Indian Economy has bottomed out & poised for healthy growth in coming days.

The two great reforms by the Modi government despite having numerous benefits to the economy have been criticized by some people in the opposition. The temporary slowdown in the economic growth has given some cause of worry. However, on 24^th October, Finance Minister, Shri Arun Jatliey, reassured the people of the country that the economy is recovering fast. The government presented the facts where economy is progressing along with the necessary steps taken by it to sustain growth momentum.

India grew at a strong pace of 7.5% p.a. in last three years during 2014-17, with growth exceeding 8% in 2015-16. There was a temporary slippage in growth in the last two quarters but that slowdown is now over, with all indicators like –IIP numbers, healthy growth in 8 core sectors (coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity) ,better performance in market Index, growth in automobile industry , higher consumer spending etc. all of which are pointing towards  a strong growth pick up.

Finance Minister said that the public sector banks have adequate lending capacity after demonetization. Indiscriminate lending under UPA regime had led to accumulation of non-performing assets and is now under control. Inflation declined from nearly double digits in 2012-13 and 2013-14 to an average of less than 5 per cent. It has consistently come down (3.28%) and will not cross 4 per cent this fiscal, according to Economic Affairs Secretary S C Garg.

The current account deficit (CAD) for 2015-16 was 1.1 per cent of GDP as compared to 1.3 per cent of GDP in 2014-15. The CAD further narrowed to 0.7 per cent of GDP in 2016-17 on the back of the contraction in the trade deficit that narrowed to US$ 112.4 billion in 2016-17 from US$ 130.1 billion in 2015-16. Though exports declined in 2015-16 primarily on account of the sluggish global demand but on the other hand, imports have also declined due to fall in international crude oil prices as well as in the prices of other commodities. During 2016-17, exports grew by healthy 5.2 per cent while imports increased by 0.9 per cent only, helping in narrowing the trade deficit.

Foreign exchange reserves stood at US$ 370 billion at the end of March 2017 as compared to 360.2 billion as at end March, 2016. As on 13th October 2017 the foreign exchange reserves exceeded US$ 400 billion. With increase in reserves in the last couple of years, most reserve-based external sector vulnerability indicators have improved

The gross FDI flows to India in 2016-17 amounted to US$ 60.2 billion, as compared to US$ 55.6 billion in 2015-16 and US$ 45.1 billion in 2014-15, indicating sustained improvement in global confidence in Indian economy. During April-August 2017, the gross FDI inflow was US$ 30.4 billion, higher as compared to the inflow of US$ 23.3 billion in the corresponding period of the previous year. The government is committed to sticking to the deficit target of 3.2 per cent of GDP for the current fiscal but added that a review would be done in December. 

The GDP growth slowdown has bottomed out and the economy is turning around gradually.  Also the International Monetary Fund had recently projected that the country would achieve 8 per cent growth rate soon giving positive hopes to the economy. The government is also confident of surpassing the disinvestment target of Rs 72,500 crore for this fiscal.

Financial Services Secretary, Shri Rajiv Kumar said an aggressive Rs 2.11 lakh crore capital infusion for banks for resolution of NPA issue (in March 2017 stood at about Rs7.29 lakh crore, equivalent to 5% of the country’s GDP) will help banking sector. Out of this, Rs 1.35 lakh crore will be through the recapitalization bonds- government instruments subscribed to by banks, while remaining Rs 76,000 crore from the budgetary support i.e by the government or by the banks. Micro, Small and Medium Enterprises (MSME) is high priority area for fund infusion through increased lending.  There will be 100 bank-approved project templates along with MSME customized Mudra financing products.  These Cabinet decisions will benefit enhanced market access and employment. This will be facilitated through a GEM portal and will be connected to eCommerce portals.  There will be special campaign in 50 high employment clusters.

Finance Secretary Ashok Lavasa made a presentation on the government's spending on infrastructure to "create more jobs, more growth," detailing that 83,677 km of highways will be built in the next five years at a cost of 6.9 lakh crore. "It will create 14 crore man days of jobs," he said. Also a road building programme, known as BharatMala, under which 34,800 kms of roads will be constructed. for which Rs 5,35,000 crore will be invested. Besides, a 9,000 km economic corridor will also be built , along with inter corridor and feeder route (6,000km), National Corridors Efficiency Improvement, Border Roads and International Connectivity (2,000km), Coastal Roads and Port Connectivity(2,000 km), Greenfield Expressways(800km) and Balance NHDP works(10,000 km).Prioritizing national security, the government aims to strengthen border road connectivity. The government also listed out plans for increasing rural road connectivity and universal affordable housing. All these measures will surely help the economy to grow at a fast pace in near future. 

Gopal Krishna Agarwal

National Spokesperson of Bjp Economic Affairs 

“GST becomes even simpler, ensuring interests of our citizens are safeguarded and India’s economy grows”

It is now 100 day that Goods and Services Tax (GST) has been successfully rolled out. It is a landmark reform that will transform Indian economy by creating One Market One Tax. Agriculture sector and manufacturing sectors were reeling under fragmented markets. In addition manufacturing sector was bogged down by multiplicity of taxes and lack of Ease of Doing Business (EODB). Complexity of indirect taxes, inspector raj, harrasment of registration and filing returns physically and running around for assessment & refunds and corruption thereoff, have all been removed. The process is online transparent and automatic. 

GST is changing the way businesses is being done in India. For the consumer, it will reduce prices, for the Government, it would mean increased revenue collection and creation of a simpler system to administer through GST network (GSTN). Conceptually, GST does away with the multiplicity of tax structures subsuming about 13 central and state taxes. We are looking at an objective, online, transparent and compliant tax system. 

The complete online structure of GST Network, after full implementation, by December 2017, will bring EODB. Once, initial transactions are uploaded into the system, either online or even offline, other informations will be transmitted automatically. With registration, returns, assessment and refund without tax personnel intervention, the day to day life of businessmen will become hastle free. 

Demonetisation has pushed people to move business transactions to banking channels, establishing audit trail. This has been a prerequisite for successful implementation of GST. Once the full benefits of GST, such as Input Tax Credit (ITC) and removal of the cascading effects of tax from Maximum Retail Price (MRP) are implemented, consumer prices will come down. With better tax compliance, government can lower indirect tax rates. This indication has already been given by Union Finance Minister. 

There has been some criticism on some issues regarding implementation of GST. There is also lot of misinformation being circulated on social media, therefore we should be careful about them. Many people are quoting wrong figure of Rs 65000 crores as ITC demand, although the returns for claim of ITC has not yet been filed. All these assumption of demand of tax credit are based on Interstate GST figures (IGST) alone and wrong estimation.

Current government is the most proactive government the country had anytime. We are never in denial mode. Prime Minister has his ears to the ground and is always ready to listen and adopt. Prime Minister very graciously indicated at the Institute of Company Secretary (ICSI) function, about the changes in GST laws to accommodate some of these demands. 

The 22nd meeting of GST council brought in major changes making GST more people friendly with active public participation, these changes will give major boost to EODB for small and medium entrepreneurs and will unlock new possibilities for these entrepreneurs. These changes will also provide significant relief to the exporters. Council has revised GST rates favourably on 27 items of common use in textiles, manufacturing sector including various yarns, parts of diesel engines, pumps etc. These steps will definitely empower farmers and poor sections of society.

 

Increasing the turnover threshold for composite scheme from Rs 75 lacs to Rs 1 crore will give further relief to the small businesses. Difficult provisions with regards to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) have been put on hold and will be operationalised from 1st April, 2018. Even the services provided by goods transport agencies to unregistered persons have been exempted from GST, one of the major demand from transport sector. Demand for suspension of Reverse Change Mechanism (RCM) has been agreed upon and RCM under CGST and IGST have been suspended till 31st March 2018. Now there is no need to pay GST at time of reciept of advances on sale of goods for taxpayers with turnover up to Rs 1.5 crore. Small service providers with trunover of less than Rs 20 lacs per annum have been exempted from registration even if they are providing inter-state taxable services.

Finance Minister Shri Arun Jaitley said at an international forum that, under GST the government has unveiled attractive schemes to ensure that the non-compliant in India become compliant. The obvious problem for some, in the GST, is that the noncompliant are going to eventually come in to the tax net. Data has shown that almost 95 % of the tax is just being paid by 400,000 accesses. And there is a need to continue to expand the tax base at the bottom itself. This is what demonetization and GST is accomplishing. 

He further said that, ‘India's transition to the GST regime has been fairly smooth despite attempts by ill-informed opposition leaders to derail its implementation’, he further said that, ‘Many attempts have been made by political groups to derail the GST, but I am glad that their own state governments are not listening to them because they know 80 % of the money from GST is going to come to states’. Even the states are being encouraged towards competitive federalism and the government is also taking up the ranking of state based on EODB. 

The GST Council is India's first genuine federal institution, which meets every month, reviews the monthly situation and takes the final decisions. The global integration of the Indian economy is happening at a time when other economies are becoming more and more protectionist. India is now a better place to do business, because of the series of steps being taken by the government in the last three years. We are sure that with mega structural reforms like GST being, implemented India is now capable of taking big decisions and implementing them at a large-scale. 

(The writer is BJP National Spokesperson on Economic Affairs)

Contrarian View Is Fine, But Govt Is Trying Hard

             Contrarian View Is Fine, But Govt Is Trying Hard

Any debate on real issues facing the economy is always welcome. So we welcome Yashwant Sinha’s concerns on the state of the economy. Prime Minister Narendra Modi has Acknowledge that the first quarter GDP Figures are a cause of concern. The Economy has problem such as private investment, financial institutions distress and employment. But we have to look at what the government is doing.

One can Always have a contrarian view and get statistical data to back it up. It is therefore not surprising that Mr. Sinha chose the wrong figure of 65000 crore as input tax credit demand under GST although the returns for input tax credit claims have not yet been filed. These assumptions of tax credit demand are based on IGST figure alone and therefore wrong estimates.

Second, the negative impact of demonetization was due to the initial liquidity crunch. With fresh currency in circulation by June-end 2017, this was a short term pain.

Also, currency does not have shades of black and white. Black money is determined only on the basis of ownership. With identity now clearly established, tax evasion will be checked and black money traced.

Demonetization has pushed people to move business transactions to banking channels establishing audit trails. This is a prerequisite for successful implementation of the Goods and Services tax (GST). Once the benefits of GST such as impute tax credit and removal of the cascading effects of tax are implemented.  Consumer prices will come down. With better tax compliance the government can also lower indirect tax rates. This indication has already been given by the union Finance Ministers. 

The complete online structure of the GST network after full implementation by December 2017, will bring ease of doing business (EODB). Once initial transaction are uploaded into the system, other information will be transmitted automatically. With online registration return assessment and refunds without intervention by tax personnel, the day to day life businessmen will become hustle free, similarly, more and more processes. Including e-tendering are being done online through technological innovation. So, Mr. Sinha’s question of raid raj is limited to tracking black money and corruption cases. 

For the first time the Government has made a concerted bid to enhance manufacturing in India with EODB. The world bank has recognized 20 economic reform of the Modi Government that will be considered in this year’s international ranking. This will significantly improve India's EODB ranking. It has helped attract foreign direct investment which is now at an all time high of $62 billion. This indicates faith in the future of the economy. 

A major Criticism of the previous UPA Government was policy paralysis and lack of ownership of problems. The current government is active on all fronts. Mr. Modi is personally overseeing stalled projects in infrastructure power and steel under the Pro- Active Government and timely implementation initiative through a three-tier system (PMO Union Government secretaries, and chief secretaries of states). Twenty such meetings of Pragati have led to a cumulative review of 183 Projects with a total investments of 8.79 lakh crore.

The UPA Government compromised loans from public sectors bank. The present government has inherited the NPA problem along with several macroeconomic establishing factors high inflation a fiscal deficit of over 4.5 per cent of GDP and falling GDP growth. The government is now identifying and resolving NPAs through pragati, the insolvency & bankruptcy  code and the Benaim properties Act which was passed 28 years back but was not notified. 

Indian is among the World’s fastest growing economics, the seventh largest economy by nominal GDP and the third largest by purchasing power parity (World Bank) 2015. But the benefits of this growth are unevenly distributed. As per the Global Wealth Report, 2016. The top one per cent of our population has over 58 per cent of the total wealth of the country. Large scale corruption is the main cause of uneven growth. Curbing corruption and eliminating black money is a key mandate of the present government. Mr. Modi’s initiatives to flight this meninge include the setting up of a special investigation team.

The Foreign Assets Declaration scheme renegotiation of bilateral treaties on double taxation avoidance agreements with Mauritius Cyprus and Singapore the income disclosure scheme (IDS) I & II Banal transactions Amendment Act (2016). Demonetizations deregistration of shell companies and GST, These efforts have helped establish a clean business environment.

The gloom is nowhere in sight with healthy foreign exchange reserves the current account and fiscal deficit under control a strong rupee healthy tax collection boosting government revenue corruption and crony capitalism under check a leak proof and targeted delivery mechanism for financial participation and a proactive government committed to structural reforms. Mr. Modi may be criticked for sqeezing too many reforms into a small time span. He believes in accountability has created a performance matrix and is setting tough targets. His commitment to doubling farmers income by 2022, providing five crore low cost housing units electrification of all villages, electricity to every house, bullets trains a corruption free business ecosystem, self employment, rural roads, regional low cost air connectivity and two lakh km of optical fibre connectivity, all point to his pro poor and business friendly approach.

He was voted to office to change the status-quo and create a new normal. That is what his government is doing.