impact of demonetisation shock. “The withdrawal of SBNs could transiently interrupt some part of industrial activity in November-December due to delays in payments of wages and purchases of inputs, although a fuller assessment is awaited,” the RBI said.

The RBI indeed acknowledges that there’ll be ‘short-run disruptions in economic activity in cash-intensive sectors such as retail trade, hotels & restaurants and transportation, and in the unorganised sector’. But the RBI’s larger assumption seems to be that there will be a recovery beyond short –term pain of cash-crunch. “ If the impact is transient as widely expected, growth should rebound strongly.”

But the central bank too only ‘expects’ that the demonetisation effect is ‘transient’ but it is not fully sure on the actual impact. “The outlook for GVA growth for 2016-17 has turned uncertain after the unexpected loss of momentum by 50 basis points in Q2 and the effects of the withdrawal of SBNs (specified bank notes) which are still playing out.” In short, the RBI has no clue at this stage what the demonetisation will do to the economic growth. It primarily attributes the loss of growth momentum in second quarter to the downward revision and to the as yet unclear effects of note ban. This means, if things turn bad, the 7.1 percent growth projection could be revised downwards even further to 6-6.5 percent.

Job losses

There are indications of severe hit to the employments in the informal sector post after the government announced Rs 500, Rs 1,000 notes as illegal tender on 8 November. As Singh points out in his Op-ed, “more than 90 per cent of India’s workforce still earn their wages in cash. These consist of hundreds of millions of agriculture workers, construction workers and so on”. The pain and suffering of these segments, which constitute the majority is not quantifiable, but no government can shun the responsibility of massive losses in the country that is a consequence of a “well thought-out”, conscious policy action, which according to RBI governor Urjit Patel, “wasn’t done in haste”. We don’t have reliable figures on job data. But, according to a report in Financial Express, which quotes unnamed industry officials, “As many as 4 lakh people, mostly daily wagers, may have either lost their jobs or shunned work temporarily due to the lack of payment so far, and the number is only going to grow if the cash crunch persists.”

Even the Bharatiya Mazdoor Sangh, the labour wing of BJP’s ideological parent, Rashtriya Swayamsevak Sangh has raised an alarm about the huge hit on job losses. “”Under the new government, 1 lakh and 35 thousand job opportunities have been created so far but 20 lakh people have lost their jobs,” Baij Nath Rai, president of the Bharatiya Mazdoor Sangh, told The Telegraph. This is a serious situation indeed in a country where job creation is already a massive challenge. The onus, yet again, falls on the Modi-government here.

The big question is how long the pain will last. There is no clarity on this either from the government and the central bank. PM Modi talks about 50-days, his finance minister, Arun Jaitley speaks of two or three quarters and the RBI doesn’t seem to have an answer except assuring the public that there is enough cash out there and things are under “constant review”.

There are no two thoughts on the intentions behind the demonetisation exercise but when ultimately a cost-benefit analysis is done, and if the government finds little luck on recovery on unaccounted cash, the cost of this whole exercise will be enormous, far outweighing the gains that may include more people moving to non-cash transactions. PM Modi’s big task now is to ensure demonetisation doesn’t end up as a tragedy.

Data support from Kishor Kadam

First Published On : Dec 9, 2016 14:59 IST

Parliament disrupted: Angry LK Advani reprimands Ananth Kumar, Sumitra Mahajan over stalemate

The impasse in Parliament over the issue of demonetisation has taken such a mammoth proportion that on Wednesday veteran BJP leader LK Advani was openly critical of Union Parliamentary Affairs Minister Ananth Kumar and Lok Sabha Speaker Sumitra Mahajan for failing to end the stalemate.

Led by Union Finance minister and Leader of the House Arun Jaitley in Rajya Sabha on Wednesday, the BJP took an aggressive stand and dared the Opposition to participate in the debate on demonetisation. The Parliament hardly did any business since the beginning of the Winter Session which already logged into its 16th day today.

BJP patriarch LK Advani. ReutersBJP patriarch LK Advani. Reuters

BJP patriarch LK Advani. Reuters

As soon as the House started, BJP members started shouting slogans from their benches after Jaitley challenged the opposition that to “have courage” to begin discussion on demonetisation, which they have been disrupting on a daily basis leading to many premature adjournments.

Disappointed by the series of adjournments, Advani spared none to express his anguish over the state of affairs. Apart from blaming Kumar and Mahajan, the veteran BJP leader also took the Opposition to task. Kumar’s efforts to mollify Advani did not have any desired impact on the veteran leader. Advani’s angered pitch was such that it was heard by the media persons sitting in the press gallery on the first floor of the House in Lok Sabha. The issue was such that it became an instant talking point among all concerned in the corridors of Parliament and outside.

At one level Advani’s giving a vent to his ire to his own party members, especially to someone who has been close to him and responsible for floor management in the both Houses of Parliament, could be taken as a genuine reading of the situation by the eldest statesman in the House. But then at another level, any such remark in full public on the current deadlock in Parliament on an issue as sensitive as demonetisation, could be taken as yet another censure of his own party and government.

Advani would know that his remarks would make instant news. Though senior BJP leaders including Information and Broadcasting and Urban Development Minister M Venkaiah Naidu played it down saying that this should be taken in good spirit, it could be easily assessed that ruling party had been deeply embarrassed by their ‘Margdarshak’.

The problem for the BJP is that the opposition might use Advani’s statement to target the government and go to town claiming that it was actually the government which was to be blamed for the deadlock in Parliament.

For over a year Advani had been silent, not speaking on any issue within and outside of Parliament. On demonetisation, he had issued a written statement hailing Modi’s decision. But his rather tough positioning on Parliament functioning came when a raging debate is going on the mismanagement of cash flow and hardships faced by common mass. At this juncture, the party could ill-afford reprimand on floor management from its senior most leader.

It had been over a year when Advani had taken on the current dispensation in the BJP. Shortly after BJP had lost Bihar elections Advani along with Murli Manohar Joshi and Yashwant Sinha had issued a joint statement, brief but tough and loaded: Results of Bihar elections has shown that “no lessons has been learned from the fiasco in Delhi. To say that everyone is responsible for the defeat is to ensure that no one is held responsible… Principal reason for latest defeat is the way the party has been emasculated in the last year. A thorough probe must be done of the reasons of defeat as well as the way party is being forced to kowtow to a handful and how its consensual character has been destroyed.”

This time around Advani’s message is not as direct and not as embarrassing but it has hit hard and made many talk about floor management and attitude of the government. The party stalwart may face further marginalisation but he apparently is not bothered for he would think that his was only true nature of a given situation.

There are some other people in the ruling party who feel that the issue could have been resolved if the government had shown slight flexibility. According to those believing in this line of thought, the prime minister should have been present in both Houses of Parliament when the Opposition had asked for initially and should have agreed to a discussion under a provision which requires voting.

“The party had taken a position that this was a fight against corruption and one has to be either for it or against it. Even if voting had been done, people would have taken note of who was with the government in the war against corruption, black money, fake currency and terror funding and those who were opposed to it,” said a government functionary.

First Published On : Dec 7, 2016 19:27 IST

Demonetisation round-up: Goyal says 100% success, Kerala FM calls it ‘calamity’

The fumes that have arisen ever since PM Narendra Modi made the demonetisation announcement on 8 November refuses to abate. The public has been standing in long queues ever since with many having to return empty handed, some being given less than their requested amounts and most ATMs dispensing only Rs 2000 notes while many went dry.

Over the weekend, the trouble just heightened for the common man as customers rushed to ATMs to withdraw their salary credited just a day or two back. The queues before ATMs were lengthier and stretched beyond late night at certain places.

PTIPTI

PTI

Meanwhile, supporters and those opposing the scheme continued their war of words. Here’s a round-up of what happened over the weekend:

Need clear tax laws to prevent black money creation: Niti chief

Terming taxation laws in the country as ‘ill-defined’, Niti Aayog vice-chairman Arvind Panagariya called for removing ambiguities in them so as to do away with “discretion of the tax officer”. He also said that demonetisation of high value currency is just one step to combat black money, and more needs to be done. “Tax reform is really important to curb black money,” he said at a panel discussion here.

Retailers asked to accept old Rs 500 note for recharges: COAI

Amid complaints about non-acceptance of old Rs 500 notes for mobile recharges at some places, cellular operators body COAI has said the companies have given strict guidelines to accept these notes from customers but retailers and distributors cannot be forced. COAI Director General Rajan Mathews said that operators have provided strict guidelines to their distributors and retailers for accepting and processing Rs 500 demonetised notes so that no inappropriate activity, contrary to the objectives of the government, takes place. “However, these retailers and distributors cannot be forced to do something they do not want to do, if they believe the process is tedious.

Depositing black money in banks will not make it white: FM

Issuing a veiled warning, Finance Minister Arun Jaitley said one cannot convert black money into white by merely depositing unaccounted cash in bank accounts as taxes are required to be paid on them. “By just depositing it (unaccounted money), you don’t avoid the responsibility of paying tax,” he said when asked about surge in deposits in banks following withdrawal of high denomination currency notes. He further said the income tax department is keeping an eye on such deposits.

Goyal describes demonetisation scheme ‘100 percent success’

Power Minister Piyush Goyal described the decision to demonetise currency notes “100 per cent success” and said money which was not kept in bank accounts has come into formal economy and now is traceable. “We have never imagined that (black) money will not be deposited in banks. We have given 50 days time to deposit (old currency notes of Rs 500/1,000) money,” Goyal told reporters.

Kerala FM terms demonetisation as ‘national calamity’

Kerala Finance Minister Thomas Isaac described the Centre’s decision to demonetise old Rs 500 and 1,000 notes a “national calamity” which has put the nation in a turmoil. “There is going to be a severe downturn. Even if you take 2 percent (decline in GDP as suggested by former prime minister Manmohan Singh)… it means something like loss of production of Rs 2.5 lakh crore…,” Isaac said, adding that the Centre’s move is now impacting almost all sectors of the economy. He dubbed it as a failed exercise, saying Prime Minister Narendra Modi is shifting the goalpost to cashless economy.

Petrol pumps get into digital overdrive, play up wallets

Making a push to promote digital payment post demonetisation, petrol pumps across the country have installed infrastructure to accept not just credit and debit cards but e-wallets and mobile wallets as an alternative to cash. Also, over 4,800 petrol pumps across the country are dispensing Rs 2,000 per card a day through POS machine swipes and have dispensed Rs 65 crore in the past two weeks.

Aiyar says Modi bungled ‘big time’ on note ban implementation

Noted journalist Swaminathan S Anklesaria Aiyar criticised the note ban, saying Prime Minister Narendra Modi has ‘bungled on a big scale’ so far but added he may still come out successful with some doles to the poor. He also warned that nobody has fully gauged demonetisation’s impact on the economy. Blaming Modi’s ‘lack of trust’ in anyone for the poor handling of the demonetisation move, he said it was done in great secrecy with even his own senior Cabinet colleagues not kept in the loop. “Modi does not trust his own Cabinet or anyone else, due to which he was incapable of preparing it well. The result is that it has been bungled on a very big scale,” Aiyar said.

RuPay card usage jumps 118 pc in 1st week of demonetization

RuPay card usage jumped by over 118.6 percent in the week following demonetisation that took effect from 8 November midnight while the overall debit and credit card transactions recorded an increase of 70.5 percent. According to RBI data, the usage of RuPay card at POS terminals soared by as much as 200.6 per cent to 46.6 lakh transactions during November 9-15. This compares with 15.5 lakh swipes during November 1-8.

Two-day seminar by CAIT to educate traders on e-payment

Seeking to educate traders about digital payment framework, a two-day seminar was organised by an umbrella body of traders to ease them in transitioning to a different transaction format. “With the kind of developments happening in the country we as traders will have to look for ways to enhance acceptance of digital payment to shift from traditional cash-based economy,” said Praveen Khandelwal, Secretary General, CAIT.

Bank unions seek Jaitley’s intervention to end cash-shortage

Two large bank unions on 2 December demanded immediate intervention of Finance Minister Arun Jaitley in ending the acute cash shortage in the system following the demonetisation of high-value notes last month. In a letter written to Jaitley, All-India Bank Employees Association and All-India Bank Officers Association said: “You (Jaitley) are very well aware of the problems being faced by the bank staff and customers after 8 November (when demonetisation was announced). Even after so many days we find that problem of acute cash shortage persists due to lack of lower denomination notes and non-functional ATMs,” the letter said.

Rs 2.5 lakh crore won’t come back into banking system: SBI

State Bank of India has estimated that money worth Rs 2.5 lakh crore may not come back into the banking system post demonetisation of high-value notes. On 8 November, the government banned banknotes of Rs 500 and Rs 1,000 worth over Rs 14 lakh crore from the economy. As per the SBI analysis, the market estimate of Rs 14.18 lakh crore currency – excluding cash with banks — is based on March 2016 data while in reality it should be based on data available as on 9 November, a day after demonetisation was announced. SBI noted that going by data as on 9 November, the amount of high currency denomination notes was Rs 15.44 lakh crore (excluding cash in the banks), an increase of Rs 1.26 lakh crore compared to the March figure.

Cash pain remains as demand outstrips supply

Shortage of cash continued to make things difficult as ATMs ran out of money quickly even as banks rationed valid notes to meet requirements of as many customers as possible. There were reports suggesting that bank branches from across the country did not get sufficient cash to take care of pay day withdrawals. While RBI placed weekly withdrawal limit of Rs 24,000 per person, bank branches on their own have further lowered the ceiling to make cash available to more people. The ATMs too did not come to the rescue either as most went dry soon after being loaded with cash, given the huge pent-up demand. Many ATMs were dispensing mainly Rs 2,000 notes.

Demonetisation: 27 senior PSU banks officials suspended

In a major crackdown on bank employees involved in irregularities post demonetisation, as many as 27 senior officials of various public sector banks have been suspended and six others transferred to check corrupt practices. The suspensions come amid reports of Income Tax authorities conducting search and seizure in many places, including one at Bengaluru where Rs 5.7 crore cash in new currency notes was recovered from two businessmen.

India Ratings lowers GDP forecast to 6.8% post demonetisation

India Ratings today lowered its GDP forecast for 2016-17 to 6.8 percent from 7.8 percent earlier, stating that the demonetisation drive will lead to an erosion of Rs 1.5 trillion this fiscal. “We have revised GDP growth forecast for 2016-17 to 6.8 percent, 100 basis points lower than earlier projection of 7.8 percent. The downward revision is a fallout of the disruptions caused at various levels in the economy due to the de-legalisation of banknotes from November 9, which according to our analysis can cost economy a Rs 1.5 trillion,” it said.

With PTI

First Published On : Dec 5, 2016 12:10 IST

If GST not rolled out by Sept, there won’t be taxation in country, warns Jaitley

New Delhi – Citing constitutional compulsion, Finance Minister Arun Jaitley today sought to drive home the point that the Goods and Services Tax has to roll out before September 16 next year as the existing indirect taxes will come to an end by then and it would not be possible to run the country without revenue collection.

He made a pitch for widening the tax base, saying efforts are on to make taxation process far simpler and make rates more reasonable.

Finance Minister Arun Jaitley. Reuters file photoFinance Minister Arun Jaitley. Reuters file photo

Finance Minister Arun Jaitley. Reuters file photo

For instance, he said, the GST Council is deliberating on ways to reduce the taxation process, including assessment by tax officials.

“Today, each person gets assessed thrice, in each of the three taxations (including VAT and central excise). Now, you will only be assessed once and what one authority assesses, others will have to accept that assessment,” he said.

Terming GST as a game changer, Jaitley said: “The Constitution does not permit delay in GST implementation. The government notified GST on 16 September and the constitutional amendment itself says the current indirect tax system can continue for one year, after which the GST has to come.”

So, if as on 16 September 2017, there is no GST, then there is no taxation in the country, he reasoned.

“So, you have a constitutional compulsion to have a Goods and Services Tax in place before September 16 (2017), otherwise the country doesn’t run, and the tax is absolutely essential. Therefore, our intention is it gets implemented from April 1, 2017, that was the original intention,” he said.

Jaitley made the point that states should not oppose every reform for the sake of opposition because that makes investors wary.

“The states must welcome the decision and I can only tell you, if some states are seen as opposing every reform, then investors in the country and the ones coming from outside, must decide which are the states they want to invest in,” he cautioned.

“So, if your state is seen on the wrong side of the reform, then investors are going to be very wary of those states.

First Published On : Dec 3, 2016 10:26 IST

Demonetisation to have long-term benefits; disruption temporary: Finance Minister Arun Jaitley

New Delhi: Conceding that demonetisation may create a disruption in short-term, Finance Minister Arun Jaitley on Friday said the impact on the economy may be seen “for a quarter or so” but relative advantages are going to be much more in the long run.

“When you switch over, it creates disruption. I don’t see disruption lasting too long. You may see the impact for a quarter or so. Then when you look at next 12-15 quarters, it’s certainly going to benefit,” he said at the HT Leadership Summit in New Delhi.

Citing a few economic trends post demonetisation, the Minister said rabi sowing this season has been higher than last year, while auto sales were a mixed bag.

A file image of Finance Minister Arun Jaitley. PTI

A file image of Finance Minister Arun Jaitley. PTI

“Of course, you will have some disruption created because of the switchover, in the long run, advantages are going to be huge as far as the relative cost of disruption is concerned,”
Jaitley said.

He further said the Indian economy has been witnessing a high growth in the past two years and retained the tag of the fastest growing large economy in the world. This year too, India would probably remain the fastest growing economy, the Finance Minister added.

On GST, Jaitley said, its implementation cannot be delayed beyond 17 September next year due to constitutional compulsion.

“First of all, the constitution does not permit a delay in GST implementation. The notified GST on 16 September and the constitutional amendment itself says that the current indirect tax system can continue for one year, after which the GST has to come,” he said.

“So, if on 16 September, 2017, there is no GST, then there is no taxation in the country. So, you have a constitutional compulsion to have a Goods and Services Tax in place before September 16; otherwise, the country doesn’t run, and the tax is absolutely essential,” the FM added.

The government intends to implement the GST from 1 April, 2017, Jaitley said.

Jaitley further said that low-cost deposit due to demonetisation will increase and therefore the ability of banks to use that money suddenly improves for reasonable cost lending in various sectors like social, infrastructure, industry and trade.

“So, that boosts the economy. There could be another limb, that money which was not deposited, then goes to the credit of the RBI. And that money can be constructively used.

And of course the third limb, the immediate advantage that you will have of this money, that are even being deposited and which are liable for exemplary taxation,” he said. And the fourth limb, he said, base of taxation for

And the fourth limb, he said, the base of taxation for direct and indirect would expand. Noting that security printing of currency is a fairly complicated and time-consuming exercise, the Finance Minister said, replacement of large volumes of currency required calibrated move by the RBI otherwise it would lead to malpractices.

“If you suddenly release entire thing in one go then there would be market malpractices and therefore remonetisation process is not instantaneous but it would be spread over a couple of weeks,” he said.

Acknowledging that long queues were factored in during the decision-making process of demonetisation, the finance minister appreciated that people have cooperated immensely and
those standing in queues were disciplined.

“The country, by and large, has welcomed this decision,” he said, adding there will be a very significant amount of currency that will be released into the market by 30 December.

“One of the significant advantages of this would be you won’t have the same level of currency which existed on 8 November… the level of paper currency will shrink, you should not expect the same level of paper currency coming back and it would be lesser. The balance would be replaced by other modes credit, debit cards, e-wallets,” the FM said.

Emphasising that people are already moving towards digital transactions, he said out of 80 crore credit and debit cards, 45 crore cards are in active circulation.

Besides, there are 23 crore e-wallets that started less than one-and-a-half years ago, he added.

“Both in politics and media, you find difficult to digest these figures but the country is changing much faster than what we think,” Jaitley said.

First Published On : Dec 2, 2016 17:01 IST

Pakistan should introspect why relations are tense, says Arun Jaitley

New Delhi: Blaming Pakistan for having an uneasy relationship with India, Finance Minister Arun Jaitley on Friday said it is for Islamabad to introspect as to why there are tensions between the two neighbours.

“It is a serious situation. Right from the day this government had been formed and even prior to that, India has taken one step after another honestly trying to improve relations with Pakistan,” he said at HT Leadership Summit in New Delhi.

Prime Minister Narendra Modi took a lot of initiatives, including unconventional ones but then the response was Pathankot or Uri attack, prompted by Pakistan, he said.

“This cannot be normal as far as Indo-Pak relationships are concerned. If there are tensions, it’s for the Pakistan to introspect really why there are tensions,” he said.

Asked about the impact of the change in regime in the US, Jaitley said the relationship between the two countries is expected to strengthen further.

“I have not the least doubt that India’s relations with the United States would continue to be on the same plank as it was, probably growing and maturing almost by the day,” he said.

“This was an unusual election as far as the US was concerned. When one of the world’s most powerful democracies through a fair electoral process takes a decision, we have to accept the decision,” he added.

First Published On : Dec 2, 2016 16:13 IST

GST stalemate: Why Centre can’t expect cooperation after concealing data from states

The crucial meeting of the GST council that was to happen on 25 November has been cancelled. No new date had been finalised, as of 24 November. Prior to the postponement, the GST negotiations between the state finance ministers and the
Union government had hit a roadblock after it was exposed that the Union government had been allegedly concealing true data from the state finance ministers during a large part of the negotiations . The present stalemate is around the issue of jurisdiction on the service taxpayers in the under Rs 1.5 crore revenue category. That the Union government has presented
misleading data to state finance ministers that hugely under represents the actual taxpayer base size is a pretty serious affair. It’s not surprising that it didn’t make big letter headlines given how the Delhi-based think-tanks and a segment of the business media is cheering for the Union government’s side in the GST negotiations. This sort of thing should have ended the
GST negotiations altogether, but the state governments have greater faith in cooperative federalism than the Union government had.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

Now that this is out in the open, Arun Jaitley is finding it difficult to defend the Union’s claims on a tax base that he earlier took for granted, given the allegedly misleading information that was fed by the Union government officials to the state finance ministers. Now, those “gains” by the Union government, based on allegedly previously concealed information, is suddenly up for negotiation and grabs. The future of this negotiation will decide a very crucial issue of federalism in the Indian Union – would the states retain any serious amount of revenue autonomy at all or will they become total beggars seeking alms in the court of the New Delhi Empire.

Let us understand the implications of this alleged concealment of data. The crucial issue is, who will control the service tax base for entities under the Rs 1.5 crore annual revenue threshold. This is not a theoretical argument but one that is premised on numbers – the most crucial among which is the actual size of this under Rs 1.5 crore revenue service tax payer base. In the initial meeting of the GST council, service taxpayer data supplied by the Union government to the state finance ministers showed a service taxpayer base of 11 lakh.

Negotiations thus happened on the basis of this number, which the state finance ministers in good faith believed to be true. One does not expect that in a crucial forum like the GST council, the Union government would be concealing real information and feed allegedly misleading information. Based on that 11 lakh number and its estimated revenue corpus, the states were magnanimous to the Union and decided to let the Union government retain control of the under Rs 1.5 crore annual revenue service tax base. Everything changed turned out that this 11 lakh number that was supplied by the Union government to the state finance ministers was deemed to be misleading by them.

New data available with the state finance ministers suggest that the actual service taxpayer base with below Rs 1.5 crore annual revenue is almost 31 lakh! That is almost 3 times the number that the Union government fed the state finance ministers earlier. Chairman of the empowered group of state finance ministers, West Bengal’s Finance Minister Amit Mitra has directly accused the Union government of concealing service taxpayer information from the states. A three-times increase in tax payer base has very different revenue implications. On the basis of that, a majority of the states have now proposed that for the under Rs 1.5 crore revenue class, state governments will have full control of both goods and service taxes, while for the over Rs 1.5 crore slab, there will be dual control and revenue sharing between the States and the Union.

Any entity whose bluff has been called out so directly would be embarrassed and would respond directly to the serious allegations that have been raised. Not, so the Union government. It has refused to agree to the formula proposed by a majority of the states, including Kerala, Bengal, Tamil Nadu, Bihar, Delhi, Odisha and others. Thus the stalemate continues. It is unfortunate when a 31 percent vote share government has the power to hold at ransom the united political decision of a majority of state governments. That is a fundamental flaw in the federal structure of the Indian Union.

In the 4 November meeting of the GST council, the state finance ministers wanted updated data on assesses of service tax, excise and VAT. Without giving updated data to state finance ministers on such crucial matters, what is the point of a GST
council meeting? Was the Union government thinking that the GST council will be a tea-drinking, rubber-stamp club for New Delhi’s decisions? After the state finance ministers raised a cry based on the new data on service taxpayer base, the Union
government tried to counter that by calling for a “re-opening” of the settled decision.

The goods and services issues are not equivalent. The service taxpayer base issue was “settled” earlier based on false date. Updated data that shows the actual base to be nearly 3 times larger than what the Union government’s earlier allegedly misleading numbers showed has resulted in this justified calls for negotiations from a majority of the states. There has been no such corresponding allegation of concealment from the states about the goods taxpayer base.

The Union government has retained the right to impose cess at will. Thus, it has a rate elastic source of revenue. The state governments, on the other hand, after GST proposals, have not been left with any elastic source of revenue. Thus, Union will
generate its own revenue in response to what it deems as an emergency. The states will have to go with a begging bowl to Delhi in a similar situation. This is unjust and a blow to the powers and dignity of the states.

Also, the upper slab of luxury goods, which represents a whopping 25 percent of the total indirect tax base, has been forcibly kept low on Union government’s insistence since it wants to add cess over it, which it does not have to share with the states. Thus, Union already wants to deprive states from their legitimate revenue claims in the top-most tier. Either states should also have the power to impose cess or the highest slab has to be revised upwards significantly to squeeze the space for Union cess. Otherwise this becomes another way where states will be deprived of their rightful revenue.

One hopes that the BJP will not be so shameless to introduce the GST bill as a money bill and silence the Opposition in Rajya Sabha. This too after getting immense cooperation extended by most of the opposition in spite of many reservations and concerns about GST that the opposition had voiced during the parliamentary GST debate. The states, by agreeing to GST, have given up exclusive revenue powers. By dangling deadlines and roll-out dates and its pressure tactics via big corporate controlled industry bodies, the Union will try to force the state into a dishonourable and damaging settlement.

It is up to the states to stand up to this blackmail coming from same Union government that has allegedly misled state governments by giving wrong information during crucial GST council meeting. This is about the future federalism in the Indian Union and preservation of the basic structure of the Constitution of India. If the state governments do not have exclusive control over any part of the tax-payer base, it will mean that the federal structure of the Indian Union will be damaged permanently. Any union government that misleads state government by concealing revenue data does not have any moral or ethical right to claim jurisdiction over the revenue sources situated in states.

First Published On : Nov 24, 2016 15:36 IST

Demonetisation: Opposition to organise all-India protest on 28 November

The opposition parties have joined hands to organise a nation-wide protest on 28 November against Narendra Modi government’s move that demonetised old notes of Rs 500 and Rs 1,000.

The opposition parties including Congress, Communist Party of India (Marxist), Samajwadi Party (SP), Trinamool Congress (TMC), Bahujan Samaj Party (BSP), All India Anna Dravida Munnetra Kazhagam (AIADMK) and Dravida Munnetra Kazhagam (DMK) announced the decision to hold the ‘All India Protest’, called Aakrosh Diwas, on Wednesday, after more than 200 MPs joined together to form a human chain in front of Mahatma Gandhi’s statue outside the Rajya Sabha to protest demonetisation.

Opposition members form a human chain during a protest against the demonetization of Rs 500 and Rs 1000 notes at Parliament house in New Delhi on Wednesday. PTI

Opposition members form a human chain during a protest against the demonetization of Rs 500 and Rs 1000 notes at Parliament house in New Delhi on Wednesday. PTI

Where will the protests take place

Based on the comments of the various parties who form the Opposition, the protests are likely to take place in all central government offices in districts and state capitals as well as outside banks.

United in stand, divided in methods

Though the Opposition remains united in its stand to protest against demonetisation, the parties have decided to adopt their own methods. The Communist Party of India (Marxist) released a statement on Wednesday stating that it would take part in “mass demonstrations, dharnas, picketing of RBI and Central government offices, rasta rokos, rail rokos, commercial and general hartal etc”.

DMK party chief, M Karunanidhi told PTI that the party will organise “massive protest demonstrations outside central government offices in all the districts” of Tamil Nadu. Congress, on the other hand, plans to organise protests in not only districts and state capitals but also in front of banks, NDTV reported.

Similar methods are expected to be used by other parties as well.

Why not protest as a united group?

During the meeting on Wednesday when the nationwide protest was announced, differences emerged on whether and when to meet President Pranab Mukherjee, The Indian Express reported. Incidentally, the Left is not very keen on meeting the President.

As a result of which the Opposition parties have decided to organise the nationwide protest in their own way, but on the same day. They would be “marching separately and striking together”, said CPM general secretary Sitaram Yechury quoting Mao, the report said.

What’s the goal? 

So, far different opposition parties have given different statements on their principal demands, but what is clear so far is none are happy with PM’s demonetisation move. Here’s what some of the main demands are:

— Allow old notes of Rs 500 and Rs 1,000 for all white transactions: In a statement released on Wednesday, the Polit Bureau of the Communist Party of India (Marxist) said that the principal demand for the party is that “the Rs 1000 and Rs 500 rupee notes should be allowed for all legal transactions, payments and settlements …. till alternative arrangements of making  new currency notes available is put in place or till 30 December”. Yechury on Thursday also said that in three sectors associated with exports, around 4 lakh people have lost their jobs since the move was announced.

— Joint Parliamentary committee investigation on alleged leaks on the move: Congress Vice-President Rahul Gandhi on Wednesday said that the Oppostion wants a joint parliamentary committee investigation on alleged selective leak about the demonetisation announcement. “Ahead of this decision, bank deposits surged drastically. BJP’s organisation in Bengal and other states knew of it. FM did not know but the BJP organisation knew. BJP’s industrialist friends knew,” the Congress leader said on Wendesday, as reported by News18.

— PM should address the Parliament, and name those who died due to demonetisation: Another major demand of the opposition was that Prime Minister Narendra Modi should address the parliament in both houses on the issue of demonetisation and  offer a condolence of those who died. According to News18, a condolence was offered on first day of the Parliament but since the names were not mentioned, the Opposition has refused to accept it.

— A debate on demonetisation: The Opposition on Wednesday said that it want a debate on both houses of the Parliament, and that Prime Miniser Narendra Modi should be present during it. While BJP has agreed for a debate, Congress has alleged that the opposition leaders are not allowed to speak.

However, on Thursday, Finance Minister Arun Jaitley said that that the government is ready for any debate in both houses, and alleged that it’s the opposition that is running away from it by adding new conditions to the debate. “We are ready for any debate on both the houses. The steps which we have taken are the right steps, and they were taken in the right manner,” he said, adding that the opposition just want to disrupt and not debate.

— TMC leader Mamata Banerjee wants a total rollback of the demonetisation move, which the BJP government has denied. Speaking at the Jantar-Mantar on Wednesday, she said, “Power me rehne se aankhen or kaan bandh hojate hain. Itni badi akad hai inme. (The government has closed its eyes and ears since gaining power. They have a lot of attitude),” International Business Times reported.

Should you be concerned?

Yes, very much. As if the problems due to demonetisation weren’t enough, a nationwide protest which also includes (rasta rokos and rail rokos) would mean more public inconvenience.

The queues outside banks and ATMs have not shortened, if protesters join in, the problem may only increased further. India has very poor track record of peaceful protests. The anger and frustration in the public could be further fuelled by protesters with mostly political voertones. And the fact that Road and rail blockades are also part of the CPI(M) agenda, it may affect transportation.

With inputs from PTI

First Published On : Nov 24, 2016 15:34 IST

RBI asks banks to ensure cash supply to rural cooperative banks for ongoing Rabi crop season

Mumbai: The Reserve Bank on Tuesday asked banks to ensure adequate cash supply to cooperative banks and Regional Rural Banks (RRBs) so that farmers can have enough valid notes needed for purchase of seeds, fertiliser and other inputs during the ongoing rabi season.

The decision comes a day after Finance Minister Arun Jaitley had a meeting with RBI, Nabard and all bankers and impressed upon them to make available funds to the cooperative sector as it is an important financing mechanism for rural India.

Representational image. ReutersRepresentational image. Reuters

Representational image. Reuters

According to RBI, it is imperative that farmers are adequately supported financially to ensure unhindered farming operations.

“It is estimated that about Rs 35,000 crore would be required by DCCBs (District Co-operative Banks) for sanction and disbursement of crop loans to farmers at the rate of Rs 10,000 crore per week,” an RBI notification said.

National Bank for Agriculture and Rural Development (Nabard) will be utilising its own cash credit limits up to about Rs 23,000 crore to enable the DCCBs to disburse the required crop loans to Primary Agricultural Credit Society (PACS) and farmers, it said.

“As many of these loans will be disbursed in cash to facilitate farming related expenses, we advise in this regard that banks with currency chests should ensure adequate cash supply to the DCCBs and RRBs,” it said.

Adequate cash supply should also be ensured for rural branches of all commercial banks, including RRBs, it said.

Further, it said, bank branches located in Agricultural Produce Market Committee (APMC) may also be given adequate cash to facilitate smooth procurement.

Jaitley on Tuesday said its focus will now be on rural areas and more measures will be announced for farmers.

The minister said the credit flow from banks will also go up for various activities, including agriculture as huge amount of cash due to demonetisation was deposited in the banking system.

It is expected that the government may announce some more measures to ease pressure on the farm sector.

First Published On : Nov 22, 2016 20:59 IST

Demonetisation: Arun Jaitley says execution could not have been better

New Delhi: Unfazed by criticism of the demonetisation move, Finance Minister Arun Jaitley on Friday said replacing 86 percent of the currency in circulation with new bank notes could not have been executed in a better way than currently being implemented.

Union Finance Minister Arun Jaitley. PTIUnion Finance Minister Arun Jaitley. PTI

Union Finance Minister Arun Jaitley. PTI

Ten days after the government withdrew Rs 1,000 and Rs 500 notes, he said the move will help banks lend at a
cheaper rate to businesses, trade, agriculture and infrastructure while at the same time getting rid of the shadow economy.

“On the execution part, I don’t think this could have been better executed than how it has been executed now,” he
said at an ET Now event in Mumbai.

He said replacing such a large currency without any social unrest and any significant economic disruption was an
“achievement”.

“When currency replacement takes place, initial inconvenience takes place, but there is not a single major
incident in the country. It’s moving smoothly as everyday passes by. The queues are getting smaller,” he said.

“In the next 1-2 weeks, we have to make sure currency reaches rural areas because that is where it’s required. This is the largest currency exchange in the world probably in recent times.”

Indian shopkeepers, traders and retailers, according to Jaitley, will realise that formal official trade is certainly superior way of doing business than just a shadow economy.

“It has its own pitfalls. And therefore by this shock therapy, everybody enters into cleaner system of economy. In the long run, it will be welcome by all,” he said.

Stating that there is not any parallel of such a large decision in Indian history in several decades that was
ethically and morally so correct, he said every honest man felt that he had no reason to be worried.

The decision has “popular support because there were people with crime money, black money or wealth accumulated by not paying taxes”.

In a major assault on black money and terror financing, Prime Minister Narendra Modi on 8 November announced
demonetisation of 500 and 1,000 rupee notes and asked holders of such notes to deposit them in bank accounts.

Jaitley said Rs 14 lakh crore or 86 per cent of India’s currency has been withdrawn and replacement is being done and printing of the new currency was done in adequate by the RBI much in advance.

“The whole thing is a very well planned and executed exercise. Obviously in the first two-three days there was a
lot of rush, last three days I have been going everyday myself to look at bank branches and I can say with full confidence that the rush has significantly come down… and today it has come down substantially,” he said.

Jaitley said 22,000 ATMs are being recalibrated in a day on war footing and in next few days all would be dispensing money. “RBI has provided more than adequate currency to the currency chest, there is absolutely no shortage”.

He said the earlier currency exchange limit of Rs 4,500 was being “misused”. Following complaints that people are
being hired to convert money and that is responsible for big queue, the government decided to start using indelible ink and reduced the limit of currency exchange to Rs 2,000 per person till 30 December.

“For me, there is a great regret that some people have been inconvenienced, which was bound to take place in an
operation of this kind because the larger object in the interest of country that we have to squeeze the quantum of currency, we have to withdraw the quantum of currency which was used in generation of black money, counterfeit. And we had to allow normal volume of currency in the market…,” he said.

He said most Chief Ministers across the country have not only supported this but they have in a big manner used the apparatus of state government to support this entire move.

On why the government was targeting only cash to unearth black money, Jaitley said it was necessary to squeeze cash to prevent generation of more black money.

“You have to squeeze cash because black money generates more black money. Not whatever is in assets is a matter of assessment by the income tax authorities. But whatever is lying in hard cash so that it does not generate anything for the future, has to be squeezed out,” he added.

Jaitley also dismissed the criticism that banks have written off loans belonging to large industrial houses.

“Write off in the banking parlance, does not mean loan waiver. It just means, that a performing asset has become a non-performing asset. And therefore the opposition must understand the banking terminology before making an
irresponsible statement,” Jaitley said.

First Published On : Nov 18, 2016 22:47 IST

Demonetisation: Pinarayi Vijayan protests Centre’s move, claims it will ‘destroy’ Kerala’s cooperative sector

Thiruvananthapuram: Kerala Chief Minister Pinarayi Vijayan, along with his ministers, sat on a dharna in front of the RBI office in Thiruvananthapuram, protesting against the Centre’s move to “destroy” the cooperative sector in the state under the cover of demonetisation process, while also taking pot shots at Prime Minister Narendra Modi.

Vijayan and his Cabinet colleagues marched from the Martyrs Column at Palayam to the RBI regional office in Thiruvananthapuram, before commencing the dharna.

The CM termed the Centre’s move a “political conspiracy”, backed by BJP, and rejected the saffron party’s charge that cooperative societies are “hub for black money”.

Attacking the Prime Minister, he said the demonetisation of Rs 1,000 and Rs 500 notes “without taking proper precautionary measures” had led to the present “crisis” and hardships to people.

File photo of Pinarayi Vijayan. PTI

File photo of Pinarayi Vijayan. PTI

Arguing that about 84-86 percent of currency in circulation was that in the demonetised notes, he said the sudden withdrawal had led to the “present crisis”.

“It was not an appropriate decision of a seasoned administrator,” he said.

Vijayan said the cooperative sector was not being allowed to accept deposits and exchange demonetised Rs 1,000 and Rs 500 notes which had led to “deep crisis” and attributed this to the outcome of BJP’s “propaganda”.

“All financial transactions in these societies have accurate inspection systems and these are deposits of ordinary persons,” he said, adding, the sector stands with the people of the state.

Vijayan said he and state Finance Minister Thomas Issac had met Union Finance Minister Arun Jaitley on 14 November to apprise the Centre of the difficulties of the cooperative sector.

“We pointed out that primary agricultural cooperative societies should also be allowed to exchange notes and accept deposits. We thought there would be a favourable decision. But by afternoon, the Centre decided to take back the permission given to district banks also,” he said, adding, “this was not a normal action”.

Pointing out that some people may be shocked that cooperative sector in the state had such deposits of about Rs 1.27 lakh crore, he said, “The sector has grown step by step and people working in this field are socially committed”.

Highlighting the importance of cooperative societies in Kerala, he said 70 percent of agriculture loans for farmers were given by the sector. Besides, it also meets the day-to-day needs of the people, he said.

Vijayan said, “Cooperative sector in Kerala has a bond with the people right from their birth to their death. People depend for all their small needs on the sector”.

To save the cooperative sector, Kerala will fight unitedly, he said.

“We need to stand together on the issue. We need to fight out forces who are trying to destroy the sector,” he said.

A special Cabinet has been called later in the day to discuss the issues of the sector and an all-party meeting would be held on 21 November on the issue, he said.

CPI(M) General Secretary Sitaram Yechury said all India programmes and actions on the issue will be launched along with other opposition parties and his party would take the initiative.

First Published On : Nov 18, 2016 16:10 IST

Demonetisation: From Modi rally to Maratha Morcha, how crash crunch is affecting politics

The government’s move to demonetise Rs 500 and Rs 1,000 currency notes will help curb black money in elections and its impact will be visible in the upcoming Assembly polls in five states, say experts, while Opposition leaders called it hasty or questioned its effect.

Former chief election commissioner SY Quraishi said the move will definitely have a positive impact on the election system, but more steps were needed to tackle the problem of black money in polls.

“It will definitely have some impact on the free flow of money in elections but I don’t think it will curb the whole menace. We all know that in the Uttar Pradesh and Punjab elections, money plays a big role. There will be some control after the decision,” Quraishi told IANS.

However, he added that the political parties would find different routes to convert their unaccounted money into accounted money.

People queued outside an ATM. PTIPeople queued outside an ATM. PTI

People queued outside an ATM. PTI

Political parties in Maharashtra, which are in the midst of election campaigns for the upcoming polls to the local bodies, seem to have been hit by the sudden demonetisation as it has affected the disbursal of election funds to party offices.

The move has also put some candidates in tight spot, who were otherwise aiming to lure voters with high-value notes, sources said.

One hundred and ninety-two municipal councils and 20 nagar panchayats are going to polls in the state between 27 November and 8 January.

A senior functionary of a political party requesting anonymity said that demonetisation has affected the disbursal of election funds for party units at the district and local level.

“The move has hit the political parties as well as the candidates, most of whom woo voters with cash,” he said.

In New Delhi, the Kranti Maratha Morcha (KMM) has cancelled its rally scheduled on 20 November citing financial crunch, reports The Indian Express.

“The demonetisation has hit our plans to proceed with the rallies in talukas and cities in Maharashtra and outside,” a senior KMM functionary told The Indian Express.

Even BJP itself have been hit by the cash crunch. In Agra, where Prime Minister Narendra Modi is scheduled to hold a rally on 20 November, from tents to chairs and lights, party workers had to arrange almost everything on credit from local traders, reports The Times of India.

According to the report, the time expenditure of would run around Rs 25-30 lakh and “like everyboy else”, the organisers have run out of cash.

Jagdeep Chhokar, founder member of Association for Democratic Reforms (ADR), told IANS that the decision will bring about reduction in black money in the country.

“This will absolutely impact the elections, particularly those parties which are gearing up for next year’s Assembly elections in five states.

“If political parties have organised their money then it will have no impact on them but those who would not have organised, they may find themselves in trouble. Now they will not be able to organise their unaccounted money. This will obviously impact the elections but will take much more time to completely curb the menace,” he added.

Sangeet Kumar Ragi, who teaches at Delhi University’s Political Science department, said those who use money power in elections will be severely impacted.

“Candidates who rely on wooing voters by using money will find the going difficult,” Ragi said, adding that all political parties will be impacted in some way and those opposing it are doing so for petty politics.

While Information and Broadcasting Minister M Venkaiah Naidu said that the measure will lead to election expenses of candidates coming down and “sincere” politicians would be happy with it, Uttar Pradesh chief minister Akhilesh Yadav linked it to the upcoming Assembly polls and said it was not a permanent solution.

“It is quite possible that decision might have been taken in view of Assembly elections. It seems that the decision has been taken in hurry. They could have discussed it in parliament as the session is likely to begin this month itself,” Akhilesh told reporters in Lucknow.

Apart from Uttar Pradesh, assembly polls are expected to be held early next year in Uttarakhand, Punjab, Goa and Manipur.

Union Finance Minister Arun Jaitley, however, said the decision had no connection with elections.

“After this decision, if elections get cheaper, it will be a great service to nation. If elections get cheaper, it will be a good beginning,” Jaitley told reporters in New Delhi.

His predecessor, P Chidambaram of the Congress, said that his party will fight elections according to rules and regulations.

“I don’t know… You must ask people who spend large amounts of money in elections. I don’t know if people stash cash three months ahead of elections. I don’t know. I know that people pull out money at the time of elections and spend it for elections. I don’t know if people put it in gunny bags or suitcases and store it somewhere. I don’t know,” he said to queries on the impact of the government’s decision on political parties.

“The Congress party, in anyway, did not have too much money even in the last elections,” he said.

Swaraj India leader Yogendra Yadav told IANS that he supports the decision but it is mainly aimed at checking counterfeit currency notes.

“The prime minister has tried to make virtue of this necessity. His party has made grand claims about this decision being a historic game changer in the fight against black money and terror. There is not much to justify this propaganda.

“This decision would not affect much of the black money that has entered the stock market or real estate or has been parked outside the country via dubious financial instruments,” he said.

With inputs from agencies

First Published On : Nov 17, 2016 12:16 IST

Budget 2017: After demonetisation, a carrot by way of banking transaction tax on 1 Feb?

Listening to Narendra Modi‘s speech to NRIs in Japan last week, many would have wondered if the prime minister is not in touch with what is happening back home. His joke about people not having money to conduct weddings in the family, coming across in particular as insensitive.

Since his return, the NDA government has tried to get its act together. Micro ATMs have been deployed in semi-rural areas and the limits for withdrawal have been increased. To check on cash hoarding, incredible India is turning into indelible India, with the ink that is used to check voter fraud in elections being used on the fingers. A terrible move in terms of optics and messaging and is annoying citizens to no end.

That the BJP is invested in this big ticket move is obvious from the manner in which Amit Shah is reportedly supervising the nuts and bolts of ‘Operation Demonetisation’. If there is anyone in the political establishment who perhaps has an inkling of Modi’s mind, it is Shah.

File image of Prime Minister Narendra Modi. PTI

File image of Prime Minister Narendra Modi. PTI

Speaking in Goa on Sunday, Modi indicated that demonetisation is only the first step in the anti-black money conveyor belt. And that post 30 December, many more financial surgical strikes would continue. That will most likely be on jewellery and the benaami land deals, where most of the black money is parked. Aadhaar seeding of revenue data of agricultural lands and property tax data would be used to weed out the benaami holders, by linking their assets to their PAN card.

All this is going to essentially line the exchequer and will filter down in terms of more social welfare benefits for the poor. But what is in it for you and me, the Form 16 salaried middle class, for who the queue in front of the bank and the ATM have become a home away from home in the last one week.

Admittedly, things have not gone according to Modi’s plan. The Finance Ministry and RBI have goofed up in estimating the scale of operations that were needed to roll out the new currency to the public. With most ATMs running dry and people suffering from ‘withdrawal symptoms’, India is looking like a state running helter-skelter. The immediate priority would be to get things under control, even as a parallel political slug fest plays out in Parliament.

The reason Modi went for demonetisation first instead of say, scrutiny of land deals was to get public mood on his side. Nothing excites a human being and an Indian in particular, than to give him the feeling that Modi will get the rupee from the rich into your pocket. That job is not yet done and Modi has another 42 days to win his fellow Indians over.

If demonetisation and the other measures that will follow can achieve the desired results of bringing in even one third of the black money into the legal system, Modi’s purpose would be largely served. It is a tall order. The second step to follow would be to seen as visibly passing on the benefits to the common man.

Depending on the results of the drive till 30 December, one of the very drastic options before Modi could be to scrap income tax from 2017-18 and replace it with Banking Transaction Tax (BTT) from 1 April, 2017. If done, this will be the biggest financial decision since 1991. In one stroke, it will excite the huge Indian middle class. On the face of it, there won’t be an incentive to deal in cash any more and every transaction can be shown in the books. Dealing with corruption in the I-T department will also be a thing of the past.

With BTT imposed, it will bring that many more people into a different kind of informal tax net. Revenue generated from income tax was Rs 2.86 lakh crore in 2015-16 and the BTT with a wider base could start replacing it. Besides, revenue can also be generated as they are now, through a more transparent auction of coal and spectrum. A win-win situation for both the government and the people.

Yes, there will be that section of people who do not fall under the tax bracket now and will not like being subjected to a BTT. The poor who were encouraged to open bank accounts under the Jan Dhan Yojna too would resent having been trapped by a tax net. Modi will have to particularly look at how to ensure the poorest of the poor do not feel aggrieved.

In terms of consumer behaviour, this will also lead to a reduction of high value consumption because there would be no more black money to splurge on unnecessary stuff. It will end up making the economy more honest. With no tax burden, there will be more savings by households, which would find its way into investments.

But this comes with a huge risk baggage. If it does not work out, India’s economy could simply collapse. A safer carrot for Arun Jaitley to offer would be to adjust the tax slabs and lower rates significantly in order to give more concessions to the salaried class and keep it happy.

This financial year’s Union Budget is going to be presented on a different date — 1 February, 2017 instead of on the last day of February. It will be a much anticipated financial document.

First Published On : Nov 16, 2016 08:36 IST

Demonetisation: Rumours of strike against currency ban baseless, says Shaktikanta Das

New Delhi: The Finance Ministry on Tuesday dismissed as baseless rumours that some institutions were planning a strike against demonetisation and said technology teams will be set up to hasten the pace of recalibrating ATMs.

Shaktikanta Das. File photo. PIB

Shaktikanta Das. File photo. PIB

“Don’t believe rumours spread on the social media about certain institutions going on strike,” Economic Affairs Secretary Shaktikanta Das told reporters.

“On zooming the (strike) picture on the social media, it was found to be from 2015,” he added.

Das was briefing the media on the second review meeting on demonetisation held by Prime Minister Narendra Modi with officials of the Finance Ministry and the Reserve Bank of India (RBI) on Monday night.

To ease liquidity crunch, Das said, it was decided to constitute ‘technology teams’ to hasten the pace of recalibrating the ATMs for the new high-denomination notes.

Finance Minister Arun Jaitley had said it will take 2-3 weeks to recalibrate the ATMs. All ATMs in India need to be calibrated afresh to disburse the newly-minted Rs 500 and Rs 2,000 notes as per their weight, dimensions, design and security features.

The technology teams have also been directed to popularise e-wallets among people, Das said.

Micro ATMs are also being deployed in banks across the country.

“Separate green channel is being created in banks across the country for micro ATMs,” he said.

Among other measures, a task force has been formed to monitor stocking and transfer of old notes in other places, the senior officer said.

Assuring the people of enough cash availability with banks and post offices, Das said there was no reason for panic.

First Published On : Nov 15, 2016 15:57 IST

Demonetisation drive: Currency chaos in country is because of poor planning, says Subramanian Swamy

After a surprise announcement by prime minister Narendra Modi on 8 November to demonetise Rs 500 and Rs 1,000 bank notes, BJP MP Subramanian Swamy made his unhappiness with the government very clear. He told South China Morning Post that the confusion over currency and chaos at banks at automated teller machines (ATMs) and banks was because of poor planning and execution on the government’s side.

CNN News18 reported that Swamy said that while excuses can be made for ministries not being in the loop, it was inexcusable that they did not have a contingency plan. “Ad hoc roadside kiosks should have been set up for all and special kiosks organised for senior citizens. All these should have been planned as part of a contingency plan,” Swamy was quoted as saying, by the CNN News18, in Hong Kong. Swamy was present there to give a talk about the anti-corruption efforts that India is currently engaged in.

Banks have struggled to dispense cash following the government’s decision to withdraw large denomination notes in an attempt to uncover billions of dollars in undeclared wealth. Tempers frayed as hundreds of thousands of people queued for hours outside banks for a fourth day to swap 500 and 1,000 rupee bank notes after the notes were abolished earlier in the week. The banned bills made up more than 80 percent of the currency in circulation, leaving millions of people without cash and threatening to bring much of the cash-driven economy to a halt.

Subramaniam Swamy. PTISubramaniam Swamy. PTI

Subramaniam Swamy. PTI

“There are around 125,000 branches of public, private, regional and rural banks across India and 20 RBI regional offices from where currency chests are dispatched to all these locations. But that is not happening quickly enough although RBI has received full currency stocks from the printing presses,” said All India Bank Employees Association vice president Vishwas Utagi. The situation was worse in small towns and far-flung rural areas where there were few bank branches and very limited ATMs and people were unable to exchange old notes or carry out banking transactions, he said. In Patna, a group of angry people broke the locked gates of a bank and forcibly entered it in Bihar’s Gopalganj district after being told there was no cash, police said.

Amid this on-going unrest around ATMs and banks, on Saturday, finance minister Arun Jaitley said that though people will face an inconvenience in the beginning, the long terms benefits are much larger. He also said that it would take ATMs two or three weeks to function properly as they have to be recaliberated to dispense the new currency. This statement has not sunk well with people as it will delay getting liquid cash. Jaitley said that it would take an estimate of 21 days in order to recalibarate all the 2 lakh ATMs in the country.

Modi on Sunday sought 50 days to tide over the nationwide cash crisis. Addressing a public rally in Goa, Modi made an impassioned plea to citizens to give him until December 30 to weed out the ill-gotten wealth in India. “I know what kind of powers I have taken on. I know the kind of people who will be against me now. I am looting what they had accumulated over 70 years,” Modi said at an indoor stadium in Bambolim village near Panaji.

“They will not leave me alive. They will destroy me. Let them do what they want. (For) 50 days, help me. The country should just help me for 50 days.

Delhi Chief Minister Arvind Kejriwal requested Modi to roll back the scheme and first jail those with illegal Swiss bank accounts.  The Aam Aadmi Party leader warned that if the massive cash crunch continued, it could lead to law and order problems that could spiral out of control. He took on Modi for demanding 50 more days to streamline the system. “Does this mean that the markets will remain closed for the next 50 days? How can farmers survive? Will people keep standing in queues for 50 days? He is only giving an emotional speech.”

West Bengal Chief Minister Mamata Banerjee, who has been very critical of the demonetisation, called for an opposition front against Modi and even telephoned CPI-M leader Sitaram Yechury. She said she and other political leaders would meet President Pranab Mukherjee over the issue this week.

With inputs from agencies

First Published On : Nov 13, 2016 21:46 IST

Demonetisation: Amit Shah, Arun Jaitley differ on surveillance on bank deposits

Those who thought that they would not incur the liability and need not have fear of any kind in depositing old or demonetised currency notes of Rs 500 and Rs 1,000 beware. Even worse, the long unending queues before banks and ATMs may become a bit thinner in days to come but it is not going to end anytime soon.

Union Finance Minister Arun Jaitley and BJP president Amit Shah. PTIUnion Finance Minister Arun Jaitley and BJP president Amit Shah. PTI

Union Finance Minister Arun Jaitley and BJP president Amit Shah. PTI

The war against black money, fake currency, hawala, terror financing, drugs and so on will take its own kind of toll on common men and women. They will have to face their share of short-term hardships. The situation as it prevails now gives a sense that the government overestimated the strength and efficiency of its banking infrastructure. The intentions behind this decisive move were right and praiseworthy. But somewhere while taking this bold and brave decision it misjudged the logistical issues and capacities.

Those who looked up to Finance Minister Arun Jaitley’s press conference on Saturday to get a clear assurance and a possible date for banking infrastructure to function as in the good old pre-8 November days when cash was available within minutes, would be disappointed. The finance minister said the banks could not be told before the 8 November evening address to the nation by Prime Minister Narendra Modi to recalibrate their ATMs because of understandable secrecy reasons. Each of the over two lakh ATMs in the country will have to be physically calibrated, two of cash boxes inside the machine changed and the software there synced with the central system for them to function normally. This process according to the finance minister will take two to three weeks time if not more.

His assurance was that there was enough cash in the 4,000 RBI currency chests spread across the country, thus there was no reason to rush. Jaitley said the problem was logistical in some places as notes of higher denominations were available than the currency notes which customers wanted.

But more than what Jaitley said would concern people was the fact that whatever amount was being deposited in the banks was being monitored by the concerned revenue departments — Income Tax and Enforcement Directorate. Cropping up of sudden money from nowhere and the rise in deposits in Jan Dhan accounts are also being factored in. In fact, Jaitley spoke about money deposits in Jan Dhan accounts twice — once on his own and second in response to a query — during the course of the press conference.

Jaitley’s contention was that the revenue departments are keeping a close eye on the deposits in Jan Dhan or any other savings accounts. This is in contravention to the initial assurance given by the government, as also to the assurance given by the BJP president Amit Shah at a specially called media briefing on Friday at the party headquarters. Shah had said, “Those who have currency notes in the denomination of Rs 500 and Rs 1,000 below Rs 2.5 lakh, would have no issue by putting it in their bank accounts and no one in the process will have to face any inquiry.” Later the party even issued the same statement as a press release.

The BJP has a social constituency. Unnecessary harassment by the income tax and other revenue departments to those who made genuine household savings could turn them against the party. Jaitley, however, maintained that this was being done with the aim of attaining clean transaction, clean money.

The finance minister was also unrelenting on hardships faced by small traders and hawkers, like those fruit and vegetable vendors who wouldn’t get supply from the wholesalers due to the paucity of cash. “Why should wholesale business be transacted in cash? Every exemption is a gateway to corruption.”

It was also time for Jaitley to take to rival political parties — the Congress, Samajwadi Party, and Aam Aadmi Party.

“The political reactions that are coming in, some are most irresponsible. A demand for one week reprieve (by Samajwadi Party chief Mulayam Singh Yadav has been made. This gives the whole game away,” the Union minister said.

Training his guns at the Congress, he said the party said this morning that “it’s our money, so why should we stand in line.” It “could be your money” but the government and the people have a right to know whether “you have paid taxes”. The government will insist on that.

Aam Admi Party chief Arvind Kejriwal who saw a scam behind the demonetisation move was strongly rebutted by Jaitley. The Delhi chief minister even charged that the deposits in the banks have increased in the last quarter. The finance minister said he had all the deposit figures from RBI and in the last one year there has been a spike in deposit figures only once in September. Jaitley said that Kejriwal should have applied his mind and seen the rationale before pressing the charge. The minister said that due to the pay arrears of Seventh Pay Commission which was released on 31 Agust there was a spurt in bank deposits.

The arrears were deposited in bank accounts between 21 August to 15 September and “on that basis a concocted story was made” by Kejriwal, Jaitley said.

The finance minister and the top brass in the government should, however, note that whatever politically motivated concoction is being made by Congress vice-president Rahul Gandhi, Kejriwal, Mulayam and Bahujan Samaj Party chief Mayawti, would not have any taker if the public at large is not inconvenienced beyond the tolerable limit. But if the hardship persists for weeks to come then there could be some bad publicity which the Modi government will have to guard against.

First Published On : Nov 12, 2016 19:43 IST

Rs 500, Rs 1,000 ban: Modi govt’s intention fair, but failed those without bank accounts

Sticking points in implementation of the Jan Dhan Yojna showed us how weak our banking sector is in dealing with such changes. And these points should have been factored in.

Usha Rani, 55, resident of Chilla Village in East Delhi is clueless as to how she would buy groceries for her evening meal. She, like lot of other women of her locality, who work as house help, prefers to keep a larger part of their savings with themselves and buy groceries and vegetables on daily basis.

Sadly, all her employers gave her Rs 1,000 and Rs 500 notes this month, which she is clueless about where to use.

Using debit card is still an ‘unimaginable’ thing for the likes of Usha, who do not know to read and write.

With the help of one of her employers, Usha deposits a regular sum in her bank account, but visiting a bank branch or an ATM to deposit or withdraw money is still a very rare thing for her.

Chennai: People scuffle to exchange Rs 1000 and 500 notes at a bank in Chennai on Friday. PTI Photo by R Senthil Kumar(PTI11_11_2016_000144B)Chennai: People scuffle to exchange Rs 1000 and 500 notes at a bank in Chennai on Friday. PTI Photo by R Senthil Kumar(PTI11_11_2016_000144B)

Representational image. PTI

For Usha, her old and rusted iron trunk is still her most accessible bank, and for millions like her.

In August 2014, Prime Minister Narendra Modi launched his very ambitious financial inclusion scheme Pradhan Mantri Jan Dhan Yojna (PMJDY). The idea was to instill the banking habit among people by giving each households at least one bank account.

As stated by the vision document of the PMJDY, the plan envisaged “universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility. In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of र 1 lakh”.

In January 2015, in less that five months, 11.5 crore accounts were opened under Jan Dhan Yojana. The figure fetches the government a Guinness Book of World Records entry for opening the maximum number of bank accounts in the shortest possible time.

But along with this motivating figure was another that raised serious concern that was of non-operational or zero balance account. Out of total 11.5 crore accounts that were opened only 28 percent were operational.

At that time Finance Minister Arun Jaitley, while speaking on this issue of zero-balance accounts, had said that the direct benefit transfer will make sure that non-operational accounts are made operative in coming times.

That happened to a great extent. But that only made the accounts operational. That did not mean that banking habits were instilled among people at large.

As of now, under the scheme, 23.37 crore accounts were opened till 2 November. According to official statistics, 100 percent household coverage in majority of the states have been achieved.

Now consider this: According to official data 23.37 percent of the accounts are still having zero balance. When converted into numbers it runs into crores.

A report published in The Indian Express in September revealed how banks concerned about the huge number of non-operational accounts, were “quietly making one-rupee deposits, many from their own allowances, some from money kept aside for office maintenance. Their ostensible goal: to reduce the branch’s tally of zero-balance accounts”.

The report stated, “As many as 20 branch managers and officials told The Indian Express, on the condition that they not be identified, that there is ‘pressure’ on them to show that zero-balance accounts are falling in number.”

In August 2014, Prime Minister Narendra Modi launched his very ambitious financial inclusion scheme Pradhan Mantri Jan Dhan Yojna (PMJDY). The idea was to instill the banking habit among people by giving each households at least one bank account.

During the field visit to different states to report about the implementation of the PMJDY in 2014 and 2015, it became evident that lack of financial literacy and appropriate banking infrastructure were some of the biggest sticking points.

The sudden launch of the PMJDY with a massive target of opening 7.5 crore accounts, which was later revised to 10 crore, left the banking infrastructure in lurch. Duplication of accounts, wrong seeding with Aadhaar for DBT, that followed the launch of the scheme highlighted the problems in banking infrastructure and lack of financial literacy.

Apart from the media glare of the national capital, in smaller towns and villages, people had to struggle to get their subsidy money. In many cases in Bihar, people were not regularly getting their DBT and LPG subsidy and intense apathy of the bank officials were evident.

In the entire PMJDY, it was complementary components of the plan (in-built accident insurance cover of Rs 1 lakh, and an overdraft facility of Rs 5,000) that motivated people to open accounts and not the fact that they were to become part of the formal banking structure.

And this is the reason a resentment is being slowly building among the people as they are clueless as to how to deal with the situation.

Former Reserve Bank of India (RBI) Governor Bimal Jalan while commenting upon government’s decision said, “This is a very good move. Nobody can say that we should not do anything to tackle black money. It will have a clear impact on unaccounted transactions. The question now is of implementing it in a way that it does not cause any disruption in trade and daily transactions made by people. We have to see if we have the enough banking infrastructure in our country that can help the smooth implementation of this decision. Like in the rural areas people might face problem as there is still lots of cash transactions.”

As highlighted by Jalan, formal banking and use of debit cards is still not a regular feat for millions of people living in rural and semi-urban areas. During the implementation of the PMJDY, it became evident that India’s banking infrastructure was under immense constrain due to huge numbers of accounts that were to be opened under the scheme.

In this context, the government was supposed to have dealt this issue with some sincerity before launching the scheme.

The consequences of ignoring it are apparent. With a host of ATMs not working, banking staff grappling with insane amount of crowd and all sort of rumours doing rounds, the situation is becoming difficult.

In many cases, people when trying to exchange their Rs 500 and Rs 1,000 notes are forcefully given Rs 2,000 notes. For a person belonging to lower income group, buying vegetables for Rs 40 is becoming an impossible task. For someone like Ravi, who works as janitor at a private firm, it is like being “robbed of your ability to live in one stroke”.

DK Singh, who works as caretaker of a hosing society in Delhi, says, “The problem is not that government has banned these notes. But the issue is that whether they made enough provisions to help customers replace it. Yesterday, after standing for three hours in the queue, I got one Rs 2,000 note. Do you think it is very easy to exchange it if you buy something even for Rs 500, when Rs 100 notes have suddenly become so scare?”

While there can be little doubt about the fair intention of the government behind the decision, the problem lies somewhere else. The problem lies in the inability of the government to aptly ascertain the capability of its banking structure, the extent of population which is still not part of formal banking structure and huge magnitude of cash transactions. If only government could have weighed in these factors and then acted, it would have been win-win situation for all honest stakeholders.

First Published On : Nov 12, 2016 16:07 IST

Rs 500, Rs 1,000 ban: India may soon see cash riots unless govt ensures adequate cash flow

Government notables led by Finance Minister Arun Jaitley are arguing that the decision, spearheaded by Prime Minister Narendra Modi, was aimed at making India a cashless society. But unless the government is successful in ensuring adequate cash flow in banks and ATM machines over the next few days, the country will truly become cashless.

For the past three days, conversations in families and offices have often begun and ended with the amount of money in physical wallets, not e-wallets. Unless adequate currency notes are re-introduced and made available to people without having to spend hours standing in serpentine queues, we may soon be witnessing cash riots. Already, reports from different parts of major cities are trickling that police is being called frequently to manage crowds milling inside and outside banks and ensuring that frayed tempers do into spill over into bloody battles.

Queue outside ATMs. PTI

Queue outside ATMs. PTI

In the past two days, I’m not alone whose inbox has been flooded with offers from banks and other agencies for credit cards and advisories on how to make optimum use of electronic transactions. Since Modi’s announcement that government has demonetised existing Rs 500 and Rs 1,000 notes, several newspapers have published full-page advertisements of companies offering e-wallet facilities. Ola and Uber have also sent emails and placed adverts announcing payments for services can be made now by credit card.

These developments, coupled with statements like Jaitley’s that the “logical step was India has to move towards the cashless society” has made it appear that the demise of currency notes and transactions made by them is imminent. But is this possible in a country where a report, sourced to the banking division of the finance ministry revealed that just an estimated 28-32 percent of Indians have easy access to financial institutions?

Publicists of the government, however, will cite that after the success of Jan Dhan Yojna “every Indian family has bank accounts and today almost everyone who wants, has a bank account unless somebody voluntarily opts out” and this is proof that in less than two and a half years, the government has ensured that systems for transiting to cashless transactions have been put in place. It is pointed out that an advisory has been issued for government departments and other official agencies, both Central and at the State-level, to make payments in a cashless manner.

Credit card data is also cited to argue that Indians are increasingly opting for plastic money. Adherers of this viewpoint cite the fact that by March this year, a total of 24.51 million credit cards and 661.8 million debit cards had been issued. But, given the fact that most credit card holders, use more than one and that even after several years, the majority of users do not use debit cards except to withdraw cash from ATM machines, the use of currency continues to be the preferred route for making purchases and clearing bills.

There is no doubt that one part of India, especially the middle-middle classes and above, is increasingly opting for electronic forms of transaction and using their information and knowledge for their benefit. But this section does not comprise the majority which is still made up of people are either hovering below or around the poverty line and those who are marginally above them. As the controversy over zero-balance JDY has shown, having bank accounts is no guarantee that people are using banks regularly. Banking department figures also demonstrate that location of bank branches are skewed in favour of 60 Tier I and Tier II cities with branches in these two categories accounting for almost one-third of total banks in the country.

If one tallies the total population of these cities, one will realise how lopsided Indian banking system is. Besides, giving greater emphasis to banking in big urban centres, disconcertingly, economically less-developed and areas away from the national mainstream – both in terms of geographical location and national consciousness – are neglected by the banking industry. There are 38 districts in the country – mainly in the northeastern states – where there are less than 10 branches and it would be foolhardy to expect people here to transit from not approaching banks to going cashless.

The majority of Indians are no longer illiterate but that does not mean that the majority is technologically competent to conduct cashless transactions. Often, India’s vast mobile network and the number of mobile phones and connections used by people is cited to argue that people are using smartphones to access information related to their profession – be it weather forecast or commodity prices. Yet, the fact remains that for the majority of Indians, mobile phones, far from holders of e-wallet, remain just a simple device to make and receive calls, listen to some music and, of course, read SMSs sent by Modi ji’s department!

The government is trying to leapfrog India’s transactional practise by several decades. There are cultural reasons for people to stick to physical currency and this is not restricted to any class. The poignant tale about the matriarch of rural household who hid two Rs 500 rupee notes from others in the family by stitching these into the quilt with which she covers herself, is symbolic of the importance of paper currency in the Indian currency.

Bank notes provide security and comfort which the system denies to most. Some weeks ago, there had been an alarm all over the country when news spread that lakhs of debit cards had been compromised. India has several lines that divide the people into several sections. By presenting the ability to make a transition to cashless transactions a virtue, we will create a new group of deprived citizens and India could best avoid another category of have-nots.

India does not require an avatar Marie Antoinette. It is not the time for the government to say that if people have no cash, let them go cashless.

The author is a Delhi-based writer and journalist. He authored – Narendra Modi: The Man, The Times and Sikhs: The Untold Agony of 1984.  Tweets @NilanjanUdwin

First Published On : Nov 11, 2016 19:06 IST

Rs 500, Rs 1,000 note ban: Income Tax department conducts surveys in Delhi, Mumbai to catch ‘currency’ profiteers

New Delhi: The Income Tax department on Thursday conducted multiple surveys in Delhi, Mumbai and other cities in the wake of reports of alleged profiteering and subsequent tax evasion by traders by converting withdrawn currency notes in an illegal manner.

Interestingly, the operations (surveys) were launched from the evening as the taxman wanted some hard cash to get accumulated at the payment counters to make the action effective.

Officials said the operations are being carried out at least at four locations in the national capital including popular market places like Karol Bagh, Dariba Kalan and Chandni Chowk, three locations in Mumbai and few others in Chandigarh and Ludhiana.

Representational image. AFP

Representational image. AFP

Till reports came in, similar survey operations by I-T authorities are also understood to have been launched in two south Indian cities.

Sources said the department had received “actionable inputs” that some traders, jewellers, currency exchanges and hawala dealers were allegedly exploiting the recent currency demonetisation of Rs 500 and Rs 1,000 notes and were changing currencies at “discounted” prices, thereby profiteering illegally.

They said the operations were planned after CBDT Chairman Sushil Chandra on Wednesday asked all the investigation units in the country to keep a check on suspicious movement of huge cash and other illegal transactions leading to tax evasion.

Officials added that almost over 100 tax sleuths along with police officials have been roped in for the survey operations.

At few places, they said, some preliminary documents have been seized.

Finance Minister Arun Jaitley today assured people that taxman will not hound those making small deposits in scrapped Rs 500/1,000 currency adding, however, people with “large amounts of undisclosed monies will have to face the consequences under the tax laws”.

Top I-T department officials had on Wednesday said the government’s directive to them is “very clear”, saying any instance of tax evasion and black money should be dealt with strictly, especially after two opportunities in the form of one-time stash declaration window has been provided.

In a surprise move, Prime Minister Narendra Modi had on 8 November announced demonetisation of Rs 500 and Rs 1,000 notes and introduction of the new Rs 500 and Rs 2,000 ones with additional security features.

Rs 1000, Rs 500 notes band: Govt allows currency at toll plazas till 11 November

New Delhi: To avoid long queues at toll plazas Pan India, the government on Wednesday asked them to accept the old Rs 500 and Rs 1,000 currency notes till 11 November midnight. The decision was taken after National Highways Authority of India (NHAI) Chairman Raghav Chandra took up the matter with the Prime Minister’s Office after being flooded by calls from states over the grim situation at toll plazas.

“We have issued instructions to all 365 toll plazas across the country to immediately accept currency denominations of Rs 500 and Rs 1000 till 11 November midnight to ease the situation of jams and long queues at toll booths,” Chandra told PTI.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

Chandra said he contacted the PMO as well as the Finance Ministry to apprise them of the condition at the plazas after being inundated by calls from commuters as well as state government officials over traffic congestion.

“Several Chief Secretaries including Chief Secretaries of Haryana and Gujarat besides commuters contacted us about the situation. Many travelers narrated their plights,” he said. On being apprised of the situation, the government allowed toll plazas to accept Rs 500 and Rs 1,000 denominations.

“NHAI has issued instructions to all concessionaires and developers including people managing toll plazas to abide by the instructions to ensure that travelers do not face any problems due to traffic hazards,” he said.

The Rs 500 and Rs 1,000 denomination notes are legally accepted tenders at plazas till 11 November midnight, he explained.

“Meanwhile we are strictly monitoring the situation and keeping a close eye so that commuters can travel without any inconveniences,” Chandra said. Prime Minister Narendra Modi last night announced the decision to ban Rs 500 and Rs 1,000 currency notes from last midnight.

Declaring a “decisive” war against black money and corruption, Modi also listed a raft of steps to assure commoners that their money is safe. In his first televised address to the nation two-and-a- half-years after assuming office, he had announced a 50-day window from November 10 to December 30 for those having these notes to deposit them in their bank and post office accounts “without any limit”.

Battle ground GST Council: Proposed additional cess may queer the pitch at meeting today

As the first day of its meeting concluded on Tuesday, the GST Council managed to arrive at a consensus on how to compensate the states for the losses they incur on account of the tax reform that subsumes various state and central levies.

However, the council has not yet arrived at a conclusion on the crucial GST rate structure. According to finance minister Arun Jaitley who briefed reporters, the proposal for a four-tier structure was discussed.

The discussion will continue today.

ReutersReuters

Reuters

Here’s a round-up of what happened on day one and what lies ahead:

Consensus on compensation for states

This is definitely good news. The Council has decided on the issue of compensation for states. “One main issue in today’s (Tuesday) agenda was to calculate the compensation for states and this matter was concluded in the discussions held,” Jaitley told reporters.

The base year for calculating the compensation is 2015-16. One of the basis for calculating revenue in the first five years, which is the compensation period, will be the secular rate of growth in revenue. This has been arrived at as 14 percent, which would be treated as a possible growth rate. The Centre has promised to compensate the states for revenue losses for the first five years after the implementation of the GST if the states’ revenues come down under the new tax regime.

Commenting on the development, MS Mani, senior director – Indirect Tax, Deloitte Haskins & Sells LLP, said, “Now that consensus has been reached on the revenue compensation and the base year, states can focus more on the steps required to enable GST in each state, including stakeholders consultation.”

Rate structure

The basic structure: The Centre on Tuesday proposed a four-slab GST tax structure – 6 percent for essential goods, 12 percent for merit goods, 18 percent standard rate and 26 percent for demerit goods. However, there is also a proposal to impose an additional cess.

Food items will continue to be exempt from tax. As much as 50 percent of the common use goods will either be in the exempt category or lower band. Also, 70 percent of the items is proposed to be governed by 18 percent of lower GST rate. However, ultra-luxury items such as high-end cars and demerit goods like tobacco, cigarettes, aerated drinks, luxury car and polluting items would attract an additional cess on top of the 26 percent GST rate.

On gold, the GST rate suggested was 4 percent. FMCG and consumer durable products would attract 26 percent GST rate, against the current incidence of around 31 percent.

Taxation of services would, however, be only in the 6 percent, 12 percent and 18 percent range, with the higher rate being 18 percent.

The merits of the structure: The biggest thing could be that inflation is likely to be contained. Remember, one of the concerns many experts have raised with regards to GST implementation has been that the new tax reform may push up inflation rate as services are likely to get a higher tax. A report in The Indian Express, however, says the overall impact on the consumer price index is likely to be (-)0.6 percent. This is the claim made by the Centre at the GST Council meeting on Tuesday.

Estimate of inflation impact on health services is 0.56 percent, fuel and lighting 0.05 percent and clothing 0.23 percent, transport (-)0.65 percent, education (-)0.08 percent and housing (-)0.09 percent, according to the IE report. It also says the Centre’s estimated revenue collection is Rs 8.72 lakh crore as per this structure.

The proposal to impose a cess will help create a fund of Rs 50,000 crore, which can be used to compensate the states. At least that is what the Centre has said.

According to revenue secretary Hasmukh Adhia, the Rs 50,000 crore pool that would be created out of cess on demerit goods would be used to compensate the states for revenue loss. Of that, Rs 26,000 crore is expected to be garnered from clean energy cess and the remaining from tobacco and their items.

The demerits of the proposal: First of all, will the Congress agree to this kind of structure? The party has been arguing for capping the GST standard rate at 18 percent, which it says is the “appropriate rate”. With the new structure proposal capping the rate at 26 percent and also adding a cess on top of it, this is unlikely to pass the muster.

The cess is already attracting opposition.

A report in the Mint newspaper says the meeting today is likely to start off on a wrong note.

“It is likely to emerge as a key point of disagreement between the centre and the states as the latter have always opposed levy of central cesses that are excluded from the divisible pool of taxes,” the report says.

Not just politicians, experts also feel this is likely to add to the tax burden. Bipin Sapra, tax partner, EY, says, “The maximum rate of 26% for demerit or luxury goods may harbour more goods than initially envisaged which will make them costlier. Also since cesses would be outside the GST, the present cascading may continue raising the tax burden.”

Kerala’s Thomas Issac has also told PTI that his state wanted the highest rate to be fixed at 30 percent so that common man’s use of daily items can either be exempt or levied with lower rates.

Reacting to the proposal, the Federation of Indian Chambers of Commerce and Industry (Ficci) suggested that to check inflation and the tendency to evade taxes “the merit rate should be lower and the standard rate reasonable”.

“As per the current indications and reports, goods will be categorised as being subject to merit rates (12 per cent), standard rates (18 per cent) and de-merit rates (40 per cent),” FICCI said in a release following a meeting in New Delhi with the Empowered Committee of State Finance Ministers.

Given the likely sharp differences that are emerging, it is very unlikely that a final decision on rate will be taken today. Already, Jaitley has said there are five proposals on the table. Given the diverse problems each states face with the GST, an early resolution is doubtful.

(With inputs from PTI, IANS)

Cabinet nod for Budget overhaul: Why Modi govt wouldn’t want to meddle with Railways’ autonomy

The decision of the government to announce the Union Budget early (probably the first day of February every year) and merge the Railway Budget with the general budget has been welcomed by most economists. It’s big break from the past.

ReutersReuters

Reuters

It was in 1924, during British raj, that the Railways began to have a separate budget. The British attached tremendous importance to the Railways as it was crucial to move their goods and forces. The practice continued for long also because of the substantial size of the Railways budget in relation to the total budget expenditure. But that scenario has changed.

The political and economic rationale that warranted a separate Railway budget during the British raj has lost its relevance long back and it was only a matter of time before we revisited this practice and brought in reforms in the way budget is presented.

Secondly, the day for the general budget presentation has been the last day in February every year since 1948-49, after Independence. Advancing it will help to take decisions early and follow the process faster to get on to the implementation stage.

The government also wants to do away with the distinction of plan and non-plan expenditure, which too is a logical move given that Planning Commission itself is non-existent now and Five Year Plans are being replaced. Thus, prima facie, all the three changes —merging the railway and general budget, plan/non-plan expenditures and advancing the general budget presentation date–are small but significant reforms steps which may not have major tangible impacts on any stakeholder, but will give more clarity on tax proposals and expenditure.

This is because the Finance Bill will be approved in the first half of the budget session itself, not towards the end after the recess as is the case now. This will mean the government and the private sector can plan the new fiscal year a bit early and not in the middle of the fiscal year. Presently, the Finance Bill is approved towards the end of the budget session. The proposed changes in presentation will ease the time lag in the budget process and subsequent decision-making by government departments and the private sector.

It is wrong, however, to term these as reforms that can do wonders in the economy. “Beyond the fact that general budget is going to be bigger (post Railway budget merger) and the entire process is going to start early with the budget advancing, there aren’t much changes expected due to the budget overhaul in the economy,” said Devendra Pant, chief economist at India Ratings and Research.

As Union Finance Minister Arun Jaitley said in the presser post the cabinet meeting on Wednesday, the government will seek GDP data for budget preparation from the Central Statistical Office (CSO) in January itself, instead of 7 February, for Budget preparation. Early presentation of Budget would mean that the entire exercise is over by March 31, and expenditure as well as tax proposals come into effect right from the beginning of the new fiscal, thereby ensuring better implementation.

Railways’ autonomy under threat?
Let’s look at the Railways budget merger specifically. The brighter side of the change is that there will now be presentation of a single Appropriation Bill, including the estimates of Ministry of Railways, thereby saving precious time of Parliament by not having to hold a separate consideration and passing of two Appropriation Bills, Jaitley said.

But it also raises obvious questions.

The first is: Will the Railways, which enjoyed a special autonomy and financial independence compared with other ministries for nearly a century, continue to have functional autonomy? Or will it end up just as another department of the government?

Former railway minister Nitish Kumar (read here ) and former finance minister, Yashwant Sinha (read here ) have flagged this issue.

Look at the numbers. In terms of size, the Railways is the third biggest budget (Rs 1.71 lakh crore in 2016-17) after defence (Rs 2.49 lakh crore) and infrastructure (Rs 2.21 lakh crore). The carrier, which runs around 11,000 trains everyday, of which 7,000 are passenger trains, has pegged a capital expenditure of Rs 1.21 lakh crore in 2016-17, most of which is planned through joint ventures with states and PPP model. For years, Railways has its own independent planning and strategy.

The public carrier’s operations are too critical and sensitive (both passenger and freight movements) for the government to mess with. So far, the Railways had financial autonomy on account of its separate budget. Can the government afford to kill its operational autonomy in the first place? It will be too risky for the Modi-government to do and it wouldn’t want to interfere, too.

The signal from Jaitley’s presser too was that the government wouldn’t want to meddle with the Railway’s functions.

Consider these comments from Jaitley:

One, the government doesn’t intend to supersede the functional autonomy of the Railways but will only present its accounts in the budget, the FM said.

Two, even on the issue of fare and freight rates too, Jaitley said, the decisions will continue to be taken by the Railways.

Three, the government has also promised to hold a separate discussion on Railways expenditure every year.

Four, Railways fund its expenses (employee salaries, pensions) from its revenues and also draws government subsidies. All these will continue to be the same except that accounting will be different.

If one takes these comments at face value, the Railways will not end up as just another department of the government at the mercy of the Finance Ministry.

The bottomline is this: The fear that the country’s largest public carrier will lose its autonomy post the budget merger is unlikely to come true. The government cannot afford to experiment with the Railways’ functions.

(Data support from Kishor Kadam)

Uri terror attack: Fate of PM Narendra Modi’s ‘strong leader’ image lies in his response

This is testing time for Prime Minister Narendra Modi, the toughest in his two-and-half years rule at the Centre. His response to Pakistan-backed terror attack on the Indian Army brigade headquarters at Uri, which comes in close succession to the attack on the Indian Air Force base station at Pathankot, will decide whether he should be taken as a strong and decisive leader or his ‘chhapan inch ki chhati’ would be lampooned.

He has often been equated with the late prime minister Indira Gandhi but so far that comparison and contrast was in terms of popularity, reach and making the party win elections on personal charisma in states where its organisational base was not strong. Despite her failings on several counts, Indira was called Durga as she took the call of militarily engaging with Pakistan and winning it decisively. It’s a different matter though that India lost its gain over Pakistan in the Shimla Accord. However, Indira is considered to be one of the strongest Indian leaders.

The test is not only for Modi but also for his number two in the government, as also for the BJP and the RSS to prove that they meant what they said in the run-up to 2014 parliamentary elections. But all eyes are on Modi.

An Indian Army soldier during the Uri attack. PTI

An Indian Army soldier during the Uri attack. PTI

After all, India had overwhelmingly and decisively voted for Modi, the first single party majority government in the last 30 years. He was not called Chhote Sardar (after Sardar Vallabhbhai Patel) by his supporters for nothing. A majority of his supporters saw in him a mix of Vikas Purush (development man) and Loh Purush (Iron man). It’s time for Modi to meet their expectations.

The current national mood — after a series of backstabs and terror attacks by Pakistan, most recently Pathankot and Uri and fomenting trouble in Kashmir Valley — is of assertive nationalism.

That prevalent national mood is best reflected by the manner in which a 2.10-minute video of a BSP jawan reciting a patriotic poem inside a bus full of his other jawans went viral on social media. “Jakar Bata Do pakistanion ko….hum darte nahi atom bombo se, visfotak poto se hum darte hai to Shimla, Tashkant jaise samjhuaton se….Kashmir to hoga par Pakistan nahi hoga…..”. The other jawans shouting in chorus Pakistan nahi hoga. This has an inherent message for the political ruling class, don’t make us sacrifice and then concede the gains for a farcical truce with Pakistan. Wage a decisive war against this troublesome neighbour.

The BJP national general secretary’s Facebook post is also interesting as it comes from someone higher up in ruling echelon: “The Prime Minister has promised that those behind the Uri terror attack will not go unpunished. That should be the way forward. For one tooth, the complete jaw. Days of so-called strategic restraint are over. If terrorism is the instrument of the weak and coward, restraint in the face of repeated terror attacks betrays inefficiency and incompetence. India should prove otherwise.”

The theme cuts both ways — it is both an asset as well as a challenge — from within the party-Parivar ranks and outside. This means that gone are the Vajpayee era, the spin doctors singing virtues of “coercive diplomacy” for cornering Pakistan and making President Pervez Musharraf yield that Pakistan soil would not be allowed to use for terror activity.

Uri and Pathankot attack mean attack on the Indian state, just as attack on Parliament on 13 December, 2001 meant attack on the Indian state. It demands retaliatory action from the Indian state, otherwise Indian state will always be called a ‘soft state’, always looking for other countries like the US to take up its cause on its behalf and end up doing what they say “increased pressure”. India and its people have seen that enough and is no longer in the mood to consider that as a viable option. Coercive diplomacy is good only if it is accompanied with military option.

Modi should take some lessons from Vajpayee’s failure. After 2001 Parliament attack, Atal Bihari Vajpayee had famously said “ab aar par ki ladai hogi” (a final and decisive battle would be waged now) and Cabinet Committee on Security (CCS) approved Operation Parakram — massive combat troops mobilisation on the western borders. After cancelling leave of all officers and jawans and having an eyeball to eyeball mobilisation along the Line of Control (LoC) and International Border in Punjab, Rajasthan and elsewhere, Operation Parakram ended in mid-October 2002 with CCS taking a decision to call off mobilisation and making a face-saving statement that troops would now be strategically redeployed.

Vajpayee in Parliament played with his own words, claiming that he had never said ‘ab aar par ki ladai hogi’, instead he had said ‘agar ladai hui toh aar par ki ladai hogi’. Vajpayee and his men thought that by doing verbal gymnastics they had been able to convince people. The results of 2004 parliamentary elections proved that people of India never forgave them. Remember Vajpayee had won 1999 election post the victory in Kargil war.

Also, the eventual capitulation of Vajpayee and his men under international pressure made Indira’s position distinct from other leaders. In 1971, she not only won the war, but liberated East Pakistan (now Bangladesh).

This time around Modi is talking about liberation of Balochistan.

Consider Modi’s position. Two distinct things have happened since after Uri attack — first, consider the tweets: Prime Minister Narendra Modi said, “We strongly condemn the cowardly terror attack in Uri. I assure the nation that those behind this despicable attack will not go unpunished.”

Home Minister Rajnath Singh: “My heartfelt condolences to the families of the martyred soldiers. Those behind this terror incident would be brought to justice.” In another tweet he names Pakistan: “I am deeply disappointed with Pakistan’s continued and direct support to terrorism and terrorist groups.”

Finance Minister Arun Jaitley: “Perpetrators of Uri terror attack shall be punished. My thoughts & prayers are with families of our soldiers injured & martyred.”

All three top leaders in the government assured that the sacrifice of soldiers will be avenged. The Indian Army and the Home Minister have named Pakistani establishment and terror outfit Jaish-e-Mohammad as the ones behind these attacks.

Now the question is: Is there any other way other than going for military option whatever one may call hot pursuit or surgical exercise or risking full-scale war to punish “those behind the attack”? More so, if that option will have to be exercised then it has to be exercised before the next possible attack. Remember, surprise factor is generally an advantage on terrorist and their backers side.

If Modi government fails to do so, or seem to be taking any other effective and tangible measure then all such words used in tweets would be taken as empty rhetoric and people would not forgive Modi and the BJP. The popular perception is, if Modi can’t do, no one else will ever do it. Modi has the popular mandate and the image to do it. If he fails to do it then he not only fails himself, but also the entire nation.

Second, for the first time ever, the government has released pictures of those attending high-level meetings chaired by prime minister and home minister with top ministers and security and intelligence officials. There has also been leakages that the army was seeking the use of military option. The idea is to assure people that the government was seriously reviewing its options. But then there is no structured meeting of CCS yet.

It is for Modi to decide whether he would stand true to the image he so consciously cultivated for over a decade.

Kashmir unrest: Congress is not buying PM Modi’s ‘pain’ and ‘concern’; terms it ‘mere rhetoric’

Congress on Monday lashed out Prime Minister Narendra Modi and Finance Minister Arun Jaitley over their statements on the Kashmir unrest, saying that the central government does not have any coherent policy on the Kashmir issue and it is engaging mere rhetoric over the issue.

“We want to ask the Prime Minister: When he talks about insaniyat (humanity), what is the definition of insaniyat as understood by the Prime Minister of India?” Congress spokesperson Manish Tewari said at a press conference in New Delhi.

Congress spokesperson Manish Tewari. PTI

Congress spokesperson Manish Tewari. PTI

“When the Prime Minister talks about Kashmiriyat, what does he mean? Is there any policy behind these words?” he further said. “The PM talks about engaging in dialogue. But with whom is he going to engage in dialogue? These words are mere rhetoric by the Prime Minister,” Tewari further said.

“Even after 45 days, the situation in Kashmir has not improved at all,” said the Congress spokesperson. “PM Modi has no coherent policy to deal with Kashmir,” he said, adding that the government also needed to decide on whether it wants to send an all-party delegation to Jammu and Kashmir, something which the Congress has been demanding since the second half of the Budget Session in the Parliament.

The party also took a dig at the Modi government’s stand on nationalism. “Those people who hide behind pseudo-nationalism are insecure about their past and clueless about the future,” Tewari said.

He also criticised Jaitley for his remarks on Kashmir. “The essence of the Finance Minister’s statement was that there is no political problem in Kashmir. According to him, it was only a problem regarding development,” he said.

Tewari’s remarks come after Jaitley on Sunday had blamed the Congress and National Conference for not bringing about any development to Jammu and Kashmir, which he said eventually led to this unrest.

“There will be no compromise on the security and integrity of the country and no compromise with the people who indulge in violence.

“Secondly, as Jammu and Kashmir has faced violence and wars, it needs development which was denied for past 60 years by National Conference and Congress governments. Thirdly, Jammu, being the support base of BJP, needs added attention,” Jaitley had said in Jammu.

Acknowledging that situation in Kashmir was “serious”, Jaitley had said that those indulging in stone-pelting in Kashmir are “not satyagrahis but aggressors” who target police and security forces but some people with limited vision cannot see this.

He had also lashed out at Pakistan for the current unrest, saying it was “attacking the integrity of India” in a “new way” after failing to snatch the state by waging wars and fuelling trouble ever since partition in 1947. “Now this time, a serious situation has emerged in which Pakistan, separatists and religious forces have joined hands and now with a new way, they are attacking the integrity of India,” he had said.

Even as political parties are busy blaming each other for the crisis in Kashmir, Prime Minister Narendra Modi had on Monday expressed his “deep concern and pain” over the situation there. The Prime Minister had emphasised on the need for dialogue to find a “permanent and lasting solution” within the framework of the Constitution and had also asked all political parties to work together to find a solution to the problems in Jammu and Kashmir.

Making an appeal for restoration of normalcy in the Valley where the unrest entered the 45th day, Modi had emphasised that there has to be a dialogue.

An official statement issued after his 75-minute-long meeting with a joint opposition delegation led by former Chief Minister Omar Abdullah said the Prime Minister appreciated the “constructive suggestions” made by them during the talks and reiterated his government’s commitment to the welfare of people.

The 20-member delegation comprising Omar and seven of his National Conference MLAs, Congress legislators led by PCC Chief GA Mir and CPI-M MLA MY Tarigami had called on the Prime Minister on Monday morning and had made an appeal for a political approach for resolving the crisis in the Valley and to ensure that the “mistakes” of the past are not repeated.

The Prime Minister had said, “those who lost their lives during recent disturbances are part of us, our nation; whether the lives lost are of our youth, security personnel or police, it distresses us.”

“Government and the nation stand with the state of Jammu and Kashmir,” the Prime Minister had said and had suggested that all political parties should reach out to the people and convey the same. He expressed his commitment to the development of the state and its people, and appealed for restoration of normalcy in the state.

Kashmir has been witnessing unrest since the killing of Hizbul Mujahideen commander Burhan Wani on 8 July and so far over 60 people have been killed.

With inputs from PTI

Amnesty row: Jaitley accuses Congress of vote bank politics, says ‘azadi’ slogans not freedom of speech

Jammu: In a clear reference to the Amnesty International row, union minister Arun Jaitley on Sunday asserted that ‘azadi’ slogans cannot be treated as freedom of speech and slammed Congress and its Karnataka government, accusing them of indulging in vote bank politics over the issue.

“Four days ago, in the capital of Karnataka, during a programme in Bangalore, ‘azadi’ (freedom) slogans were raised by a few people. An organisation, which gets funding from abroad, organised the event and yesterday I read the statement of Karnataka Home Minister in which he said that whatever happened is nothing wrong,” Jaitley said.

Jammu: Union Finance Minister Arun Jaitley addresses during BJP Tiranga Yatra rally as part of 70th Independence Day celebrations at Smailpur in Bari Brahmana, Jammu on Sunday. PTI Photo (PTI8_21_2016_000079B) *** Local Caption ***Jammu: Union Finance Minister Arun Jaitley addresses during BJP Tiranga Yatra rally as part of 70th Independence Day celebrations at Smailpur in Bari Brahmana, Jammu on Sunday. PTI Photo (PTI8_21_2016_000079B) *** Local Caption ***

He said that Congress and its vice-president Rahul Gandhi had extended support to the youth who had raised anti-India slogans then. PTI

“After so many sacrifices this country has made, some political parties do it for vote bank politics,” he added at a rally on the outskirts of Jammu city.

While talking about this matter, the finance minister recalled a similar incident in JNU in January and said raising slogans to advocate the disintegration of the country cannot be seen as freedom of speech as advocated by some.

“When in Delhi, inside JNU, slogans for disintegration of India were raised, we were the only party within and outside Parliament to say that it was wrong. It is not freedom of speech.., he said.

He said Congress and its vice-president Rahul Gandhi had extended support to the youth who had raised anti-India slogans then.

“Many political parties and Congress vice president went to the support of those youth (who raised the slogans) at JNU. This ideology for the vote bank politics is unfortunate,” he said.

Those advocating the cause of Kashmir stone pelters are playing petty politics: Arun Jaitley

Jammu: Those advocating the cause of stone pelters in the Kashmir Valley are playing petty politics, Union Finance Minister Arun Jaitley said in Jammu on Sunday.

A file photo of Arun Jaitley. PTI

A file photo of Arun Jaitley. PTI

Addressing a public meeting in Samba district in memory of Premnath Dogra, the founder of the Jan Sangh, the forerunner of the BJP, in Jammu and Kashmir, Jaitley said people defending rioting and stone pelting in the Kashmir Valley have nothing on their mind except petty politics.

He said, “Some people outside talk of human rights in Kashmir. Have they ever visited the valley and seen those securitymen who have been injured while performing their duty?”

“When India became free in 1947, it was created for peace and development. Whereas Pakistan was created only to divide India,” Jaitley said.

“After getting badly defeated at three wars with India, Pakistan started a proxy war against us in 1990s. In 2008 and 2010, they gave the new face of stone pelting to their proxy war and that is what is happening in the valley this time also.”

The minister said militancy and stone pelting need to be dealt with firmly and no laxity should be shown in dealing with such situations.

Minister of State in the Prime Minister’s Office Jitendra Singh was also present on the occasion.

7th Pay Commission: Cabinet clears pay hike for one crore govt employees, pensioners

New Delhi: In a bonanza, one crore government employees and pensioners will get a 2.5 times hike
in basic pay and pensions under the 7th Pay Commission recommendations that will cost the exchequer annually Rs 1.02 lakh crore, which the government says will have a multiplier effect on economy.

The new scales of pay provide for entry-level basic pay going up from Rs 7,000 per month to Rs 18,000, while at the
highest level i.e. Secretary, it would go up from Rs 90,000 to Rs 2.5 lakh. For Class 1 officers, the starting salary will be Rs 56,100.

Pay hike for Central government employees. ReutersPay hike for Central government employees. Reuters

Pay hike for Central government employees. Reuters

The Union cabinet on day accepted the recommendation of Justice AK Mathur headed panel due to which there would be a recurring burden of Rs 72,800 crore every year, while the current fiscal’s burden would be Rs 84,933 crore in view of the fact that they would be implemented from 1 January, 2016.

While the cabinet in its meeting, chaired by Prime Minister Narendra Modi, accepted the recommendations in respect of the hike in basic pay and pension, a decision on its suggestions relating to allowances has been referred to a Committee headed by Finance Secretary.

Announcing the government’s decision, Finance Minister Arun Jaitley said government salaries have to be respectable
in comparison to private sector, for which the Commission had engaged IIM-Ahmedabad for making a comparison.

“The recommendations of the Pay Commission with respect to pay and pension, have been accepted by and large by the
government. And those recommendations will be implemented with effect from January 1, 2016, and the arrears would also be paid in this year,” he said.

The recommendations cover 47 lakh central government employees and 53 lakh pensioners. This include 14 lakh serving
employees and 18 lakh pensioners in defence forces.

Allaying fears of government’s fiscal maths going wrong, Jaitley said the budget has provided for the anticipated
expenditure and it did not come as a surprise.

Concerns have also been expressed over the extra money in the economy pushing up inflation. The minister admitted that there will be some inflationary pressure.

Maintaining that government cannot grudge a hike in salary for government staff after 10 years, he said, “when
people get more money, it comes back in the system in the form of taxation. Savings will increase … spending will go up”.

The Pay Commission had recommended abolition of 53 out of 196 allowances that the government employees currently get and moderation in several others.

The scrapping of the allowances was opposed by the Unions and so it has been referred to a Committee of Secretaries.

The once in a decade pay hike has seen burden on exchequer rise from Rs 17,000 crore in the 5th Pay Commission to Rs 40,000 crore in the 6th and Rs 1,02,100 crore in the 7th Pay Commission, Jaitley said.

While the cabinet approved the Commission’s recommendation of enhancing ceiling of house building loan from Rs 7.5 lakh to Rs 25 lakh, the suggestion of deducting Rs 1,500-5,000 per month towards group insurance was not accepted.

Rate of annual increment has been retained at 3 percent.

Also interest free advances for medical treatment, travel allowance and LTC have been retained. “All other interest free advances have been abolished,” an official statement said.

For armed forces, gratuity ceiling has been doubled to Rs 20 lakh and it would increase by 25 percent whenever Dearness Allowance rises by 50 percent.

Jaitley said the cabinet has brought about a parity between defence personnel and Combined Armed Police Forces by
providing an additional indexation.

“Government salaries have to come to at a respectable level so that the government is able to attract the best
talent. Not necessarily in civil services alone but also other services and therefore irrevocable consequence of this would be a pressure on the Budget along with OROP recommendations,” Jaitley said.

He said since there will be more money in the market to spend, it will generate more demand, that will help push
economic growth. Also additional savings will help economy, but in the flip side more money supply will lead to
“inflationary pressure”.

The minister also announced Constitution of a separate committee to look into anomalies arising out of the
implementation of the 7th Pay Commission recommendation.

Another panel would be set up to suggest streamlining the implementation of the National Pension System.

After the cabinet meeting, Jaitley had tweeted that it was a “historic” increase for government employees.

“Congratulations to central government officers, employees & pensioners on a historic rise in their salary &
allowances through the 7th CPC (Central Pay Commission),” he tweeted.

At the press briefing he said the government took just six months time to implement the 7th Pay Commission
recommendations, as against 19 months taken to implement fifth Pay Commission and 32 months for the sixth.

The 7th Pay Commission had in November last year recommended an average 14.27 per cent hike in basic pay at
junior levels, the lowest in 70 years. The previous 6th Pay Commission had recommended a 20 per cent hike which the
government doubled while implementing it in 2008.

After including allowances, the hike in remuneration proposed by the 7th Pay Commission came to 23.55 percent.

Jaitley said that the government intends to pay arrears for six months within the course of this year.

“When you spend there is taxation, demand is also generated. When you save that, savings is used in development
of the country. It also has some inflationary pressure.

“So the extra money also comes back into the system which increases size of economy. We don’t have any option,” he
said.

On the strike threat by certain unions, Jaitley said after the 7th Pay Commission award the salaries of government
employees have surpassed those in private sector.

“After implementation of 7th Pay Commission report, government salaries are distinctively higher than the market
salaries and the private sector salaries. So, there is no logic in opposing it,” he said.

Of the Rs 84,933 crore additional burden on the exchequer in the current financial year, Rs 60,608 crore would be on the general budget and the remaining Rs 24,325 crore on the railways.

While the Pay Commission applies to central government employees, state governments usually follow suit and emulate
the revision in salaries. There is a separate Pay Commission for deciding on salaries of central PSU employees.

The statement said that the present system of Pay Bands and Grade Pay has been dispensed with and a new Pay Matrix as recommended by the Commission has been approved.

“The status of the employee, hitherto determined by grade pay, will now be determined by the level in the Pay Matrix. Separate Pay Matrices have been drawn up for Civilians, Defence Personnel and for Military Nursing Service,” the statement said.

All existing levels have been subsumed in the new structure and no new levels have been introduced nor has any
level been dispensed with.

“Index of Rationalisation has been approved for arriving at minimum pay in each Level of the Pay Matrix depending upon the increasing role, responsibility and accountability at each step in the hierarchy,” the statement said.

The minimum pay has been increased from Rs 7,000 to Rs 18,000 per month. Starting salary of a newly recruited employee at lowest level will now be Rs 18,000 whereas for a freshly recruited Class I officer, it will be Rs 56,100.

“This reflects a compression ratio of 1:3.12 signifying that pay of a Class I officer on direct recruitment will be
three times the pay of an entrant at lowest level. For the purpose of revision of pay and pension, a fitment factor of 2.57 will be applied across all Levels in the Pay Matrices,” the statement said.

For defence personnel, hospital leave, special disability leave and sick leave have been subsumed into a composite new leave named ‘Work Related Illness and Injury Leave’ (WRILL). Full pay and allowances will be granted to all employees during the entire period of hospitalisation on account of WRIIL, it said.

A common regime for payment of ex-gratia lump sum compensation for civil and defence forces personnel payable to
Next of Kin with the existing rates enhanced from Rs 10-20 lakh to 25-45 lakh for different categories.

Rates of Military Service Pay have been revised from Rs 1,000, 2,000, 4,200 and 6,000 to 3,600, 5,200, 10,800 and
15,500 respectively for various categories of Defence Forces personnel.

The cabinet also approved terminal gratuity equivalent of 10.5 months of reckonable emoluments for Short Service
Commissioned Officers who will be allowed to exit armed forces any time between seven and 10 years of service.

The statement said the Finance Ministry is working out a customised group insurance scheme for Central Government
Employees with low premium and high risk cover.

As regards the Finance Secretary headed Committee for rationalisation of allowances, the statement said the Committee will submit its reports within a period of four months.

“Till a final decision, all existing Allowances will continue to be paid at the existing rates,” it said.

The 7th Pay Commission examined a total of 196 existing Allowances and, by way of rationalisation, recommended
abolition of 51 Allowances and subsuming of 37 Allowances.

“As estimated by the 7th CPC, the additional financial impact on account of implementation of all its recommendations in 2016-17 will be Rs 1,02,100 crore. There will be an additional implication of Rs 12,133 crore on account of payments of arrears of pay and pension for two months of 2015-16,” the statement said.

PTI

Live: Govt to clear arrears in the current fiscal year itself, says Arun Jaitley

Jun 29, 2016

Highlights

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In a bonanza for over one crore government employees and pensioners, the Union cabinet on Wednesday
approved implementation of the 7th Pay Commission, which had recommended an overall hike of 23.5 percent.

“Congratulations to central government officers, employees & pensioners on a historic rise in their salary &
allowances through the 7th CPC (Central Pay Commission),” Finance Minister Arun Jaitley tweeted shortly after the
meeting of the Cabinet headed by Prime Minister Narendra Modi.

Union Finance Minister Arun Jaitley.Union Finance Minister Arun Jaitley.

Union Finance Minister Arun Jaitley.

It wasn’t however known immediately if the cabinet had bettered the hike recommended in salary and allowances of
nearly 50 lakh government employees and 58 lakh pensioners.

An official said the cabinet has approved implementation of the recommendations from 1 January, 2016.

The pay panel had in November last year recommended 14.27 percent hike in basic pay at junior levels, the lowest in 70 years. The previous 6th Pay Commission had recommended a 20 percent hike which the government doubled while implementing it in 2008.

After considering the increase proposed in allowances, the hike in remunerations comes to 23.55 percent.

The 23.55 percent overall hike in salaries, allowances and pension would entail an additional burden of Rs 1.02 lakh crore or nearly 0.7 percent of the GDP, to the exchequer.

The entry level pay has been recommended to be raised to Rs 18,000 per month from current Rs 7,000 while the maximum pay, drawn by the cabinet secretary, has been fixed at Rs 2.5 lakh per month from current Rs 90,000.

The secretaries’ panel may have recommended raising minimum entry level pay at Rs 23,500 a month and maximum
salary of Rs 3.25 lakh.

While the Budget for 2016-17 fiscal did not provide an explicit provision for implementation of the 7th Pay
Commission, the government had said the once-in-a-decade pay hike for government employees has been built in as interim allocation for different ministries.

Around Rs 70,000 crore has been provisioned for it, the official said.

With inputs from

Subramanian Swamy has to get past Jaitley to hurt Arvind, Shaktikanta Das

There is an old story.

Once, the house got filled with rats. Too many of them. Someone advised the family to get a cat to kill the rodents. After all, who knows the job better than a cat? The cat was brought in and it did the work meticulously. Within a few days, all the rats are gone but then a bigger problem arose. With no rats left to hunt, our fighter tomcat turned restless. It claimed the first right over food items in the kitchen and, when denied, focused on destroying the utensils in the house one by one, causing the family to lose its sleep. Finally, the family decided to drive the cat away, but it wouldn’t go no matter what they did. The cat, thus, became a permanent pain in their lives.

BJP leader Subramanian Swamy. PTI.BJP leader Subramanian Swamy. PTI.

Subramanian Swamy speaking in a Parliament session. PTI

For Prime Minister Narendra Modi and BJP leadership, who launched maverick leader, Subrmanian Swamy to Parliament to spearhead the attack on the Gandhis and gain a psychological advantage over other ‘obstructionist’ opposition leaders, the 76-year-old pro-Hindutva leader, today, is lot like the cat in the old story.

Swamy has now fulfilled his original mandate (causing a flutter in the house by attacking Sonia, Rahul Gandhi in the National Herald, Agusta scams) but is now largely jobless. But, he can’t sit idle and hence, has begun causing troubles to the same family which hosted it, giving them sleepless nights.

After the successful ‘Operation R3’, launched to ensure Reserve Bank of India (RBI) governor Raghuram Rajan wouldn’t get a second term, Swamy has now trained his guns at Chief Economic Advisor (CEA) Arvind Subramanian and economic affairs secretary Shaktikanta Das. This is totally unlike the Rajan episode, where Swamy had the silent support of senior BJP leadership who too were upset with Rajan overstepping his mandate and speaking on political issues. Hence, Swamy was given a silent go-ahead. But, that’s not the case with Arvind Subramanian and Shaktikanta Das, who are trusted sentinels of finance minister Arun Jaitley and friendly figures to the Raisina Hill.

One could deduce a clear pattern here. Swamy is attacking the finance ministry (the CEA and the Economic affairs secretary) with a two-pronged strategy. One, to destabilise the finance ministry headed by his nemesis Jaitley and claim the right for what is long denied to him despite his credentials after he joined the party in August 2013 – the finance minister berth. Swamy feels his potential has not been recognised by the BJP.

Second, consolidate his position in the BJP leadership by questioning and exposing the mistakes of Jaitley (who appointed officials with a ‘tainted’ past). While Swamy’s Rajan move was timed to the expiry of his term at RBI, the attacks on CEA and Das are timed seeing the impending cabinet reshuffle in mind.

But, Swamy has totally missed the plot here. Both Das and Subramanian have kept a relative low profile and have never overstepped their mandate. Both have full backing of Jaitley, evident from his comments shortly after Swamy’s twin-attacks. Jaitley has expressed “full confidence” in Subramanian and said “his advice has been of great value”. In the case of Das, Jaitley has tweeted that “it is an unfair and false attack on a disciplined civil servant”.

But, by confronting Jaitley, Swamy is probably beginning a fight he cannot finish. To begin with, Swamy do not have a strong case against CEA and Das unlike Rajan, who irked the BJP leader ship with his ‘One-eyed King’ remark and refusing to toe the government line on GDP growth. This could very well end up as the Waterloo for Swamy.

The charges raised by Swamy against Subramanian — acting against India’s interests siding US and encouraging the Congress party to be ‘rigid’ on GST—do not hold much water as Firstpost explained in an earlier article. In the case of Das, too, Swamy hasn’t offered any strong evidence to prove that Das facilitated P Chidambaram’s land deal in Mahabalipuram. The barrage of attacks made on the BJP government’s top officials when PM Modi is away and crucial UP election is due next year, wouldn’t be taken in good humor by the BJP top brass and not even by the Swamy’s supporters in the Rashtriya Swayamsevak Sangh (RSS), who appeared to side Swamy in the Rajan case.

In the latest episodes, they would ultimately stand by Jaitley, who weighs much more than Swamy in the larger political canvas. Swamy has made the scene even worse on Thursday by openly refusing to acknowledge Jaitley’s displeasure on his attacks on the CEA and Economic affairs secretary.

“Jaitleyji, kya bole kya nahi bole iss se mujhe kya lena Dena. Will talk to the party president and PM when required, right now it’s not needed as I’ve said what I had to say,” Swamy said when reporters cited Jaitley’s remarks on the CEA issue to him.

The short point here is this. Swamy’s attacks on finance ministry have a vivid pattern that is ultimately aimed at FM Jaitley. Swamy is chewing more than what he could bite since PM Modi is not someone who would tolerate dissents within his party like former PM Manmohan Singh.

Especially, when the BJP has already entered its crucial third year and the whole events can potentially upset the BJP’s focus on the larger agenda of pushing the reforms process, mainly cornering the opposition to give in on Goods and Services Tax (GST), and preparing ground for 2017 UP polls and 2019 general elections.

Ironically, at this stage when the BJP has barely caught a breath from an array of controversies haunted it in the past (JNU, Rohit Vemula and intolerance episode) and the Congress-led opposition is at its weakest point post the recent Rajya Sabha polls, Swamy is filling the void with his repeated self-goals.

Both PM Modi and RSS are unlikely to tolerate the Swamy Raj this time.

Arun Jaitley takes on Swamy, says ‘unfair and false attack’ on Arvind Subramanian

Hitting out against maverick BJP leader Subramanian Swamy, Union Finance Minister Arun Jaitley on Thursday tweeted out that the MP’s outburst against Chief Economic Advisor Arvind Subramanian is “an unfair and false attack on a disciplined civil servant in the Finance Ministry.”

Union Finance Minister Arun Jaitley. PTIUnion Finance Minister Arun Jaitley. PTI

Union Finance Minister Arun Jaitley. PTI

Swamy showed no sign of relenting even after Jaitley firmly backed the CEA in a press conference on Wednesday.

“Government has full confidence in CEA. His advice to government from time to time has been of great value,” the finance minister had said.

In a brazen and direct attack on the finance minister Thursday afternoon, Swamy responded to reporters by saying, “I have nothing to do with what Jaitley says. I might talk with the party president (Amit Shah), PM (Narendra Modi).”

Earlier on Thursday, Swamy in a series of tweets even dragged the Prime Minister into the raging controversy.

“If BJP Union govt says that we know all about AS but still he is an asset, then I will suspend my demand and wait for events to prove truth,” the BJP leader tweeted.

“If an Indian?, held patriotic, can advise a foreign nation where he works, to twist India’s arm, is to be forgiven, then I suspend my demand,” Swamy said in an apparent jibe to the government his party runs at the Centre.

Parliament’s Monsoon Session likely to begin on 18 July; GST Bill tops govt’s agenda

New Delhi: The Monsoon Session of Parliament is likely to begin in the third week of July and end by mid August, with the Cabinet Committee on Parliamentary Affairs set to meet on 29 June to decide on the schedule.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

Sources say that the Session is expected to start from 18  July and continue till 13 August. The CCPA headed by Home Minister Rajnath Singh will, however, take the final call at its meeting on 29 June.

With increased strength and support from some opposition parties in Rajya Sabha, the government is keen to get the GST Bill, which has been pending for a long time now, passed in this session in the Upper House.

The government has already missed the target of implementing the GST regime from 1 April, this year in the wake of stiff opposition to the tax reform measure by Congress and some other parties.

Finance Minister Arun Jaitley has recently claimed that almost all the states have agreed to support GST.

After a meeting of State Finance Ministers in Kolkata recently, Jaitley had said that except Tamil Nadu, which has some reservations, all other states favour the proposed legislation.

The GST is being touted as a key tax reform measure by the Modi government which will help give a fillip of 1 to 2 per cent to the country’s GDP.

The Bill has already been passed by Lok Sabha.

Education and agriculture should go hand in hand: Jaitley as he lays foundation stone for IIM-Amritsar

Amritsar: Education and agriculture will have to go hand in hand for India’s development as has been the case in countries like Japan and South Korea, Finance Minister Arun Jaitley said on Sunday as he laid the foundation stone for a new campus of IIM-Amritsar.

This would be the own campus of IIM-Amritsar, the 15th Indian Institute of Management in the country, which has been so far operating from a temporary facility.

Jaitley said the government and private companies will have to join hands for taking the education sector forward in Punjab.

Stressing that 55 percent of people are engaged in agriculture, Jaitley pointed at rising unemployment in the farm sector which has forced people to look at other sectors for income and stressed on the need for good quality education.

He also said that the government’s efforts to develop the premier institute in Punjab will encourage more educational institutes to set up campuses in the state.

“Education and agriculture will have to go hand in hand as we have seen in other countries like Japan and South Korea… Government and private institutions both will have to contribute for development of education in India,” Jaitley said.

The Union Minister also highlighted the contribution of Narendra Modi government in bringing reputed institutions like the AIIMs and IIMs to Punjab.

A file photo of Arun Jaitley. PTIA file photo of Arun Jaitley. PTI

A file photo of Arun Jaitley. PTI

The new campus of IIM-Amritsar, which commenced its first batch last year out of a temporary facility, will be built on a 60-acre land in Manawala on the National Highway-1.

Union Human Resource Development Minister Smriti Irani, Punjab Chief Minister Parkash Singh Badal and Deputy Chief Minister Sukhbir Singh Badal also attended the event.

“In the coming years, IIM-Amritsar will become a premier educational institution,” Jaitley said.

In her address, Irani said that she hoped IIM-Amritsar will soon be among the top-five institutes of the country.

“I hope in Punjab, which is known for farmers, milk and agro processing, the IIM-Amritsar will have courses as per the state’s priorities,” Irani said.

Jaitley in his first Budget in July 2014 had announced setting up of five new IIMs in Himachal Pradesh, Bihar, Punjab, Maharashtra, Odisha and Andhra Pradesh.

Amritsar was chosen in Punjab for setting up the IIM. Jaitley had in 2014 unsuccessfully contested Lok Sabha election from Amritsar, where he lost to former Chief Minister Captain Amrinder Singh of Congress.

The IIM at Amritsar is reported to be the smallest among the IIMs in the country. Most of the 14 existing IIMs have 90 acres or more land for their campuses.

IIM Calcutta was the first IIM to be set up in November 1961 followed by ones at Ahmedabad, Bangalore, Lucknow, Kozhikode, Indore, Shillong, Rohtak, Ranchi, Raipur, Trichy, Kashipur, Udaipur and Visakhapatnam.

In the Union budget presented on 28 Feb, 2015, two more IIMs were announced at Jammu and Kashmir and Telangana.

Narendra Modi is finally breaking reforms jinx; it’s time for final push

India’s economy was perceived to face a cul de sac last year with respect to the progress on big-ticket reforms. The BJP-led NDA’s majority in 2014 polls failed to give it the desired advantage owing to its weak position in Parliament’s upper house. Bad politics, poor reform-drive and lack of foresight on key economic issues were often highlighted as the reasons for the dead end. After two years in power, the government seems to have broken the jinx and is showing encouraging signs on reforms front.

Prime Minister Narendra Modi. AFPPrime Minister Narendra Modi. AFP

Prime Minister Narendra Modi. AFP

The NDA government’s renewed push to get the Goods and Services Tax (GST) puzzle solved, passage of crucial legislations such as bankruptcy law, Aadhaar Bill, efforts to clean up the stressed assets in the banking system and subsidy reforms indicate its reforms intent.

The latest examples are cabinet nod on civil aviation policy and SBI-associate merger shows that the decision making process is happening in the government, as opposed to the prolonged policy paralysis during the UPA-regime. If the current momentum continues with the desired pace, it can actually put the mojo back in the economy. It is an opportune time for prime minister Narendra Modi.

At this stage what is most critical is GST. This is where Modi and his backroom political strategists should throw their weight and give a final push for the constitutional amendment happen in the monsoon session. This is critical to meet the April 2017 rollout deadline (already delayed by one year). Also, the GST rollout would take much more time to happen on the ground even after Parliament clears the amendment since it has to go through state assemblies and processes. There is a lot of paper work involved to put in place the systems for the final implement the unified tax regime.

The Modi government, which is already in the third year of its term, has very short time to do all this. The final years will be occupied with strategies that please the electorate for the 2019 elections, where the government’s headroom to bring about radical reforms that would have near-term adverse impacts, will be limited. Even in the case of GST, not all will be dancing to the same tune. For instance, a high GST rate will initially push up costs of some services. Too low rate will hit those states who bet big on manufacturing. Hence, certain short-term dissents are to be foreseen when the GST rollout happens. But that is an inevitable risk the government must take to salvage the larger reform goal.

Now is the opportune window for the BJP to do that. Chances for GST passage are relatively bright in the monsoon session since the Congress party, the main opposition that has been opposing the Bill, is at its weakest point now after the massive defeats in recent state polls. The party is also structurally weak on account of lack of strong leadership and revival strategy.

Also, most of the regional parties, including Trinamool Congress, have agreed to support the Bill in larger national interest. If one goes by the comments of finance minister Arun Jaitley after the recent meeting of GST council with finance ministers of 22 states, all states but Tamil Nadu, have agreed in principle on the GST. This includes the Left-ruled Kerala. Even AIADMK’s broader approach seems to be favorable. If Modi throws his weight to convince the small parties and force the Congress on a consensus path, it’ll be a major victory for him politically and a big boost for the economy.

Modi has all the advantages to make its case for the GST passage. The BJP has already agreed in principle upon two of the demands raised by the Congress party on GST –waiving of 1 percent inter state levy and joint dispute resolution mechanism. The GST council meeting has also agreed that issues of dual control and revenue neutral rate should be dealt by the Empowered Committee. As far as capping the GST rate in the Bill is concerned, the Congress and its crown price Rahul Gandhi is actually asking for the moon.

Once the GST rate is included in the constitutional amendment, every time when an exigency arises and if the GST rate needs to be modified, it will need parliament’s approval. This is a foolish thing to do in such a vast country, where multiple states have different geo-political conditions. If Gandhi blackballs the Bill for this reason, he’ll find no supporters anywhere. As the projected revival agent of the Congress party, it will be a politically disastrous move for Rahul to do.

The smart thing for Gandhi to do is admit a temporary defeat on this point and play it up as a political sacrifice made for the larger economic interests of the country. Modi should exploit the Congress party’s weak position and put pressure for consensus. With all states falling in line, the Congress doesn’t have a strong case to make to prevent the Bill. The larger point is clearance of GST will silence Modi’s critics on lack of reforms progress. Multilateral agencies, including International Monetary Fund, have asserted time and again that reform progress is critical for India to retain its advantage among emerging market peers. In this context, GST is critical.

It is also time for Modi to radically rethink his stance on privatization of PSU assets. Modi’s stated view that ‘the government has no business to be in business’ doesn’t go well with his actions after he assumed power. There has been no serious intent to privatise the entities in the banking sector and the likes of Air India, which every year return to the government exchequer with a begging bowl to seek survival funds.

This is particularly true in the banking sector, where the huge pile-up of non-performing assets (NPAs) has necessitated substantial chunk of additional capital, which the government has to provide. Given the fiscal constraints of the government, it isn’t practical to keep feeding funds. Modi should announce the government’s intent and prepare a roadmap to initiate the privatisation drive, which will be the biggest reform since the liberalisation in the 1990s.

The government’s existing disinvestment roadmap has largely failed to generate sufficient revenues, which is evident from its ambitious targets and disappointing performance in the previous years. NITI Aayog’s recommendation for disinvestment in companies, including Air India and immediately winding up 26 state-run firms and leasing out several loss-making hotels, is a step in the right direction.

Modi is ruling the Centre at the most opportune time in last 10 years. Low commodity prices, an improvement in the domestic fiscal situation, a reformist RBI governor who has restored international confidence in the Indian economy and BJP’s dominant position over the political opponents are Modi’s big advantages. It’s time for him to give the final reform push.

No rationale behind Congress opposing GST: Rajya Sabha MP

New Delhi: Calling the opposition Congress to heed to “popular opinion”, Rajya Sabha MP Rajeev
Chandrasekhar on Tuesday said there was no rationale behind the party protesting against the Goods and Services Tax.

“There is no logical rationale for any of the opposition raised by Congress. Congress concern is more of a political red herring than real substance,” he said.

Rajeev Chandrasekhar. Image courtesy rajeev.inRajeev Chandrasekhar. Image courtesy rajeev.in

Rajeev Chandrasekhar. Image courtesy rajeev.in

Chandrasekhar, who was also the member of the Select Committee which had scrutinised the GST bill, said the state finance ministers in their meeting on Tuesday have voiced their support for the new indirect tax regime and it was time that Congress listened to the popular opinion.

“States want GST, businesses want GST, small businesses want GST. It is not for political formation to block its implementation. There are lots of ways in which the issues raised by Congress can be addressed. I am hopeful it will be passed in the monsoon session,” he said.

Chandrasekhar said the Congress’ demand of 18 percent cap in Constitution Amendment bill “will not find any support anywhere” as no government would want to bring in a higher taxation rate.

Congress, which first proposed the constitutional amendment in 2006, is demanding capping the overall rate at 18 percent and scrapping an additional one percent tax designed to compensate manufacturing-heavy states that fear losing revenue once the measure is implemented.

On the contentious issue of the Constitutional cap on the GST rate, Finance Minister Arun Jaitley said: “There is a complete consensus on that, there should not be any such ceiling as exigencies may arise in future. Now it is left to the GST council.”

Also the Congress has been demanding doing away with the power to levy one percent additional tax by the manufacturing states and also an independent dispute settlement mechanism.

The GST bill — which will help create a single national sales tax to replace several state and central levies — has already been approved by the Lok Sabha and is pending in the Rajya Sabha where the government doesn’t have a majority.

Assam CM Sonowal meets PM Modi, seeks help to deal with financial crisis

New Delhi: Assam Chief Minister Sarbananda Sonowal on Saturday called on Prime Minister Narendra Modi and sought his help to tide over the state’s “precarious” financial condition.

Assam Chief Minister Sarbananda Sonowal calling on Prime Minister Narendra Modi, in New Delhi on 11 June 2016. Image courtesy PIBAssam Chief Minister Sarbananda Sonowal calling on Prime Minister Narendra Modi, in New Delhi on 11 June 2016. Image courtesy PIB

Assam Chief Minister Sarbananda Sonowal calling on Prime Minister Narendra Modi, in New Delhi on 11 June 2016. Image courtesy PIB

During the 20-minute meeting, the Chief Minister briefed the Prime Minister on various development initiatives
undertaken by the new BJP-led government in Assam.

“I have informed the Prime Minister about the precarious financial condition of Assam and sought the Central
government’s help to salvage the situation,” Sonowal told reporters after the meeting.

The Chief Minister said he has also submitted to the Prime Minister a ‘white paper’ on the financial condition of the state, which is facing a fund crunch.

Sonowal later met Finance Minister Arun Jaitely and sought financial assistance from the Centre to overcome the crisis in Assam.

Earlier, the Chief Minister called on Vice President Hamid Ansari, who is also the Chairman of Rajya Sabha, and Lok Sabha Speaker Sumitra Mahajan.

Sources described the last two meetings as “courtesy call” by the new Chief Minister, who took charge on 24 May.

Before moving to the state, Sonowal was the Union Minister for Sports and Youth Affairs and a Lok Sabha member.

PTI

Judiciary cannot perform executive function:Finance Minister Arun Jaitley

New Delhi: Drawing the line between judiciary and executive, Finance Minister Arun Jaitley on Wednesday said courts cannot perform the functions of executive and the independence of the two will have to strictly maintained.

Jaitley said if executive fails to perform its function, courts can direct it to do so but it cannot take over the executive function.

A file photo of Arun Jaitley. PTIA file photo of Arun Jaitley. PTI

A file photo of Arun Jaitley. PTI

Speaking at the ‘Indian of the Year 2015’ awards of CNN News 18, he said if the judiciary fails to act, the executive cannot take up that role on the plea that there are mounting pending cases.

Similarly, courts also cannot take over executive function.

“Let’s first of all be clear about two basic facts. Fact one, independence of judiciary is certainly required and must be maintained at all cost. Fact two, judiciary unquestionably has the power of judicial review. I don’t think anybody has power to dispute that. It is essential for democracy,” he said.

Stating that the argument that judiciary steps in when executive does not act was a “questionable proposition”, he said, “when the executive does not act judiciary can tell and direct the executive to act. But the judiciary cannot perform executive function. Executive function has to be performed by executives.”

Jaitley, who also holds the charge of Information and Broadcasting Ministry, said just as independence of judiciary was essential, so was separation of powers.

“The Parliamentary function has to be performed by Parliament, nobody else can pass or approve a Budget. The executive function has to be performed by the executives. Courts cannot perform an executive function. It can direct the executive to perform its function, if it is not acting,” he said.

Jaitley’s comments came close on the heels of Chief Justice of India TS Thakur asserting that judiciary
intervened only when the executive failed in its constitutional duties.

The CJI had also said, “the government should do its job instead of hurling accusations and that the people turn to the courts only after they are let down by the executive.”

India to move up rapidly in ease of doing business ranking, says Jaitley

Tokyo: India will move up “rapidly” on the Ease of Doing Business ranking within a couple of years following an array of reforms undertaken by the government to ease rules, Finance Minister Arun Jaitley said on Wednesday.

India ranks at 130th out of 189 economies on the World Bank’s Doing Business report, which is topped by Singapore as the easiest country in which to do business. Though India has moved four places up, it ranks way below China, which is placed at 84th position.

“India has taken a number of steps to ease doing business and I have not the least doubt that over the next 1-2 years we will move up more rapidly in the Ease of Doing Business ranking,” he said at a conference organised by Institute of International Economic Studies.

A file photo of Arun JaitleyA file photo of Arun Jaitley

A file photo of Arun Jaitley

Jaitley, on a six-day investor wooing tour of Japan, said India’s taxation system required some more reforms.

“Major reforms are underway as far as direct tax system is concerned. It is work in progress because all exemptions have to be phased out and corporate tax has to be brought down to 25 per cent (from current 30 per cent),” he said.

Stating that retrospective taxation can no longer visit an investor investing in India, he said that any form of unpredictability or surprise is being done away with.

He advised Japanese investors, wanting to invest in India, to be “very patient. “It will pay to be very patient. As you say the Japanese companies have been very patient.”

A combination of Japanese innovation and technology with human resource of India can be rewarding in a market as big as India where the purchasing power of that market was rising.

“And therefore the Japanese companies have a lot to look forward to as far as the Indian market is concerned,” he said. India, he said, is passing through a phase where the per capita income of every Indian is going to increase significantly over the next decade.

“With the purchasing power increasing…I think this is the right time for those who haven’t entered India to enter India. The markets are open, the entry has been made far easier and wide open and as a fast growing economy in the world those who don’t look at Indian market will miss a great opportunity,” he added.

Jaitley says he disapproves personal comments against RBI guv Rajan

New Delhi: Amid BJP MP Subramanian Swamy stepping up his tirade against Raghuram Rajan, Finance Minister Arun Jaitley on Thursday said he does not approve of “personal comments” against anyone including the RBI Governor.

“I don’t approve of personal comments against anyone, let alone the RBI Governor,” the minister said when asked about the continuing attack on Rajan in past few months and whether there was an effort on part of the government to ring-fence the Governor.

The Reserve Bank, Jaitley said, is an important institution which makes its own judgement.

“One can agree or disagree with their judgment, but that’s a debate on issues. But I don’t think we should allow a public discourse where instead of debate on issues we concentrate on debate on persons,” he told NDTV.

A file photo of Arun Jaitley and Raghuram Rajan. PTIA file photo of Arun Jaitley and Raghuram Rajan. PTI

A file photo of Arun Jaitley and Raghuram Rajan. PTI

In separate letters to Prime Minister Narendra Modi within a fortnight, Swamy has sought immediate dismissal of the RBI Governor alleging that Rajan was “mentally not fully Indian” and has “wilfully” wrecked the economy by keeping interest rate high.

Swamy also accused Rajan of sending confidential and sensitive financial information around the world.

Jaitley said RBI and the government are in continuous dialogue and that relationship will continue.

“And I hope from the later part of this year, the Monetary Policy Committee will get into action and therefore, both the bank and the government nominees will have to sit together and decide monetary policy,” he said.

Rajan’s tenure is scheduled to end in early September.

To a question on views of certain corporate leaders that the rupee will crash and economy will face crisis if Rajan is removed as RBI Governor, Jaitley said there was no need for him to comment.

“I think in democracy debate of every kind takes place. Now people make comment one way, somebody else makes the other way. I read those comments, its not necessary for me to express views on those comments,” he said.

On a question that should RBI Governor remain conservative and publicly shy, Jaitley said it all depends upon individuals.

“It depends on persons. Even among ministers you will have people who express themselves freely…you can always have personalities which keep to themselves and just read statements.

“There are others who go out and speak. I am a minister and go out and speak on subjects which don’t concern my ministry also. I can’t preach to the world that don’t go and deliver lectures because…I do a lot of it myself,” he said.

As an outspoken RBI Governor, Rajan has expressed his views on host of issues, including intolerance and has even described India as ‘one-eyed king’ in the land of blind in reference to the country’s high economic growth.

Medical entrance: Political parties want NEET postponed as sole test for entry by a year

New Delhi: Major political parties on Monday favoured deferring implementation of Supreme Court-ordered NEET as the sole medical and dental entrance test by at least a year as the Centre kicked off consultations on the issue, asserting the matter was essentially in “executive domain”.

As the parties addressed concerns by several state governments, which wanted their exams to be the basis for
admission for their 85 percent quota seats for this year too, Union Health Minister JP Nadda made it clear private medical colleges and deemed universities cannot have their entrance exams and will have to take students through the NEET route.

Exam worries. Getty ImagesExam worries. Getty Images

Exam worries. Getty Images

After separate meetings with State Health Ministers and political parties on the Supreme Court order, the government said it was in favour of implementing NEET (National Eligibility cum Entrance Test) but it has to take on board the issues being raised by the states on holding a common gateway test from this year itself.

Separately, Finance Minister Arun Jaitley while referring to protests by many states over the Supreme Court order
asserted that what should be the manner of holding the examination across the country is essentially an executive
matter as it is in policy domain.

While Nadda chaired the consultations with the state health ministers, Jaitley presided over the meeting with the
political parties. The consultations came amid reports that Centre may bring an ordinance to bypass the apex court’s ruling making NEET mandatory from this year.

“We are in favour of implementation of NEET. We are trying to address the issues of states. There are mainly three
concerns of the states. All states have different syllabus and therefore a common syllabus needs to be formed so that students can prepare accordingly.

“Secondly, the exams should also be conducted in regional languages wherever required and lastly the ongoing exams of the states needs to be looked at,” Nadda said after the all-party meet on Monday.

Nadda said the Supreme Court’s order was welcomed by almost all states but some of them flagged concerns over
holding it in the current year itself.

The health minister said the future course of action will be formulated “soon” as the Centre was committed to bringing in transparency in medical education system and remove alleged malpractices.

Earlier, during an interaction with the media, Jaitley said, “It is the case of some of the states that boards are
unequal, their languages are dissimilar. Can those who are dissimilar in language and unequal be placed on the pedestal of quality and asked to give the same exam?

“I think this matter is essentially in the executive domain. We now have a Supreme Court judgement. We will have to
see how we deal with that particular issue,” Jaitley told reporters. Several states want NEET to be implemented only from the 2017-18 academic session.

Jaitley, however, said the judiciary and executive are “on the same page” over maintaining the fairness and integrity of exams at all costs.

Nadda said although most states are in favour of NEET “in principle”, some have talked about logistical issues that are “impeding” its implementation.

“Most States are in favour of NEET in principle. However, some states have expressed that there are some logistics
issues that are impeding its implementation, and therefore they have desired for some more time.

“We will need more discussions with the state governments on the NEET issue. Today, we had discussions on language,
syllabus and state governments’ concerns over state medical entrance examinations. We have to solve all the problems of the states before NEET is conducted across the country,” Nadda said.

He said his ministry will apprise the Supreme Court of the state governments’ apprehensions on NEET only after arriving at a conclusion.

At the meeting, Delhi Health Minister Satyendar Jain came out in full support of the Supreme Court order and requested the Centre to implement it at the earliest to bring in reform.

Maharashtra Chief Minister Devendra Fadnavis said he will meet Prime Minister Narendra Modi over the NEET issue, amid concerns raised by parents and students.

“I have assured parents that I will meet PM Modi on NEET issue. We are trying our best to resolve the issue,” he told reporters in Mumbai.

The Supreme Court had ruled that starting this academic session, students would have to appear in NEET to seek
admission to medical or dental colleges in the country.

The apex court order had implied that all government colleges, deemed universities and private medical colleges
would be covered under NEET and those examinations which had already taken place or were slated to be conducted separately stand scrapped.

Nadda said all states agreed that the NEET was a welcome move for bringing in transparency and removing several
malpractices in the field of medical education.

However, during the meeting some states said the examination process was either underway or was soon to
commence for admission to various state medical colleges.

Others referred to the issue of the syllabus of the CBSE being different from that of the State Examination Boards.

“The views and concerns of the states shall be collated and soon a future course of action shall be thought of. The
government is committed to bring about transparency in medical education and remove malpractices,” he said.

INLD leader Dushyant Chautala said students should be given time to prepare for the common exam.

Chautala said that every party that was present at the meeting has opposed the NEET because the time is very short
and students are also not prepared to handle the common entrance test as all state boards have different syllabus.

“Therefore we request the government to conduct NEET with the postgrad exam next year and come with a common syllabus so that every student has equal right in all regional languages which the government accepts in the coming year 2017-18,” he said.

Earlier this week, the apex court had turned down a batch of appeals by states seeking to conduct their own medical
admission tests and ruled that “only NEET would enable students to get admission to MBBS or BDS studies”.

PTI

Arun Jaitley’s outburst is justified: The Supreme Court is playing God

There is no one better than Arun Jaitley to call a spade a spade.

Two days ago, the Finance Minister minced no words in saying that the judiciary was trampling all over the constitution’s basic mosaic of the separation of powers. Angry about the judiciary’s repeated lunges into executive and legislative terrain, Jaitley said it all in one sentence: “Step by step, brick by brick, the edifice of India’s legislature is being destroyed”.

It’s a strong statement, and one that the Supreme Court should heed.

The Constitution gave the legislature, the executive and the judiciary primacy in their own domains, but the courts have been stomping all over legislative and executive territory, making laws rather than just interpreting them. And these interventions are not one-offs, occasional transgressions that may be necessitated by circumstances. It seems ‘The Brethren’ want to see themselves in the headlines almost daily, as if to prove they are the only worthies capable of running the country.

Friday’s newspapers tell us that the Supreme Court has ordered a special investigation team to probe charges of wife-swapping among navy officers. Pardon me, but isn’t this the job of the police? So tomorrow if someone is beating his kids, we go straight to the Supreme Court with a public interest litigation (PIL)? If garbage is piling up in front of my house, I go to court again?

Thursday’s newspapers found the Supreme Court ordering the Centre to create a new policy on handling drought, and set up a new disaster relief fund.

File image of the Supreme Court of India. AFP

File image of the Supreme Court of India. AFP

Excuse me, but can the courts order governments to decide what to do with their budgets and how? This bit of court meddling had Jaitley fuming: “We have the National Disaster Response Fund and the State Disaster Response Fund and now we are being asked to create a third fund. The appropriation bill is being passed. Now outside this appropriation bill, we are being told to create this fund. How will I do that? India’s budget-making is being subject to judicial review,” he was quoted as saying.

Yes, it is possible to argue that when governance standards are poor in states and even at the Centre, someone has to step up to render justice. But, surely, the answer is to strengthen governments and their ability to enforce the law, not weaken it further by sidelining elected governments through judicial processes? How often can courts order the police or bureaucrats to operate under court orders? How far can this process continue without a complete breakdown of the constitutional order? Why would the police listen to anybody, when the courts inject themselves into the power equation?

And while we are discussing a lack of governance, whatever gave the judiciary the idea that it is well-governed itself? With over four crore cases piling up in various courts, surely the judiciary is no paragon of competent governance. And when a Shanti Bhushan makes an allegation in open court that eight of the last 16 Supreme Court chief justices were corrupt, the only thing the court did was give an embarrassed shrug and move on.

So much for being the conscience-keeper of the nation.

If there is a case for judicial interference in the legislative process, the failure of the judiciary on multiple fronts is equal reason for the executive to poke its collective nose into judicial turf.

To prove that the judicial over-reach is not an occasional thing, let’s look at the kind of orders the judiciary has been passing of late.

A few days ago, the Supreme Court wanted licences for dance bars in Maharashtra to be issued in two days. Are dance bars a priority even for the apex courts?

The court has been trying hard to reform the Board for the Control of Cricket in India (BCCI), when this is a private body doing its own thing. Why should cricket get so much time from the court when over 60,000 cases are pending before it?

Towards the end of last month, the court ordered the Reserve Bank of India to set up a panel to chase bad loans. After probing black money, will the court decide how banks should collect their dues?

Then the court decided that allowing religious structures to encroach on public spaces is an “insult to God”. One supposes the Supreme Court knows God’s mind better than the faithful. It is, after all, playing god in India.

The Supreme Court, in its avatar as protector of the environment, drove non-CNG cabs off the road in Delhi a few weeks ago before modifying its orders a bit on wiser counsel. Earlier it banned diesel SUVs above a certain size from being registered in the capital, taking on the role of a pollution expert. That it did little to lower Delhi’s ambient pollution levels did not deter the court.

The court also found time to pontificate on the need to connect backward states with air links, and asked Air India, already bleeding due to excessive political meddling in commercial operations, to indicate whether or not if it will fly to Shimla.

Then the court rapped states for non-implementation of the food security law. It never asked itself if this reluctance may have been caused by the foolishness of the law itself. And, of course, it gave the Centre notice on the implementation of the rural job creation scheme, MNREGA.

The court also wanted a human rights body for Delhi — no doubt, helping a few brother judges to find post-retirement jobs.

More recently, the Supreme Court effectively told the Speaker of the Uttarakhand Assembly how to do his job, including the counting of votes in the trust-vote. So the Speaker’s domain has been breached, too. When the Arunachal Pradesh crisis was going on, the Supreme Court directly violated the Constitution by issuing a notice to the governor — something that is forbidden under Article 361 of the Constitution. It was only when the attorney-general pointed this out that the court withdrew the notice reluctantly, but decided it would examine the governor’s actions anyway.

Given that the Supreme Court has been setting such a bad example on judicial restraint, high courts have also been busy throwing their weight about.

The Bombay High Court asked the IPL to shift its matches outside the state after April in view of the water shortage in many parts of the state. As if the use of recycled water on Mumbai’s cricket pitches would otherwise be available to thirsty people in Marathwada.

Then it wanted the Maharashtra government to ensure that the weight of school bags was reduced as per its orders.

Every year, the High Court also orders the Brihanmumbai Municipal Corporation to repair potholes.

A Delhi High Court judge, after receiving a poor response to calls to 100 (the police), got the Chief Justice to convert his experience into a formal PIL.

To top it all, the Chief Justice of India announced the other day that the time had come to audit the government’s performance. One wonders if he has not read the Constitution, which says the people will audit the government’s performance once in five years through an election. Does the judiciary want to usurp even the sovereignty of the voter?

As things stand, the only pillar of our democracy that stands unaccountable to anyone is the judiciary, which appoints itself, decides how others should behave, and even makes the law wherever it thinks it ought to.

It is worth noting that the laundry list of court interventions mentioned above pertain to just the last two or three months. One can only surmise what damage one Supreme Court and 25 high courts can do over an entire year.

The courts are not supposed to make the law.

In doing so repeatedly, they have become an impediment to doing business smoothly. If a court can ban diesel vehicles, why blame only the government for not doing enough to improve the ease of doing business? The courts may be undoing the work done by the government.

Now, anyone claiming to represent the public interest can file a petition to change the law, damage corporate profits, and then someone else can file another PIL saying the loan given to company so-and-so has gone bad, and now this must also be the court’s duty. Many of the loans now gone bad are the result of court verdicts in many cases.

The Supreme Court should then maybe fix the problem it has created itself.

Let’s bury the Constitution.

PM Modi’s degree authentic, year discrepancy just a minor error: DU

New Delhi: Downplaying allegations of glaring discrepancies, Delhi University on Tuesday said Prime Minister Narendra Modi‘s BA degree as circulated by BJP is “authentic” and it has all the relevant records relating to his graduation while terming as “minor error” mention of 1979 in his degree when he passed out a year earlier.

The clarification by Delhi University’s registrar Tarun Das came amid the raging controversy over Modi’s educational qualifications with AAP continuing to question genuiness of the BA degree.

“We have checked our records and it has been authenticated that Prime Minister Narendra Modi‘s degree is authentic. He cleared the examination in 1978 and was awarded the degree in 1979,” he said hours after an AAP delegation went to the university seeking details of the degree.

Narendra Modi. File photo. Getty imagesNarendra Modi. File photo. Getty images

Narendra Modi. File photo. Getty images

Asked about certain discrepencies being alleged by AAP in his marksheets and degree certificate, he said, “the discrepancies in names in two marksheets exist in university records as well.”

“The university seeks to maintain privacy of any student who is getting enrolled with it. In view of the queries and reports in media, we would like to state that Narendra Damodardas Modi had qualified for degree of Bachelors in Arts. His enrollment number was CC 594/74 and his examination roll number number was 16594,” Das said.

Asked about variations in Modi’s names in marksheets, Das said it is a common error as far as middle names are concerned. “Similar errors are often pointed out by other students as well which are rectified when requested.”

On being asked about AAP’s allegation that why he was awarded the degree in 1979 when he graduated in 1978, Das said “It is difficult to comment on minor errors.”

On Monday, BJP president Amit Shah and Finance Minister Arun Jaitley had released copies of Modi’s BA and MA degrees in response to AAP’s allegations.

The AAP had said the documents were “forged” and had “glaring discrepancies” in them.

When asked about discrepancies in calculation of marks and the marksheets being “typed ones” while other degrees issued by the university during that period had handwritten details, Das said, “it is not possible to comment on every variation. I can only confirm that the degree is genuine”.

An AAP delegation led by Ashutosh visited the university to check records of Modi’s graduation degree. The authorities asked the AAP leaders to come on Wednesday as they did not have prior appointment.

“We have two degrees of different individuals one from 1978 and another from 1980. While in the other degrees all the details including the name, course name and marks are hand-written, it is only Modi’s degree that has been typed.

“The ones forging the degree tried to be smart so that the handwriting doesn’t get caught in forensic tests but they forgot to use the proper format as well,” Ashutosh told reporters.

Another AAP leader Sanjay Singh wondered why the DU had not heeded to the CIC order of making the degree public.

“Amit Shah and Arun Jaitley had yesterday (Monday) made public and said the same can be verified from the university. We came to DU but there is an atmosphere of fear and we were not allowed to meet anyone.

“If his degree so authentic then why is DU not making it public despite CIC orders. Why records are not being allowed to be inspected? We have to keep some facts before you and our doubts are coming true that the degree has been forged,” said Singh.

Privilege notice against PM and Defence Minister in RS; Jaitley defends Modi in RS

New Delhi: The Congress on Tuesday said it had submitted a breach of privilege notice against Prime Minister Narendra Modi and Defence Minister Manohar Parrikar in the Rajya Sabha for allegedly lying on the AgustaWestland helicopter payoffs.

“I have given a notice of breach of privilege against the prime minister and the defence minister. They have spoken lies outside parliament. They said UPA leaders took money,” Congress leader Shantaram Naik said in the upper house.

Deputy chairman P.J. Kurien said he was expunging the remarks.

Finance Minister Arun Jaitley, who is also the Leader of House, meanwhile, said comments made by one politician against another cannot be a breach of privilege.

Representational image. PTIRepresentational image. PTI

Representational image. PTI

“Election speech by one politician against other has started constituting a breach of privilege. One can do it for publicity,” he said.

Congress leader Anand Sharma said Modi should make responsible statements. “The PM remains PM, whether in the house or outside… He needs to be accountable for what he says.”

Jaitley replied saying there was no gag order. “Is the prime minister of india to be gagged from speaking on corruption,” he asked.

The Congress had on Monday stalled the Rajya Sabha proceedings, blaming the BJP for using AgustaWestland as an election issue.

Modi on Sunday targeted Sonia Gandhi over the helicopter deal at election rallies in Kerala and Tamil Nadu, saying it was not the Indian government but a court in Italy that had named the Congress chief.

Modi’s degrees: BJP has entered the ring with AAP, now it must go all out

A story in the Mahabharata tells us how Yudhishthir was briefly sent to hell for deceiving Dronacharya in the war.

The significance of this minor punishment to Dharmaraj Yudhisthir is immense: In the Indian value system, even half-truths are punishable and sometimes there is hell to pay for them.

File image of Prime Minister Narendra Modi. PTI

File image of Prime Minister Narendra Modi. PTI

In a country that looks at its values, morals and culture through mythology, to argue that the issue of Narendra Kumar Damoderdas/Damodardas Modi’s varsity degrees is insignificant amounts to ignoring the psyche of Indians. At stake here is not the academic qualification of the PM. The real questions are as follows:

Did the man India chose as its prime minister needlessly embellish his CV?
Did he claim for himself non-existent academic achievements?
To put it bluntly, did Narendra Modi lie to us about his past?

Now that the BJP has mainstreamed Arvind Kejriwal‘s allegations, turned the issue of the prime minister’s education into national gossip, it will have to decisively win this battle of perception. The entire country is closely watching the controversy, simultaneously weighing every argument and making up its mind. The stakes have become so high that if doubts over Modi’s degrees persist, they will erode his image, even if he doesn’t have to pay hell for it.

At the moment, the BJP appears to be leaving too many question marks. If the very idea of responding to Kejriwal’s allegation and asking Amit Shah and Arun Jaitley to give the Delhi chief minister the honour of a rebuttal, wasn’t bad enough, the discrepancies in the two degrees and questions about their veracity are further undermining the prime minister’s cause. Take for instance the Master’s degree awarded by the Gujarat University.

According to the varsity, Modi completed his Master’s in Political Science in 1983.

But, Professor Jayanti Patel, who claims to be a faculty member of the political science department between 1969 and 1993, argues that the varsity’s statement doesn’t add up.

This does raise a question: How does Professor Patel remember so much about one student among the hundreds he must have taught from more than two decades ago?

The other discrepancies have already been widely discussed. There are minor differences in the way his name is spelt — on one certificate, he is Narendra Kumar Damodardas and just Narendra Damoderdas in the other. The total marks in the various subjects do not add up. In his first year of graduation, Modi scored 23 in English, 23 in Hindi, 67 in History, and 23 in Political Science. But the total in the mark sheet is mentioned 165 instead of 136. Perhaps this, like the different spellings of his name, is a clerical error. But, then so many discrepancies in one person’s academic documents is an uneasy coincidence.

The AAP has also argued that the PM got his graduation degree from Delhi University in 1978 in spite of appearing in the exams for third year in 1977. The BJP has, however, clarified that Modi failed in his third year, forcing him to reappear in 1978.

But, read his mark sheet again. It shows Modi failed in three subjects (scored 23 marks each in English, Hindi and Political Science when the minimum required was 36). So, how did he make it to the second year after failing to clear the first year exams in three subjects? Did university ATKT (allowed to keep term) rules permit that?

We do not have any reason to believe that the PM’s degrees are either fake or forged. There are no basic qualifications for the post of prime minister and Modi had no compelling reason to manufacture a degree, unless of course he was keen to add more academic gravitas to his personality. The timelines show that Modi went to college at the age of 24-25 and then did his Master’s when he was almost 35. That’s not the usual age at which we go through college and so has a ring of truth to it (if the degrees were suspect the tendency would have been to make them seem real by showing his age closer to the age when we normally complete degree and PG).

Clerical errors, especially in handwritten degrees, are quite common in India, my own senior colleague, Sreemoy Talukdar wrote yesterday how he became ‘Srimay’ on his degree certificate. The mystery of the vanishing Kumar, the ‘e’ in Damodardas and the wrong total on the mark sheet could well be a reflection of how the staff in our institutions functions.

But, to ensure that his image doesn’t get sullied by the controversy, the BJP — now that it has accepted Kejriwal’s bait — should go all out to ensure there is not even an iota of doubt over the prime minister’s degrees. If this is another of those cheap tricks of Arvind Kejriwal to stay in the news, it’s to the BJP’s advantage to expose the same.

NIT Srinagar unrest: Mehbooba rules out shifting of campus to Jammu

New Delhi: Jammu and Kashmir Chief Minister Mehbooba Mufti, who is in Delhi on her maiden visit after taking over the reins of the state, dismissed the possibility of shifting National Institute of Technology (NIT) out of the Valley on Tuesday.

The 56-year-old Mehbooba, who assumed charge of the PDP-BJP government on 4 April, called on Union Home Minister Rajnath Sing, a meeting she described as a “courtesy call”.

Emerging from the 45-minute meeting with Singh, Mehbooba said, “It is a courtesy call on the Home Minister after I took over as the Chief Minister”.

A file photo of Mehbooba Mufti. PTIA file photo of Mehbooba Mufti. PTI

A file photo of Mehbooba Mufti. PTI

During the meeting, the two sides are believed to have discussed the present turmoil in the state due to clashes between outstation students and police besides law and order situation arising out of militancy.

Sources in the ministry said the Home Minister told Mehbooba that normalcy should be restored at the earliest.

As she was leaving the North Block, journalists asked her questions about the unrest at the NIT and the demand by outstation students to shift the campus to Jammu.

“Let me make it clear that it is an issue within the institute and please do not give it a colour of local versus outsiders. The Human Resources Development Ministry is looking into the grievances of the outstation students and I am hopeful that it will be resolved soon.

“As far as demands of some students to shift the NIT campus out of Srinagar is considered, let me make it clear that it won’t be possible,” she said.

To a question that many outstation students had not appeared in the examination that began on Monday, she said “Some students were not prepared for exams. Their exams would be conducted later.

“Some students have gone back to their homes because of the environment,” Mehbooba, the first woman Chief Minister of the state, said.

She later met Surface Transport Minister Nitin Gadkari and is believed to have discussed the issue of widening of state’s national highways which has been pending with his ministry for a long time.

She is also believed to have taken up the issue of bad road connectivity within the state.

Meanwhile, the Jammu and Kashmir government said in a statement that during her meeting with the Union Home Minister, Mehbooba discussed how to broaden the scope of cross — LoC trade and travel.

The Chief Minister proposed opening of additional routes and crossing points across the Line of Control, described by late Mufti Mohammad Sayeed as the “biggest” confidence- building measure between India and Pakistan.

The proposed new routes include Kargil-Skardu, Jammu- Sialkote, Turtuk-Khapulu, Chhamb Jorian-Mirpur, Gurez-Astoor- Gilgit, Titwal-Chilhas, and Jhangar (Nowshera)-Mirpur and Kotli.

Mohbooba and Singh discussed on proposals of the state government which are presently under the consideration of the Ministry of Home Affairs (MHA).

The proposals include continuation of modernisation of Police Force Scheme, revised ex-gratia scheme, including loss to livestock due to cross-border firing, and exemption of security-related expenditure on account of deployment charges.

Expressing concern over rising crimes against women, Mehbooba sought financial support from the Union Home Minister for raising two all-women battalions.

She said the Cabinet had, in its meeting on Monday, sanctioned four new women police stations to check rising incidents of crimes against women, the release said.

On adopting non-lethal means in better crowd control to prevent loss of precious human lives while dealing with law and order situations, Singh assured the Chief Minister of full support from the Union Home Ministry.

The Chief Minister welcomed the central government’s direction to state governments to appoint Nodal Officers to ensure safety and security of students from Jammu and Kashmir who are pursuing studies outside the state.

The issue of Inner Line Permit for foreign tourists for visiting various parts of Ladakh also came up for discussion during the meeting.

Mehbooba also requested the Union Home Minister to clear the proposal for restoration of damaged infrastructure in police department due to floods of 2014. A proposal amounting to Rs 286.57 crore has already been sent to the Home Ministry in this regard.

The Chief Minister urged Singh to take an early decision on the state government’s proposal to recognise Nepal route as one of the routes under the policy framed for returnees from Pakistan-occupied Kashmir.

On the return of Kashmir Pandits, the Chief Minister said not only the state government but the people of Jammu and Kashmir want return of Kashmiri Pandit community to the Valley with dignity and honour as the cultural milieu of Kashmir without them remains incomplete.

In her meeting with Surface Transport Minister Nitin Gadkari, Mehbooba sought higher allocation under Central Road Fund for the state.

Gadkari assured Mehbooba that once utilisation certificates (UCs) for Rs 848 crore are received, an amount of Rs 350 crore will be released under central road fund (CRF).

So far, UCs amounting to Rs 801 crore have been sent by the R&B Department, the meeting was informed, the release said.

The Chief Minister highlighted the urgent need to declare Mughal Road as an alternate National Highway, keeping in view the critical condition of certain portions of Jammu-Srinagar National Highway. She also highlighted the need for construction of a tunnel to make Mughal Road an all-weather road.

Mughal Road was renovated under Prime Minister’s Reconstruction Plan (PMRP) and completed at a cost of Rs 640 crore. For providing alternate connectivity to Chenab Valley, the Chief Minister requested the Union Minister for construction of a National Highway from Lakhanpur to Doda via Ranjit Sagar Dam, which will provide a huge fillip to the tourism potential of the region.

Mehbooba also raised the issue of inclusion of more projects under Bharat Mala and Inter-State Connectivity Projects so that better road connectivity is provided to the people.

She was informed that except Qazitur-Tangdhar Road for which certain clarifications have been sought from the Public Works Department, bids have been received in case of Baramulla-Gulmarg and Poonch-Uri Roads and the work on the projects will be allotted shortly.

The Chief Minister was informed that Rs 90 crore will be released to the state government for basic maintenance of roads.

Mehbooba also sought special assistance for completing construction of 541 bridges in the state.

The Union Transport Minister assured the Chief Minister that he will get the proposal submitted by the state government examined on priority.

As regards to the issue of rationalisation of toll collection, a demand raised by the Chief Minister, he said the proposal submitted by the state government will be prioritised.

The Chief Minister assured Gadkari that the state government will extend full support in land acquisition for construction of ring roads in the two capital cities of Jammu and Srinagar.

The Surface Transport Ministry has already started the process of framing detailed project reports so that the work on the two prestigious projects is started in earnest.

Finance Minister Arun Jaitley to leave for United States on Wednesday for IMF-WB meet

New Delhi:  Finance Minister Arun Jaitley will on Wednesday leave for the United States on an official visit during which he will attend the International Monetary Fund – World Bank meeting and hold sessions with institutional investors and pension funds.

“As part of the first leg of his US visit, the Finance Minister will arrive in Washington on 13 April and will address at Carnegie Endowment for International Peace ‘Steering India Towards Growth’,” a Finance Ministry statement said.

On 14 April, Jaitley has a meeting with US Treasury Secretary Jack Lew, which will be followed by the 6th Economic and Financial Partnership Dialogue between India and the US.

The Finance Minister will participate in BRICS New Development Bank (NDB) Board of Governors Meeting followed by the BRICS Finance Ministers and Central Bank Governors Meeting.

A file photo of Arun Jaitley. PTIA file photo of Arun Jaitley. PTI

A file photo of Arun Jaitley. PTI

“The Finance Minister is also proposed to meet the Chinese Finance Minister in the evening,” the statement added.

On 15 April, Jaitley will participate in G-20 meetings and attend a special event to honor UN Secretary General Ban Ki-moon in nurturing World Bank-UN Partnership.

On 16 April, 2016, the Finance Minister will participate in International Monetary and Financial Committee (IMFC) Governors meet followed by the IMFC Plenary Session and Development Committee Plenary meeting, among others.

In his second leg of US visit in New York, Jaitley will address the Asia Society Event ‘Make In India-The New Deal’ on 18 April. The Finance Minister will also hold meeting with long-term funds and pension funds.

On 19 April, he will address the Special Session of General Assembly of UN on the World Drugs. The Finance Minster is also proposed to participate in institutional investors meet on the same day.

The Finance Minister will return to the country on 21 April.

#PanamaPapers: Action will be taken against unlawful accounts abroad, says Jaitley

New Delhi: Government today declared that action will be taken against “unlawful” accounts held abroad by Indians and constituted a multi-agency group to continuously monitor information in the wake of Panama Papers that named 500 people including film actors and industrialists who have allegedly stashed money in offshore entities.

Finance Minister Arun Jaitley. ReutersFinance Minister Arun Jaitley. Reuters

Finance Minister Arun Jaitley. Reuters

Finance Minister Arun Jaitley said that Prime Minister Narendra Modi discussed the issue with him this morning and on his advise the group has been set up, which includes officials from CBDT, RBI and FIU (Financial Intelligence Unit).

“The multi-agency group will comprise various government agencies – the CBDT, FIU, FT&TR (Foreign Tax and Tax Research) and RBI. They will continuously monitor these (accounts) and whichever accounts are found to be unlawful, strict action as per existing laws will be taken,” he told reporters.

Jaitley comments came on a day the Indian Express carried a report based on leaked documents of a Panama law firm Mossack Fonseca which is said to feature links of over 500 Indians to offshore firms.

The newspaper claimed that the list included foundations and trusts and passport details of 234 Indians. Jaitley said after today’s revelations, more names may come out in the next few days.

“I welcome this investigation. I think it is a healthy step that these kind of exposes are being made. I have been repeatedly saying that the world is now going to increasingly become more transparent, countries are cooperating with each other and slowly all this information is going to come out as a result of various global initiatives which have been launched,” he said.

He said that Prime Minister has spoken to him in this regard and after his advice the government has constituted a multi-agency group to monitor the information and to collect further information in this regard.

The list has been released by International Consortium of Investigative Journalists (ICIJ), which added a disclaimer that there are also “legitimate uses for offshore companies”.
PTI

ITR Form: Experts call for more details on asset disclosure

New Delhi: People earning more than Rs 50 lakh will find it challenging to declare cost of inherited properties and gift items in the new Income Tax Return (ITR) Form for the Assessment Year 2016-17, say tax experts.

Representational image.Representational image.

Representational image.

The new ITR, notified by the Central Board of Direct Taxes (CBDT) yesterday, requires people with high income to declare cost of land, building, jewellery, bullion, vehicles, yachts, boats and aircraft, in addition to cash in hand.

A new reporting column ‘Asset and Liability at the end of the year (Applicable in a case where total income exceeds Rs 50 lakh)’ has been introduced in the ITR.

While tax experts said the CBDT has done the right thing by notifying the ITR Form for Assessment Year 2016-17 in March itself, it has not yet come with the required instructions for determining the cost of immovable and movable assets.
Individuals are required to file their tax return for the previous financial year by July 31.

“Individuals are likely to face a challenge in determining cost for gifted assets (such as jewellery), inherited assets and for assets purchased several years earlier where records have not been retained,” said Tapati Ghose, Partner, Deloitte Haskins & Sells LLP.

A threshold limit for each category of asset for disclosure purposes would provide an administrative relief in case assets below a prescribed threshold are exempted from disclosure requirement, Ghosh said.

Amit Maheshwari, Partner, Ashok Maheshwary and Associates said last year there were lot of petitions as the tax department had notified the ITR closer to the last date of filing the returns.

“This time they have done the right thing by coming out with the new ITR at the beginning of the new financial year. I think people have enough time to file their returns,” he said.

Filing for the new forms begins with the onset of the new financial year today.

Global tax consultancy firm KPMG said that at this stage it appears that the disclosure required in the new ITR Form is to collate information and evaluate the income vis-à-vis the net wealth of an individual.

“We will have to wait as to how this data is utilised in the future i.e. whether any additional tax is levied on the personal wealth, especially when Wealth tax has been withdrawn in the recent past,” it said.

Experts also said new ITR Form will help in dealing with the menace of black money.

Finance Minister Arun Jaitley has already announced a scheme to enable black money holders to come clean by paying 30 per cent tax and 15 per cent penalty. For the purpose, government will provide a compliance window.

Last year he came out with similar scheme for flushing out black money stashed abroad.
PTI

IT dept notifies new ITRs; taxman eyes those earning over Rs 50 lakh

New Delhi: People with an income of more than Rs 50 lakh per annum and having the pleasure of owning a yacht, aircraft or valuable jewellery will now have to disclose these costly assets with the IT department notifying a new set of Income Tax Return (ITR) forms for assessment year 2016-17.

Tax-Day_380Tax-Day_380Filing for the new forms begins with the onset of the new financial year today.

The Finance Ministry published a gazette order in this regard on March 30 and taxpayers can file their ITRs till the stipulated deadline of July 31.

The department has introduced a fresh reporting column in the new ITRs (ITR-2 and 2A) called ‘Asset and Liability at the
end of the year’ which is applicable in cases where the total income exceeds Rs 50 lakhs. Individuals and entities coming
under this income bracket will also have to mention the total cost of such assets.

So, while immovable assets like land and building have to be furnished under the new ITR regime, movable assets like cash in hand, jewellery, bullion, vehicles, yachts, boats and aircraft will also have to be disclosed to the taxman. The entity reporting these high-value possessions will also have to describe their “Liability in relation” to these items.

“The new reporting mechanisms for people earning over Rs 50 lakh per annum are made to check tax evasion by high-net worth individuals and entities. While their income returns used to cover this in a way till now, a new exclusive column was essential to keep the taxman informed,” a senior official said.

For the first time, the ITRs, keeping in spirit the government’s flagship agenda of promoting startup businesses has brought out a separate column for earnings made from this sector.

The ITR-2A, to be filled by those individuals and HUFs who do not have income from either business, profession or by way of capital gains and do not hold foreign assets, has the new column called Pass Through Income (PTI) and seeks details from business trust or investment fund as per section 115UA and 115UB of the Income Tax Act (investments made in a venture capital company) which pertains to emerging companies or startup firms.

Finance Minister Arun Jaitley had announced in the recent Budget that startups will get 100 per cent tax exemption for three years.

The respective form, for this year, has hence gone upto eight pages (including annexures) as compared to the same document of 7 pages last fiscal.

The ITR-2, used by similar category of entities but who own foreign assets, also features the new PTI column. A total of nine such ITRs have been notified which include the Sahaj (ITR-1), ITR-2, ITR-2A, ITR-3, Sugam (ITR-4S), ITR-4, ITR-5, ITR-6, ITR-7 and an acknowledgement form called the ITR-V.

The simplest ITR-1 (Sahaj) for individuals having income from salaries, one house property or other sources, now features an additional column to mention the Tax Collected at Source (TCS) and the form now has 7 pages as compared to the earlier five.

The department has not made any changes in columns seeking declaration of foreign assets and income by entities and individuals and smart features like providing Aadhaar number, personal mobile phone number and email id have been retained.

Furnishing of Passport details has not been made mandatory this time too.

The requirement of furnishing total number of savings and current bank accounts held by the individual or entity, at any time during the previous year, (excluding dormant accounts) has been continued this time too.
PTI

Pay dues honourably or face coercive action: FM to Mallya

New Delhi: In a stern warning to wilful defaulters like Vijay Mallya, Finance Minister Arun Jaitley said they should settle their dues honourably with the banks or else be ready to face “coercive action” by lenders and investigative agencies.

Vijay Mallya. AFPVijay Mallya. AFP

Vijay Mallya. AFP

“I don’t want to make any comments on individual cases but I think it’s a responsibility of large groups like his (Vijay Mallya‘s) to honourably settle their dues with the banks,” he told PTI in an interview here.

He further said that banks have certain collaterals of group companies of Vijay Mallya and will take legal action to recover dues that are in excess of Rs 9,000 crore.

“Banks have some securities. Banks plus other agencies have also coercive methods available with them through legal enforcement…these are all being investigated by relevant agencies,” he said.

Mallya, promoter of long-grounded Kingfisher Airlines, had left India on March 2, presumably for London, days before the Supreme Court heard a plea of clutch of state-owned banks seeking recovery from his group firms.

Mallya and Kingfisher Airlines owed Rs 7,800 crore to a consortium of 17 lenders led by State Bank, which had an exposure of over Rs 1,600 crore to the now defunct airline. Other banks that have exposure to the airline include Punjab National Bank and IDBI Bank (Rs 800 crore each), Bank of India (Rs 650 crore), Bank of Baroda (Rs 550 crore), Central Bank of India (Rs 410 crore).

UCO Bank has to recover Rs 320 crore, Corporation Bank (Rs 310 crore), State Bank of Mysore, (Rs 150 crore), Indian Overseas Bank (Rs 140 crore), Federal Bank (Rs 90 crore), Punjab & Sind Bank (Rs 60 crore) and Axis Bank (Rs 50 crore). The Finance Minister said the government has been trying to address the problem of NPAs in sectors such as steel, textile, highways and infrastructure, which are on account of economic slowdown.

“I think the NPA resolution process will now begin. The sectors which have caused distress… I have always said that there are two kinds of NPAs. One is because of economic environment, the losses in certain categories of industry. Now those areas we are trying to address,” he said.
PTI