Policy Briefs

Goods and Services Tax (GST)

PART I : Need For GST in India: UPA InitiativeThe effort to introduce GST in India for the first time was seen in the UPA regime in 2006-2007 Union Budget speechmade by the then Finance minister P. Chitambaram stating that there is a national level consensus on introducing GST. Hefurther stated that GST will be introduced on 1April 2010. The Empowered Committee of State Finance Ministers agreedto work with the Central Government to prepare a roadmap for introducing a national level GST with effect from 1st April2010. In May 2007 Empowered Committee (EC) of State Finance Ministers in consultation with the Central Government,constituted a Joint Working Group (JWG), to recommend the GST model. (PIB, 2009). However, GST could not beimplemented due to Modi’s protest. This was so because of complex sharing of power between centre and state asmentioned in the constitution which further requires its amendment.The introduction of Goods & Services Tax (GST) is a significant step. It is expected to spur economic growth as well asintegrate states. GST, is an amalgamation of large number of Central and State taxes into a single tax. It is expected toreduce the overall tax burden of consumers on goods. According to the Economic Survey for 2013-14, there is consensusthat the Goods and Services Tax (GST) will be a major milestone for indirect tax reform in India. Replacing all existing indirect taxes by the GST will create a national market eliminate cascading taxes align taxation of imports and exports

Black Money: Concerns & Policy Challenges

ContextBringing back black money from abroad was a major poll promise of BJP, and, as is the case with most of thepromises, actions are far from poll rhetoric. The issue of black money captures imagination of common personbecause common person is exposed to it in almost all walks of life - paying bribes to get a legitimate thing doneon time/getting job/getting children admitted in schools, real estate deals where the amount in which theproperty gets registered is far less than the actual amount paid, and the list continues. Media has been quiteactive in capitalizing on this common person’s imagination by dropping different estimates of the paralleleconomy – not uncommon has been estimates in the media which ran as high as 50 – 70 per cent of GDP. Suchunsubstantiated numbers might serve the purpose of sensationalizing the issue in times of elections, but theyoften fail to bring real issues to the forefront. Estimation is only one part of it. There are other factors as wellwhich needs to be looked into – causal origin and characteristics, and impact on society. This brief will lookinto some of these issues.EstimatesThere are various methods of estimating black money: Fiscal approach Monetary approach Physical input approach Labour market approach National accounts approach

The Warehousing Corporations (Amendment) Bill, 2015

THE WAREHOUSING CORPORATIONS (AMENDMENT) BILL, 2015Even after 68 years of Independence India suffers from high levels of malnutrition and chronic hunger. Food Security and Public Distribution Systemare important weapons in tackling these problems. For an efficient and effective Food Security and PDS, a well developed network of Warehouses istherefore crucial. As the Bill constrains the ability of the Warehouse Corporations to borrow, the current government is obstructing theexpansion of public sector warehouses in India at a time when it needs to be expanded.The removal of Central/State government as a sovereign guarantor for Warehousing Corporations limits their potential to access capital investments,thus hampering their expansion. This would create a vacuum which will in all likelihood be filled in by the Private sector. The private sector willobviously be driven by motives of profit and revenue maximisation and a larger role of the private sector will drive up the costs of rentingwarehouses, making them inaccessible to a majority of farmers in India. This would in turn drive up input costs of food items resulting in higher foodinflation. The pro-market initiatives sought by the current government will burden the common man and have a detrimental effect on the poor andmarginalized.In fact as per M.S. Jairath, director National Institute of Agricultural Marketing, Rajasthan, the total storage capacity available at the end of 2010 forCWC, SWC and FCI is about 75 million tonnes. Keeping in view the agricultural production of the country the available storage capacity isinsufficient and assuming current production trends an additional capacity of 150 MTs is needed (refer Table1 IN Annexe). As the warehousingcapacity of most states is dismally below the national average, the 2011 Bill of the UPA government rightly suggested that states need be moreproactive. But, the present amended bill of the NDA government removes the role of both the central and state government and is an attempt to createspace for private entities in the warehousing arena.

Railway Projects in the North-East

Railway projects Initiated by the UPA Government and their current status (as of March 2013) In the XIth Plan period (2007-2012), INR 8,111 crore have been spent on various projects and other works in the region. In first year of XIIth Plan i.e. in 2012-13, INR 2,655 crore have been spent on Railway infrastructure projects in NE Region.(Ministry of Railways, 2012-13)  

RBI Rate Cuts

IntroductionRepo rate is the rate at which the central bank of a country (RBI in case of India) lends money to commercial banks in the event of any shortfall of funds. In the event of inflation, central banks increase repo rate as this acts as a disincentive for banks to borrow from the central bank. The increase in the Repo rate increases the cost of borrowing and lending of the banks which discourages the public to borrow money and encourages them to deposit. As the availability of credit and demand decreases, there is a decrease in inflation.When the repo rate is reduced, the resultant reduction in cost of credit encourages investment and consumption demand. This eventually gets reflected in an increase in output and prices. Against a background of relatively low inflation, repo rate reduction may aid in stimulating investment and growth. Table 1 gives the repo rates set by the RBI from the year 2011 to March, 2015, along withthe corresponding monthly Consumer Price Index inflation rates (in percentage).

Swine Flu: Update on the Current Threat and Government’s Response

PART I:OVERVIEWFor a party who’s manifesto promised “Health Services - Increase the Access, Improve the Quality, Lower the Cost” and talked about the need to “Move to pre-emptive care model where the focus andthrust will be on child health and prevention” it is indeed shocking that its government has been so lackadaisical in its approach on what is now a predictable part of the annual epidemics that India faces.The H1N1 pandemic broke out across the world in 2009 and the UPA government had created a set of guidelines to pre-empt future outbreaks and reduce morbidity and mortality. The powers-that-be in the government seem to have been too busy plotting a change in Health Ministers in October - November of last year, when they should have been busy ensuring that the Minister focused on a strong awareness campaign and vaccination camps that could have minimised the sad loss of lives we’ve seen over the past few months. This isn’t the only “oversight” though - the government hasn’t even been able to ensure availability of the vaccine for high-risk individuals. Tamiflu availability also remains a concern as does the Rs. 4500 price cap on tests at private sector labs.

The Current Scenario of Urea Imports

PART I. CONTEXTThe current rabi crop season has brought misery for farmers across the country owing to a shortage of urea (the most widely used chemical fertilizer in the country). The situation is a result of India’s ill-defined policy on urea imports. Urea has a special status among fertilizers at large. Unlike others fertilizers imports of urea are undertaken solely through the Centre-run State Trading Corporations, MMTC Ltd and Indian Potash Ltd. Urea Import for Rabi crop sowing - Month-wise imports data reveal the current government’s callousness in importing the essential fertilizer. In comparison to 43.82 lakh tons of urea being imported under the UPA regime between April to January 2013-14 only 17.37 lakh tones was imported by the NDA government at the centre in 2014-15. The shortage has led to protests from farmer bodies across the country as the imports did not happen in time for the planting of the rabi season. Even though the government imported heavy amounts of the fertilizer in November it proved to beof no use to farmers for they had already planted their crops

Visit to China by the Minister of External Affairs

The Minister for External Affairs, Smt. SushmaSwaraj, and Foreign Secretary S. Jaisankar, visited China to participate in thebilateral talks between the two countries.Smt. SushmaSwaraj outlined a Six-Point template(http://www.mea.gov.in/Speeches-Statements.htm?dtl/24748/External_Affairs_Ministers_remarks_at_the_launch_of_the_2nd_IndiaChina_Media_Forum_Beijing)to broaden bilateral engagements between India and China during her address at the India-China Media Forum.The six-point template speaks of:A. Action- oriented approachB. Broad-base bilateral engagementC. Convergence on common regional and global interestsD. Develop new areas of cooperationE. Expand strategic communicationF. Fulfil common aspirations to usher ‘Asian Century’

Sri Lankan President Srisena’s State Visit to India

The Sri Lankan President Maithripala Srisena visited India for two days in February. The visit is significant as it is seen as an attempt to virtually recalibrate Sri Lanka’s ties with India. Mahindra Rajapaksa’s pursuit of closer ties with China had made India extremely wary over the past few years. China has been building ports and constructing highways in Sri Lanka as a means to increase its influence in the Indian Ocean. Ties with Sri Lanka had taken a turn for the worse when the former Sri Lankan President, Mahinda Rajapaksa, allowed China to deploy military submarines, twice, to Colombo’s harbor in September 2014. With India believes it can wean Sri Lanka away from Chinese influence, analysts say Sri Lanka will balance its ties with India and China, as it will certainly continue to need Chinese financing.   While there is little doubt that Sirisena’s election enjoyed India’s tacit support, by choosing India for his first visit abroad, President Srisena has provided a much needed boost to bilateral relations between the two countries. The agreements signed during his visit pertained largely to basic and applied research on peaceful uses of nuclear technology, production of radioactive isotopes in industry, agriculture and water management. Interestingly Sri Lanka is reportedly in talks with Pakistan to explore cooperation on nuclear energy, Power Minister Ranawaka said, days after Indiaand Sri Lanka reached a civil nuclear agreement in New Delhi.

Union Railway Budget Brief 2015-16

KEY MESSAGES 

  • Pie-in-the-sky: The NDA 2015-2016 Railway Budget presented on 26thFebruary, 2015 amid high expectations turned out to bea “pie in the sky” – a “dreamy” budget instead of the promised dream budget. 

o The budget is rich in rhetoric; but poor in realism; it is opaque and lacking in transparency or specificity; it presents a vision without a strategy; it is misleading (hiding key pieces of information).o It promises 8.5 lakh crores rupees of investment, with vague statements of where this money will come from – but it is silent about how the poorest, who are the main users of this mode of transport, will pay for the proposed massive investment in up-market services catering to the demand of India’s top 10% middle and upper classes.

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