Benefits of #GST

GST – A game-changer for India

GST – A game-changer for India
The 122nd Amendment to the Constitution will go down in India’s political-economic history as a watershed, as it is about to give the country the most progressive tax reforms till date in the form of Goods and Services Tax (GST) which should make life easier for the trade and industry and more importantly reduce the cost of goods and services for the consumer, without compromising on the revenues of either the Centre or the States. In fact, the GST should lead to a tax buoyancy and push to the Gross Domestic Product between 1-1.5 per cent with clearance of the cob web of taxes.The excitement among the industry, trade and investors is justified. By a single measure, India would move up the World Bank ranking of ease of doing business by several notches. It is true the GST Bill has been pending for over a decade but the fact that the NDA Government has been able to build a wide political consensus on, what has been the most contentious issue, has conveyed a huge positive signal to the rest of the world that India enjoys a broad political support for the economic reforms, crucial for over a billion people.What is GST?It is a plethora indirect taxes which contribute to bulk of revenues of the states and just about half of the tax kitty of about Rs 16 lakh crore of the Central Government. While direct taxes like the personal income tax concern a small fraction of the population, the indirect taxes affect every Indian. Since the indirect taxes are on consumption , rich and poor , both have to pay the same amount.Presently, the Constitution gives mandate to the Centre and the States to levy indirect taxes ranging from excise duty, customs, service tax. Valued Added Tax or sales tax, entertainment tax, octroi, entry tax, purchase tax, luxury tax and different surcharges. Both the Centre and the States have their own official machineries to collect these taxes. But for Central excise and VAT, most of the taxes get calculated on a base which itself has been subjected to taxation at some or the other stage of manufacturing value chain. So, it is a tax on tax making goods and services rather expensive for the ultimate consumer while making life hard for the trade and industry. The most visible example of inefficiencies of the system can be seen at inter-state borders with long queues of trucks being subjected to different kind of tax inspection and payment of octroi and entry tax, blocking traffic on the highways for hours together.With the roll out of the GST, expected from April 1, 2017, all these taxes would be subsumed into a single tax for the consumer. The Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. Services and goods would be subjected to taxes only on value addition at each stage, thus bringing down the overall tax burden for the consumers.From manufacturing to destinationAs against the present system where the taxes like excise and Central sales tax are levied on manufacturing at the factory gate or on inter-state movement of goods, the GST involves taxation at the destination level. This could mean gains for the consuming state and loss for the manufacturing state. This is why the state with a good manufacturing base like Tamil Nadu was opposed to the GST and consuming states like Bihar, West Bengal and Odisha favoured the same. But, the GST Bill provides for fully compensating the losses to the states for five years. The earlier provision of additional one per cent levy for the losing states has now been done away with.Impact on inflationAnalysts feel that in the short term, there could be some impact on prices of services which now attract an average service tax of around 14 per cent only at the Central level. However, in the case of manufactured products like automobile, the standard GST could be much lower than the combined present effect of excise and state levies. However, in the medium to long term, this should play out. On the whole, GST should be anti-dote to inflation and would thus be people-friendly along with trade /industry friendly. It would also bring in a lot of unorganized sector of the economy within the mainstream.GST RateThere would be about three rates – Standard rate in the form of X which will cover bulk of the items , X-minus for the items of mass consumption and X-plus for the luxury goods or the so-called “sin goods’’. In the Constitutional Amendment, there is no mention of the GST rates, which would be decided by the GST Council comprising of Union Finance Minister as the Chairman and Finance ministers of the states. Any decision of the GST Council would require three-fourth approval of the Council. The states would have two –third of the voting powers and the Centre one-third. The Congress Party has demanded a ceiling of 18 per cent on GST standard rate while the government is called upon to ensure the revenue neutral rate (RNR). Any major deviation from RNR could be counter-productive either for inflation or for fiscal prudence. Getting the right RNR both for the Centre and the states would be a major challenge.Left outPetroleum products and alcoholic beverages have been left out of the GST, for now, on concerns of the states which feared these major revenue heads could not be bargained for. For the sake of wider political consensus, these heads have been left for the future reforms. What Next?After approval of Parliament, the GST Bill would go for ratification by at least half the states. The process is expected to be completed very soon. Afterwards, Parliament will have to again pass two enabling bills – one for the Central GST and the other for the Integrated GST. Besides, the state legislatures will have to pass the enabling law of State GST. In the meantime, work on the central IT backbone being prepared by a non-profit organisation is being done on a war-footing for the possible roll out from the next financial year.

Fourth Advance Production Estimates of Major Crops During 2015-16

Fourth Advance Production Estimates of Major Crops During 2015-16

The 4^th Advance Estimates of production of major crops for 2015-16 have been released by the Department of Agriculture, Cooperation and Farmers Welfare here today.

            The estimated production of major crops during 2015-16 is as under:

Ø  Foodgrains  –  252.22 million tonnes

·   Rice  –  104.32 million tonnes

·   Wheat – 93.50 million tonnes

·   Coarse Cereals  –  37.94 million tonnes

Ø Pulses  –  16.47 million tonnes

Ø   Oilseeds  –  25.3 million tonnes

Ø   Cotton  –  30.147 million bales (of 170 kg each)

Ø   Sugarcane – 352.163 million tonnes

Despite setback due to deficient rainfall and due to shortage of water in reservoirs. As per the 4^th  Advance Estimates for 2015-16 total foodgrains production in the country has been higher than that in the last year. Total foodgrains production during 2015-16, estimated at 252.22 million tonnes, has been higher by 0.20 million tonnes over the production of 252.02 million tonnes during 2014-15.   

Total production of rice during 2015-16 is estimated at 104.32 million tonnes, which is lower by 1.16 million tonnes than its production of 105.48 million tonnes during 2014-15.  Production of wheat estimated at 93.50 million tonnes is higher by 6.97 million tonnes than the production of 86.53 million tonnes of wheat during 2014-15.

            Total production of coarse cereals is estimated at 37.94 million tonnes which is lower by 4.92 million tonnes as compared to their production of 42.86 million tonnes during 2014-15. Total pulses production of 16.47 million tonnes during 2015-16 is marginally lower than the previous year’s production of 17.15 million tonnes.  With a decline of 2.207 million tonnes over the previous year’s production’s total oilseeds production in the country during 2015-16 is estimated at 25.304 million tonnes.  

            Production of sugarcane estimated at 352.16 million tones, is lower by 10.17 million tonnes than its production during 2014-15. Production of Cotton estimated at 30.147 million bales (of 170 kg each) is also lower by 4.658 million bales than its production of 34.805 million bales during 2014-15.

Sagarmala Project

Sagarmala Project

Sagarmala is a long term programme, which was approved by Union Cabinet on 25th March, 2015.

The programme involves drawing up a National Perspective Plan(NPP) for Port Modernization & New Port Development, Port Connectivity Enhancement, Port-Led Industrial Development and Coastal Community Development as a first step for an integrated approach to port led development. This planning process which involved extensive interaction and consultation with concerned states/UT governments, stakeholder Ministries and related PSUs, has been completed and the NPP is developed, has been approved by the National Sagarmala Apex Committee on 9th April,2016.

To exploit the potential of India’s approximately 7,500 km long coastline and 14,500km of potentially navigable waterways the Sagarmala Programme aims to promote port-led development in the country. The concept of the Sagarmala Programme approved by the Cabinet on 25th March, 2015. The objectives of the Sagarmala Programme are Port modernization & new port development, enhancing port connectivity to hinterland, port led Industrialization and coastal community development.

The status of major works under Sagarmala programme is as follows:

i. Sagarmala Cell was set up on 1st May, 2015. ii. The setting up of Sagarmala Development Company has been approved by the Cabinet.

iii. Twelve Early Bird Projects have been taken up for implementation in FY 2015-16 which relate to hinterland connectivity, port operations, skill building and development of breakwaters.

iv. The perspective plans of 14 Coastal Economic Zones (CEZs), identified as part of NPP, have been prepared which will lead to formation of detailed master plans.

As part of the NPP, total 173 projects have been initially identified across the programme objectives which will result in significant investment in maritime infrastructure, create employment, reduce logistics cost and boost merchandize exports over the next decade.

The implementation of these projects is to be done by the relevant ports, Central Government Ministries, State Governments and State Maritime Boards preferably through private sector or PPP route. Sagarmala Development Company will provide equity support for the project SPVs (State/Port/Central Ministry Level SPVs) and take up residual projects that cannot be funded by any other means/mode.

A projection has been made that the identified industrial cluster projects once implemented will enable creation of approximately 1 crore new jobs, including 40 lakh direct jobs and 60 lakhs indirect jobs in the next 10 years. 

National Smart Grid Mission to Upgrade India’s Power Grid

National Smart Grid Mission to Upgrade India’s Power Grid

New Program Will Train Utility Personnel on Innovative Smart Grid Components and Applications

India’s National Smart Grid Mission (NSGM) with the help of USAID launched its first in a series of training programs aimed at building the capacity and skills of utility personnel to develop India’s Smart Grid infrastructure. This training will help the Government of India achieve its target of having 10 percent of personnel from 14 of India’s state utilities trained in Smart Grid functions.

Building a Smart Grid is a key priority for the Government of India as it will help curb power transmission and distribution losses, ensuring there is 24x7 access to power for all. A trained and skilled workforce is critical to achieving this vision.

Speaking on the occasion, Shri Vishal Kapoor, Director - Distribution, Ministry of Power said,“India expects to provide 24x7 quality power to all its people. The power generated will comprise a large share of renewable energy. Managing renewable and conventional energy calls for a grid that is smart and capable of providing electricity to the remote corners of the country,”

Shri Prabhu N. Singh, Director, NSGM, emphasized the importance of having a trained workforce of utility professionals who can understand and own the Smart Grid system. This trained workforce will help accelerate the development of Smart Grids across India.“The Government of India, through the National Smart Grid Mission, is committed to assisting utilities in skill enhancement on Smart Grid aspects. We hope to partner with a number of national and state institutions to take up Smart Grid training in the country,” said Singh.

“Training and capacity building have been identified as one of the key strategic areas under the NSGM. We are happy to partner with the Ministry of Power and the NSGM to facilitate knowledge sharing on Smart Grid technologies and related-operational issues,” said USAID/India Mission Director, Ambassador Jonathan Addleton.

The three-day training program will use a basic Smart Grid course – designed under USAID’s “Partnership to Advance Clean Energy” Program – to build the capacity of utilities on various Smart Grid components and applications. The participants will also visit a Smart Grid Lab at the Centre for Power Efficiency in Distribution in New Delhi, to gain a practical understanding of select Smart Grid functionalities.

The Government of India has taken several proactive steps towards grid modernization, including the establishment of a Smart Grid Mission to plan and monitor the implementation of policies and programs related to Smart Grid activities in India. 

ambiguous territorial claims over South China Sea

China has been trying to assert its ambiguous territorial claims over South China Sea since years by building up its navy and constructing artificial islands.

People’s Republic of China claims Nine-dash line area, which covers most of the South China sea and overlaps exclusive economic zone claims of Brunei, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam.

China has not specified the exact meaning of the nine-dash line. It is not clear, for example, whether the country claims everything within the line as its sovereign possession or merely the islands and their surrounding waters

China claims it has historical rights in the South China Sea.

China also says the country also has ancestral fishing rights.

Claims of other countries

Vietnam hotly disputes China’s historical account, saying China had never claimed sovereignty over the islands before the 1940s.
Vietnam says it has actively ruled over both the Paracels and the Spratlys since the 17th Century.
Philippines invokes its geographical proximity to the Spratly Islands as the main basis of its claim for part of the grouping.
In May 2014, China established an oil rig near the Paracel Islands, leading to multiple incidents between Vietnamese and Chinese ships.
The oil rig dispute has coincided with further tensions between China and the Philippines over the Spratly Islands.

Importance of South China Sea

About a third of world trade passes through its sea lanes, including most of China’s oil imports.
It contains large reserves of oil and gas.
South China Sea also contains rich fishing grounds.
Control of the South China Sea would allow China to dominate a major trade route.

south china sea

Disputes in South china sea

UNCLOS has been signed and ratified by nearly all the coastal countries in the South China Sea.
But territorial disputes still persist, primarily over the Spratly and Paracel Islands as well as the Scarborough Shoal.
Spratlys has been occupied by saveral claimants, which consist of Taiwan, Vietnam, the Philippines, China and Malaysia.
The Paracel Islands are the subject of overlapping claims from China, Vietnam and Taiwan.
In 1974 South Vietnamese troops were driven from the Paracels by Chinese forces.
A further clash between Vietnamese and Chinese forces occurred in 1988.
Another major dispute is over the Scarborough Shoal, which is claimed by China, the Philippines and Taiwan.

Ruling of Permanent Court of Arbitration (PCA):-

This case was brought by the Philippines in 2013, after China grabbed control of a reef, called Scarborough Shoal, about 220 miles (350km) north-west of Manila.
PCA has declared China’s “historic claims” in the South China Sea invalid.
It is a place of multiple overlapping maritime claims and a growing military presence.
China’s island building activities and conduct in the Mischief Reef — not the Second Thomas Shoal — constitute a violation of its obligations under the UN Convention on the Law of the Sea (UNCLOS).
China has a positive obligation not to impede Filipino fishing vessels from exercising their EEZ rights, and to prevent Chinese fishermen from exploiting the same resources.
Court ruled that only claims consistent with the UN Convention on the Law of the Sea (UNCLOS) were valid.
Under UNCLOS, which came into force in 1982 and which China ratified in 1996, maritime rights derive from land, not history and there was “no legal basis” for China to claim historic rights within it.
Countries may claim an Exclusive Economic Zone (EEZ) up to 200 nautical miles (370km) off their coasts, or around islands. Based on this, the tribunal ruled that the nine-dash line had no standing.
Court ruled that claims of China had been building on rocks that were visible only at low tide, and hence not eligible to claim territorial waters and China had violated the sovereign rights of the Philippines, which has an EEZ covering them.

China’s stand and possible steps post-ruling?

China has refused to take part in the proceedings of court and court’s proceedings and has denied accepting, recognising or executing the verdict.

Although as a member of UNCLOS it is supposed to obey the court, but there is no enforcement mechanism.

China has repeatedly attacked the credibility of the PCA and the arbitration process, and will likely continue to do so.

China has attempted to create a coalition of states that rejects the arbitration proceedings, and may continue this effort.

China could continue its land reclamation and construction efforts in the Spratly Islands, which have added over 3,200 acres of land to the seven features Beijing occupies.

China has already threatened to establish an Aircraft Defense Identification Zone (ADIZ).

Could China be forced to accept?

In global governance, the supreme executive body is the U.N. Security Council, and China holds veto power as a permanent member.

Even the Security Council must rely on member states to enforce its decisions, including binding measures under Chapter VII of the U.N. Charter. Similarly, the PCA ruling will have to be enforced by members of the international community.

Thus enforcement powers is lacking with PCA’s decision, biggest benefit it provides is a fresh opportunity for diplomacy in the South China Sea and ensures that any action in the region will be subject to the strict scrutiny of a global audience.

Why does it matter to India?

After PCA ruling against Chinese claims over South China Sea, Indian naval warships can now move through the region under UNCLOS without informing the Chinese.

The Chinese, by claiming 80 per cent of South China Sea, have been asking India to notify Beijing of movement of Indian warships through those shipping lanes.

India, like China, is a signatory to the UNCLOS (United Nations Convention on the Law of the Seas) that mandates a certain maritime behaviour and norms.

In 2014, India had accepted an unfavourable ruling versus Bangladesh, in the Permanent Court of Arbitration.

Now India is closely looking that what would be the course of action of China in the similar situation, non-compliance may bring the stature of PCA down in the eyes of other countries, including India.

Development of Data Satellite by NASA and ISRO

Development of Data Satellite by NASA and ISRO
ISRO and Jet Propulsion Laboratory (JPL)/NASA are jointly working on the development of Dual Frequency (L&S band) Synthetic Aperture Radar Imaging Satellite named as NASA-ISRO Synthetic Aperture Radar (NISAR).
In this joint mission, JPL/ NASA will be responsible for design & development of L-band SAR, 12m unfurlable antenna & its deployment elements, GPS system and data recorder. ISRO will be responsible for design & development of S-band SAR, Spacecraft Bus, data transmission system, Spacecraft integration & testing, launch using GSLV and on-orbit operations. The L & S band microwave data obtained from this satellite will be useful for variety of applications, which include natural resources mapping & monitoring; estimating agricultural biomass over full duration of crop cycle; assessing soil moisture; monitoring of floods and oil slicks; coastal erosion, coastline changes and variation of winds in coastal waters; assessment of mangroves; surface deformation studies etc.
ISRO and JPL/ NASA are working towards realisation of this mission by 2021. Both agencies have obtained necessary approvals from respective governments. The joint science observation plan has been documented with the participation of Indian and American scientists. The core science teams of India and USA meet every six months to discuss various observation requirements and strategies of science observation. The technical teams of both the agencies are working towards building the necessary systems.