Indian economy grew at 6.7% in FY18, its slowest since 2014
NEW DELHI, May 31: India’s growth recovery strengthened last quarter, but doubts remain over whether it can sustain that pace amid surging oil prices and a rout in emerging markets.
Gross domestic product in the fourth quarter of the fiscal year that ended in March 2018 rose 7.7%, compared with a median estimate of 7.4% in a Bloomberg survey of 38 economists. While that makes it one of the fastest-expanding major economies, risks are rising because of a currency slump and faster inflation.
To add to that, India’s nearly $1.7 trillion formal banking sector is coping with $210 billion of soured or problem loans and fraud scandals have erupted at some regional banks. That’s set to curb lending and limit growth even more, and makes the central bank’s job even more complicated ahead of next week’s policy meeting.
“A sustained rise in oil prices to $100 a barrel could even lead to a re-emergence of some of the external and currency risks that existed pre-2014,” said Priyanka Kishore, head of India and South East Asia economics at Oxford Economics Ltd. “The banking sector remains in a fragile state, and such problems have the potential to derail the ongoing growth recovery.”
The economy expanded at 6.7% in the fiscal year through March, the slowest pace since Prime Minister Narendra Modi took power in 2014. Goldman Sachs Group Inc. cut its growth projection for the year ending March 2019 to 7.6% from 8%, amid concerns that the banking system’s woes are more widespread.
On Wednesday, Moody’s Investors Service cut India’s 2018 GDP growth outlook to 7.3% from 7.5%, citing higher oil prices and tighter financial conditions.
New risks have emerged just as the economic disruption caused by a cash ban late in 2016 and the chaotic roll-out of a national sales tax fade. India has been swept up in the maelstrom that’s hit emerging markets as rising US interest rates and a stronger dollar prompt investors to pull money out of stocks and bonds. The rupee has been the hardest hit in Asia, dropping more than 5% against the dollar this year.
For oil-importing India, the combination of a weaker currency and surging oil prices is a threat not only for the current-account deficit, but also inflation. Consumer-price growth is already picking up -- reaching 4.6% in April -- and for a central bank that aims to keep inflation around the 4% midpoint of its target band, an interest-rate hike can’t be far away.
Viral Acharya, the deputy governor in charge of monetary policy, said last month he’ll vote for a withdrawal in monetary accommodation in June.
There’s also limited room for a fiscal boost to support growth. India’s budget gap is one of the widest in Asia, and Modi has to walk a fine line to keep the deficit in check while trying to woo voters ahead of next year’s election.
Nevertheless, green shoots are emerging in Asia’s third-largest economy. The industrial sector is expected to pick up while services, which contributes over 50% to gross domestic product, is set to remain robust. Even farming, which has been a laggard, is recovering.
“Agricultural activity is likely to be supported by record food grain output, surge in sugarcane production after two years of decline and a sustained increase in pulses output,” said Teresa John, an economist at Nirmal Bang Equities Pvt. Ltd. in Mumbai.
All 7 ITR forms released for e-filing: Income Tax department
NEW DELHI, May 26: The Income Tax Department on Saturday launched and activated all the seven ITR forms for e-filing by taxpayers, after more than a month of them being notified.
The Central Board of Direct Taxes had notified the new Income Tax Return forms for the assessment year 2018-19 on April 5.
"All ITRs for AY 2018-19 are now available for e-filing," the department said in a statement.
The tax department has launched the ITR forms gradually since April 5 as the taxpayers have been looking forward to file their returns before the stipulated deadline of July 31.
All seven ITRs are to be filed electronically on the official web portal of the department -https://www.incometaxindiaefiling.gov.in - except for some category of taxpayers, the CBDT had said.
The new ITR forms mandate the salaried class assesses to provide their salary breakup, and businessmen their GST number and turnover.
The ITR-1 called 'Sahaj' is largely used by the salaried class of taxpayers with income up to Rs 50 lakh from salary, one house property only and additional income such as interest earned from fixed deposits and recurring deposits.
This time, the ITR-1 form seeks an assessee's details in separate fields such as allowances not exempt, profit in lieu of salary and value of prerequisites among others.
This form was used by three crore taxpayers during the last financial year.
Similarly, the ITR-2 form is used by individuals and Hindu Undivided families (HUFs), who have income from any sources except income from profits and gains of business or profession, including NRIs.
Individuals and HUFs having income under the head business or profession can file either ITR-3 or ITR-4 in presumptive income cases.
The rest of the forms are for different category of taxpayers.
The CBDT, which makes policy for the tax department, had said that some fields have been "rationalised" in the latest forms and that there is no change in the manner of filing of the ITRs as compared to last year.
Inter-departmental parleys on to quickly dispose off pending exports refund of Rs 14,000 crore: ADGFT
NEW DELHI, May 11: Inter departmental parleys are intensifying between department of commerce and revenue for early release of pending Rs.14,000 crores of export refunds relating to GST as the government has already disposed off GST refunds amounting to Rs.20,000 crores by April 2018, according to the Additional Directorate General of Foreign Trade, Mr. N K Srivastava.
Addressing a Workshop on Issues in Export & Import of Goods & Services vis-à-vis Foreign Trade Policy under aegis of PHD Chamber of Commerce and Industry here today, Mr. Srivastava also disclosed that the focus of the government is also shifting towards creation of sector specific export promotion to enable India further rise its exports.
To this effect, a Committee has been constituted within the department of commerce to examine the potential of sectoral exports that have been until now stayed put unattended to, added Mr. Srivastava pointing out that concentration of India’s exports proceeds till now remained largely on services particularly relating to ITs.
Elaborating on dispensation of pending exports related refunds though Mr. Srivastava pointed out that the disbursal would happen sooner than anticipated but blamed the exporting community also stating that their filing of GST refund cases have been in correct and proper manner.
In is on account of this that the exports refunds have also been delayed but with the inter-departmental consultations progressing faster between department of commerce and revenue, pending exports refunds to an extent of Rs.14,000 crore are likely to be facilitated quickly.
In his welcome remarks, Vice President, PHD Chamber, Mr. D K Aggarwal highlighted the grievances being faced by exporters relating to their refunds and asked the government to take up the issue with faster and accelerated pace.
According to him, Indian exports in the last couple of years have not been proceeding with required pace and speed including volumes and exports have shrunk only to an extent of 12% of GDP which is a matter of concern for India in particular and trade in general.
Chairman, Indirect Taxes Committee, PHD Chamber, Mr. Bimal Jain in his theme presentation drew a comparison between pre-GST and post-GST exports and pointed out that in the current regime must ensure ease of business with simplification for exports of goods and services with timely refund of GST so as to ensure no working capital gets blocked in the hands of exporters.
Co-Chairman, Indirect Taxes Committee, PHD Chamber, Mr. N K Gupta demanded that India needs to examine the possibilities of high value export items such as defence and the like because India’s current exports are largely dominated by IT and ITEs which could have a certain limit in future.
GST collections cross Rs 1 trillion in April
MUMBAI, May 1: The goods and services tax (GST) collections in the month of April were at Rs1.03 trillion, the first time that revenues have crossed Rs1 trillion after the new tax regime was rolled out on 1 July.
The buoyancy in tax collections could be attributed to economic recovery and improvement in compliances, the finance ministry said in a statement, but cautioned that the higher numbers could be partly attributed to the payment of tax arrears in the month for the last financial year.
To be sure, GST revenue buoyancy is expected to improve in the coming months with implementation of the e-way bill or electronic tracking of movement of goods from 1 April. This is expected to become a deterrent for tax evaders looking to keep transactions completely off their books or to understate their turnover.
Of the total revenue of Rs 1.03 trillion collected in April, Rs 18,652 crore was central GST, Rs 25,704 crore was state GST and Rs 50,548 crore was integrated GST (including Rs 21,246 crore collected on imports), the finance ministry statement said. The cess was Rs 8,554 crore.
The total number of GSTR 3B Returns filed for the month of March up to 30 April was 60.47 lakh as against 87.12 lakh taxpayers, who are eligible to file the Return for the month of March, putting the compliance rate at 69.5%.
Around 11.47 lakh composition dealers of a total of 19.31 lakh such dealers filed their quarterly return in April and paid a tax of Rs 579 crore.
Corruption at lower level has peaked up in India
NEW DELHI, April 12: PHD Chamber of Commerce and Industry on Thursday lamented that “corruption” at lower levels of bureaucracy at Centre and largely in States has increased manifold even under Prime Minister Modi whereas it virtually disappeared at senior levels in the Indian federal structure.
Chamber’s President Anil Khaitan while speaking at a Conference on “Benami Transactions (Prohibition) Amendment Act, 2016: Concerns and Challenges” exuded confidence that this Act would amount to removing black money stored in real estate sector and therefore, suggested that more legislation of this nature are called for to either root out corruption and eliminate the growing menace of black money. However, each provision should not be laced with provision of imprisonment.
According to him, corruption under the present leadership of Prime Minister Modi whose integrity and ferocious corruption free reputation should have led to rooting out of corruption even at lower levels of bureaucracy both at Centre and States on the contrary it has stoked manifold.
The businesses, particularly in the MSME segment which the PHD Chamber of Commerce and Industry represents in large number are quite aggrieved and hurtful as it had anticipated with Modi becoming the Prime Minister of India close to four years ago that this segment would be relieved of mounting corruption but the ground reality that still persist is that the lower levels of bureaucratic functionaries are still soaked in corruption.
Khaitan hoped and expressed confidence that the Prime Minister Modi would take note of this sad affair which continues even in larger chunk and accordingly take corrective measures even at block level of each Indian State.
The Conference which was presided over by former Secretary, Ministry of Law and Justice, P K Malhotra pointed out saying that if Benami Transactions (Prohibition) Amendment Act, 2016 is implemented in the right spirit, it will serve the intended cause that will do a great good to the nation in particular.
Among others who were also present on the occasion comprised, Chairman and Co-Chairmen, Company Law and Corporate Governance Committee, PHD Chamber, Pavan Kumar Vijay and Mr. Vikram Singh Mehta and Mr. Raj K Agarwal; Advocate, Ex-Member, Income Tax Appellate Tribunal, Mr. Ashwani Taneja including PHD Chamber’s Director, Mr. Abhi Narayan Mishra.
Estonia ranked second in the global transformation index
By Deepak Arora
NEW DELHI, April 1: Estonia is ranked second out of 129 countries in the global transformation index, a ranking compiled by the Bertelsmann Stiftung to measure each country’s performance in terms of political and economic transformation.
According to the index, Estonia has largely recovered from the economic recession of 2008 and 2009. “This recovery was aided by the innovativeness and efficiency of both the public and private sectors,” the German foundation says. “Foreign investors have remained attracted to Estonia due to its openness, streamlined government, strong rule of law and business-friendly environment.”
The country’s economic output has increased despite sluggish growth in the European Union. “The government’s financial position continues to be favorable, thanks to the lowest public debt in the European Union. Yet, there are challenges linked to its small size and the openness of its economy. Economic growth is dependent on the inflow of foreign investment and external demand, both of which have been weak since the recession. Continued economic stagnation and political turbulence in the European Union and beyond as well as an increasingly aggressive Russia remain substantial risks.”
The index also notes that the Estonian political system has remained stable over the last decade, and asserts that since 2012, there have been signs that the “civil society is becoming more politically active”.
On the other hand, the “fact that civil society has become more vocal does not necessarily mean that it is particularly influential or effective, especially given the still low overall levels of civic participation. Often, interest groups focus on lobbying the president to veto legislation, due to a perception that the government – and by extension, the parliament – is not engaged in genuine consultations with civil society.”
Bertelsmann also points out that interethnic relations between the ethnic Estonian majority and Russian-speaking minority have not significantly improved over the last decade.
The best country by its transformative performance, according to the Bertelsmann Stiftung, is the Czech Republic. Taiwan comes third, after Estonia, and Lithuania is ranked fourth. Latvia comes eight and Russia 70th.
The Bertelsmann Stiftung is an independent foundation that promotes “reform processes” and “the principles of entrepreneurial activity” to build a “future-oriented society”. The foundation’s transformation index measures developing and transitional countries’ performance in terms of political and economic transformation. The index places political decision-makers’ “steering capability at the heart of its analysis and, as a result, is the only index in the world that measures and compares the quality of governance with self-collected data”, the foundation said.
Petrol price hits 4-year high at Rs 73.73 a litre, diesel at highest level
NEW DELHI, April 1: Petrol price hit a four-year high of Rs 73.73 a litre on Sunday while diesel rates touched an all-time high of Rs 64.58 in the national capital, renewing calls for the government to cut excise tax rates.
State-owned oil firms, which have been since June last year revising auto fuel prices daily, on Sunday raised petrol and diesel rates by 18 paise per litre each in Delhi, according to a price notification.
Petrol in the national capital now costs Rs 73.73 a litre, the highest since September 14, 2014 when rates had hit Rs 76.06. Diesel price at Rs 64.58 is the highest ever, with previous high of Rs 64.22 being on February 7, 2018.
The Oil Ministry had earlier this year sought a reduction in excise duty on petrol and diesel to cushion the impact rising international oil rates but Finance Minister Arun Jaitley in his Budget presented on February 1 ignored those calls.
India has the highest retail prices of petrol and diesel among South Asian nations as taxes account for half of the pump rates.
Jaitley had raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.
Subsequent to that excise duty reduction, the Centre had asked states to also lower VAT but just four of them -- Maharashtra, Gujarat, Madhya Pradesh and Himachal Pradesh -- reduced rates while others including BJP-ruled ones ignored the call.
The central government had cut excise duty by Rs 2 per litre in October 2017, when petrol price reached Rs 70.88 per litre in Delhi and diesel Rs. 59.14. Because of the reduction in excise duty, diesel prices had on October 4, 2017 come down to Rs 56.89 per litre and petrol to Rs 68.38 per litre. However, a global rally in crude prices pushed domestic fuel prices far higher than those levels.
The October 2017 excise duty cut cost the government Rs 26,000 crore in annual revenue and about Rs 13,000 crore during the remaining part of the current fiscal year.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting global oil prices. In all, duty on petrol rate was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre in those 15 months that helped government’s excise mop up more than double to Rs 242,000 crore in 2016-17 from Rs 99,000 crore in 2014-15.
State-owned oil companies -- Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation -- in June last year dumped the 15-year old practice of revising rates on the 1st and 16th of every month . Instead, they adopted a daily price revision system to instantly reflect changes in cost. Since then, prices are revised on a daily basis.