Goods and Services Tax (GST), a value added tax, is collected at all points in the supply chain. In this particular tax, credit is permitted for any tax that has been paid on inputs procured for use in making the supply. The tax would be applied to both goods and services in a broad manner in which exemptions are restricted to minimum.
Abiding by the principles of federal structure of India it has been proposed that Goods and Services Tax should be imposed by the Centre (CGST) and the States (SGST) concurrently. For inter-state supply there is an integrated GST (IGST).
In the context of the supply of goods, an additional tax, in addition to IGST, of up to 1% has been proposed to be imposed by the Union Government. The revenue collected from this tax is going to be assigned to the concerned states. This tax would be levied for initial two years or as recommended by the Goods and Services Tax council as far as the time limit is concerned.
Goods and Services Tax was introduced in the year 2000 when the Vajpayee Government formed a committee to design a model for Goods and Services Tax. This committee was headed by Asian Dasgupta who was then Finance Minister of the West Bengal.
On 28th February 2006, during the budget session of (2006-07) of the Union Government, the then Finance Minister made the announcement that Goods and Services Tax would be introduced from 1 April 2010 and that the Empowered Committee of State Finance Ministers, on the Ministry’s request, would work in tandem with Central Government in preparing a road map for introduction of Goods and Services Tax in India.
Following the announcement of 2006-07 of the Finance Ministry, on May 10, 2007 Joint Working Group (JWG) was set up by the Empowered Committee of State Finance Ministers. After going through several rounds of intensive internal discussions and interaction with experts and representatives of Chambers of Commerce and Industry (CCI), on 19 November, 2007 the JWG submitted its report to the Empowered Committee which the Committee discussed in detail in its meeting on 28 November 2007. After doing some modifications to the report the final version of the Empowered Committee (EC) was sent by it to the Government of India on 30 April 2008. The report, titled “A Modal and Roadmap for Goods and Services Tax (GST) in India”, consisted of comprehensive recommendations about the structure and design of GST. Responding to the report of the EC, the Revenue Department referred some suggestions to be incorporated in the design and structure of the proposed Goods and Services Tax.
On 10 November2009 the EC released based on inputs from Government of India and States, its First Discussion Paper on Goods and Services Tax in India with an aim to generate debate and avail inputs from all stakeholders.
The EC proposed a dual GST modal under which Goods and Services Tax have two sections: the Central GST to be imposed and collected by the Centre and the State GST to be imposed and collected by the respective States. Taxes to be subsumed within the Goods and Services Tax are: Central Exercise duty, additional exercise duty, Service Tax, and additional duty of customs (equivalent to excise), state VAT, entertainment tax, taxes on lotteries, betting and gambling and entry tax that are not raised by local bodies.
The GST Bill, officially known as the Constitution (One Hundred and twenty second Amendment) Bill, 2014, proffers a national Value Added Tax to be introduced in India from June 2016.
On 6th May 2015, in order to introduce GST, the Lok Sabha passed the much delayed Constitutional Amendment Bill to pave the way for a new Bill on the uniform tax regime. The Bill is set to be sent to a Parliamentary Committee for review by the Rajya Sabha, where the opposition has said that they are in favor of the GST Bill, but want some amendments to be made by the Union Government to be vetted by a select committee of the Rajya Sbabha.
The GST Bill, that was conceived twelve years ago, has been kept pending because there were some changes needed in the basic Bill and all states were not in favor of many provisions of the Bill particularly with the clause dealing with sharing of the revenue collected through the GST.
However, the incumbent Finance Minister has assured the states to compensate them for any revenue loss by saying that the new uniform indirect tax will be much less than 27% that has been recommended by an expert panel.
The advantages of the Goods and Services Tax, an efficient tax system, neutral in its application and attractive in terms of its distribution, are :
Elimination of multiplicity of taxes and their gushing effects;
Rationalization of tax structure and simplification of procedures of its compliance;
Harmonization of States and Central tax administrations that would abate duplication and compliance costs;
Wider tax base, essential for decreasing the tax rates and eliminating classification disputes.
GST would substitute most indirect taxes which are currently in place such as service tax, Central Excise Tax, Purchase Tax etc.
The Goods and Services Tax structure would follow work on the destination principle according to which imports would be subject to Goods and Services Tax, while exports would be zero-rated. The State tax would be applicable in the State destination, in the context of inter-state transactions, as opposed to that of origin.
RuPay is an Indian domestic card scheme conceived and launched by the National Payments Corporation of India (NPCI). It was created to fulfill the Reserve Bank of India’s desire to have a domestic, open loop, and multilateral system of payments in India. RuPay facilitates electronic payment at all Indian banks and financial institutions, and competes with MasterCard and Visa in India. NPCI maintains ties with Discover Financial to enable the card scheme to gain international acceptance.
The IndiaPay scheme was conceived by the National Payments Corporation of India as an alternative to the MasterCard and Visa card schemes, and to consolidate and integrate various payment systems in India. It was renamed to RuPay to avoid naming conflicts with other financial institutions using the same name.
The RuPay card was launched on 26 March 2012. NPCI entered into a strategic partnership with Discover Financial Services (DFS) for RuPay Card, enabling the acceptance of RuPay Global Cards on Discover’s global payment network outside of India. On 8th May 2014, RuPay has been dedicated to India by President of India, Pranab Mukherjee at Rashtrapati Bhavan, New Delhi.
Benefits of RuPay Card
The benefits of RuPay debit card are the flexibility of the product platform, high levels of acceptance and the strength of the RuPay brand-all of which will contribute to an increased product experience.
Lower cost and affordability : Since the transaction processing will happen domestically, it would lead to lower cost of clearing and settlement for each transaction. This will make the transaction cost affordable and will drive usage of cards in the industry.
Customized product offering : RuPay, being a domestic scheme is committed towards development of customized product and service offerings for Indian consumers.
Protection of information related to Indian consumers : Transaction and customer data related to RuPay card transactions will reside in India.
Provide electronic product options to untapped/unexplored consumer segment : There are under-penetrated/untapped consumers segments in rural areas that do not have access to banking and financial services. Right pricing of RuPay products would make the RuPay cards more economically feasible for banks to offer to their customers. In addition, relevant product variants would ensure that banks can target the hitherto untapped consumer segments.
Inter-operability between payment channels and products : RuPay card is uniquely positioned to offer complete inter-operability between various payments channels and products. NPCI currently offers varied solutions across platforms including ATMs, mobile technology, cheques etc and is extremely well placed in nurturing RuPay cards across these platforms.
The vision of NPCI being able to provide citizens of our country anytime, anywhere payment services which are simple, easy to use, safe, and secure, fast and also cost effective. NPCI aims to operate for the benefit of all the member banks and the common man at large.
The Objectives of RuPay is to consolidate and integrate all retail payment systems such that they are: Inclusive, Customer Friendly, Varied yet simple, Universal accessible, Available round the clock, Affordable to all, Fully Automated, and world Class.
“RuPay”, the word itself has a sense of nationality in it. “RuPay” is the coinage of two terms Rupee and Payment. The RuPay Visual Identity is a modern and dynamic unit. The orange and green arrows indicate a nation on the move and a service that matches its pace. The color blue stands for the feeling of tranquility which is the people must get while owning a card of the brand ‘RuPay’. The bold and unique typeface grants solidity to the whole unit and symbolizes a stable entity.
RuPay Scheme provides flexibility to card issuing banks to issue special purpose cards like Kisan Cards, Milk Procurement Cards, Grain Procurement Cards and Financial Inclusion Cards.
NPCI has rolled out its chip card for high security transactions using EMV(Europay, MasterCard and Visa) chip technology, which is a global standard for debit and credit cards. RuPay chip cards have an embedded microprocessor circuit containing information about the card holder and because transactions are PIN-based rather than signature-based.
Privatization is the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. It may also mean government outsourcing of services or functions to private firms as revenue collection, law enforcement, and prison management.
Privatization has also been used to describe two unrelated transactions. The first is the buying of all outstanding shares of a publicly traded company by a single entity, making the company privately owned. This is often described as private equity. The second is a demutualization of a mutual organization or cooperative to form a joint-stock company.
Share issue privatization (SIP) – selling shares on the stock market
Asset sale privatization – selling an entire organization (or part of it) to a strategic investor, usually by auction or by using the Treuhand model
Voucher privatization – distributing shares of ownership to all citizens, usually for free or at a very low price.
Privatization from below – Start-up of new private businesses in formerly socialist countries.
Private individuals and companies performed the majority of services including tax collection (tax farming), army supplies (military contractors), religious sacrifices and construction.
Privatization has mainly occurred in the transition economies of Central and Eastern Europe, such as Russia, Poland, the Czech Republic, and Slovakia. The transition from a publicly traded and owned company to a company which is privately owned and no longer trades publicly on a stock exchange. When a publicly traded company becomes private, investors can no longer purchase a stake in that company.
The privatization of publicly owned operations is the estimated increases in efficiency that can result from private ownership. The increased efficiency is thought to come from the greater importance private owners tend to place on profit maximization as compared to government, which tends to be less concerned about profits.
Most companies start as private companies funded by a small group of investors. As they grow in size, they will often access the equity market for financing or ownership transfer through the sale of shares. In some cases, the process is subsequently reversed when a group of investors or private company purchases all of the shares in a public company, making the company private and, therefore, removing it from the stock market.
Bullet trains are basically high speed rail trains that go over speeds of about 250-300 kilometres per hour. It is named such because of its aerodynamic sleek appearance and high speeds. These bullet trains currently serve 16 nations around the globe with China boasting the longest high speed rail network with 27000 kilometres of these tracks.
When was the first bullet train network built?
The bullet trains originated in Japan thus initially being called as Shinkansen trains where in Japanese Shinkansen refers to new trunk lines. The first bullet trains’ line was inaugurated in 1964 between Tokyo and Osaka that reached speeds of 210 kilometres per hour, thus allowing a distance of 550 kilometres to be covered in a time frame of 3 hours.
Can these trains run on ballasted tracks?
The proposed bullet trains cannot run on the ballasted tracks laid down by the Indian Railways since they will not be able to achieve their speed on the existing ones. The maximum speed provided by the existing tracks is 160-200 kilometres per hour, when generally people experience vibrations, constant motion and sound. And if the proposed trains run on these tracks, they will not be able to handle the speed. Hence the government is to upgrade the existing tracks and also construct more tracks suitable for the proposed bullet trains.
What is the difference between these trains and Maglev trains?
The bullet trains are conventional high speed trains that use wheels whereas Maglev trains are higher version of high speed rails that are based on magnetic levitation. So Maglev trains either use electromagnetic suspension or electrodynamic suspension where they are levitated, propelled and guided by magnets. Hence, maglev trains do not need wheels thus very less friction is produced thus high energy efficiency is achieved. Though capital cost per system is extremely high, the maglev trains produce almost negligible noise and provide high passenger comfort and hence are available only in Japan, South Korea and China.
The bullet train project of India:
The high speed rail project that has been launched in India by the Prime Minister NarendraModiis expectantly going to be introduced in the 508 kilometres long Mumbai- Ahmedabad stretch of which will be a drilled seven kilometre undersea route near Thane, necessary to protect the thick vegetation of the region. The construction of this project is to start in 2018 and will be inaugurated on 15th of August, 2022 when India will complete 75 years of independence. The estimated cost of the project is calculated to be about 1 lakh crore of rupees of which, Japan will provide a loan of 88,000 crore for 50 years at 0.1% interest rate.
Advantages of a bullet train network:
Talking about the advantages, the bullet train will be able to cover the distance between the two cities in less than three hours as compared to when it takes up to seven hours. The delay record of the bullet trains has been less than a minute and zero fatality rate ever since 1964. The trains have inbuilt safety systems that can also detect earthquakes at an early stage and automatically stop hence reducing any chances of accidents. The other advantages include time and fuel savings, reduction of vehicle operation costs, lower air pollution and emission and development in economy and employment.
Its viability:
This project is receiving mixed responses for its viability. Since a huge loan will be taken for this project, the economic and financial viability is equally important. And for the success of this project, the bullet train should take at least 1 crore passengers end to end. As estimated by the JICA, there will be 1.46 crore of passengers in the first year of operation hence ensuring the economic viability. As per its financial viability, there is an estimate to where the difference between the revenue generated in 2023 and the interest payment for loan will bring about a surplus of Rs 1,810 crore which is extremely favourable on talking terms with the loan. Besides the economic and financial viability, the bullet trains will provide a dreamed level of transportation in comparison with today’s transportation and creating an ideal standard for consumer expectations.
India’s self-employed workforce shrank between 2004-05 and 2009-10 :
Reports released on April 21, 2013 revealed that there was lack of substantial increase in employment in India between 2004-05 and 2009-10. During that period, the self-employed workforce in the country shrank from 56.4 percent to 50.7 percent of the total workforce. In terms of numbers, the self-employed decreased from 258.4 million to 232.7 million during this period while regular salaried class rose in numbers from 69.7 million to
75.1 million. The ranks of casual labour swelled from 129.7 million to 151.3 million. In all, the total workforce increased from 457.8.million to
459.1 million, a rise of just 0.3 percent.
The findings were based on data
collected by the National Sample Survey Organisation (NSSO). The NSSO data exhibited a shift in general employment status in the country. Between 2004-05 and 2009-10, the percentage of regular salaried workers increased from 15.2 percent to 16.4 percent. There was a jump in casual labour from 28.3 percent to 33 percent. It indicates that formal employment that accompanies new real estate development, industry and urbanisation has lagged. This would include service providers like roadside eateries, local transport, small shops and services like appliance repair.
Centre comes out with revised consolidated guidelines on FDI : With a view to further simplifying the foreign investment regime, the Central Government on April 6, 2013 came out with the revised consolidated guidelines on foreign direct investment (FDI). The guidelines incorporated changes with regard to inflows in multi-brand retail besides allowing Pakistani nationals and companies to invest in India. Further, the government set in motion policy changes in various other sectors such as single brand retail, asset reconstruction companies (ARCs), power exchanges, civil aviation, broadcasting and nonbanking finance companies (NBFCs).
In was in 2012 that the Central Government permitted 51 percent FDI in multi-brand retail sector, despite opposition from some of its key allies and a number of State Governments. The government also allowed foreign airlines to pick up 49 percent stake in the cash-strapped domestic carriers. Similarly, it had raised the FDI cap to 74 percent in various services of the broadcasting sector. The foreign investment ceiling in ARCs had also been increased to 74 percent from 49 percent, a move aimed at bringing more foreign expertise in this segment.
Madhya Pradesh registers highest growth among the States : According to data (provisional) released by the Central Statistical Organisation (CSO) on March 29, 2013, Madhya Pradesh has emerged as the State with the highest growth rate in the country. As per the data, it has dislodged Bihar from its numero uno position in terms of the biggest growth of gross State domestic product. Madhya Pradesh added more than Rs. 20,000 crore to its economy over the 2012-13 financial year. It took the State’s GDP from Rs. 2,01,290 crore a year ago to Rs. 2,21,463 crore as of now. The rate of growth for the State during the period stood at 10.02 percent.
Bihar’s growth slipped from an impressive 13.26 percent in 20.11-12 to 9.48 percent in 2012-13. The State added merely Rs. 1,090 in. 2012-13 to its per Capita income. In comparison, Jharkhand and Madhya Pradesh saw their per capita incomes rise by over Rs. 2,000 during the period. Odisha also managed to add Rs. 1,450 to its per capita income.
CSO data shows that among the States, Madhya Pradesh has been a consistent performer in terms of growth. The State grew by 12.47 percent in 2008-09. The following year it defied downturn to post a respectable 9.88 percent. Though the State’s growth came down to 7.13 percent in 2010-11, it bounced back to double digit by managing a rate of 11.81 percent in 2011-12.
Comprehensive State-wise growth data, however, is still to be compiled. This is because the figures from Kerala, Maharashtra, Gujarat, Rajasthan and Delhi are yet to come in.
Current account deficit widens : As per data released by the Reserve Bank of India on March 28, 2013, India’s current account deficit (CAD) reached a record high of 6.7 percent of GDP in the third quarter (October-December) of the 2012-13 financial year, driven mainly by the large trade deficit. The CAD, which in effect is the difference between the inflow and outflow of foreign capital, had stood at 5.4 percent of GDP in the previous quarter (July-September) of the fiscal.
In monetary terms, CAD widened in the October-December quarter of 2012- 13 to $32 billion, markedly up from the $20 billion in the same quarter of the previous fiscal. The rise was mainly on account of a significant increase in oil and gold imports at a time when exports have remained particularly subdued in the wake of an uncertain global environment and recessionary conditions prevailing in the US and Europe, India’s main markets.
During the April-December period of 2012-13, CAD stood at $71.7 billion, which worked out to 5.4 percent of GDP. In the comparable period, i.e. the first half of fiscal 2011-12, CAD had stood at $56.5 billion, or 4.1 percent of GDP. During the October-December quarter of 2012-13, the trade deficit widened to $59.6 billion, up from $48.6 billion in the same quarter a year ago.
As has been mentioned above, the country’s CAD rose to 5.4 percent in the second quarter (July-September) of the 2012-13 fiscal. The reasons for this include the widening of trade deficit and slower growth in invisibles. The rise in CAD to GDP ratio was partly due to slower growth in GDP and rupee depreciation. A steeper decline in exports growth (12.2 percent year-on-year) compared with the imports growth (4.8 percent year-on-year) led to the widening of trade deficit. The trade deficit widened to $48.3 billion during the quarter under review from $44.5 billion during the corresponding quarter of the previous year. While the net services receipts registered reasonable increase, net invisibles earnings could finance only a lower proportion of trade deficit. This was because the net primary and secondary income flows were relatively smaller. Consequently, the CAD worsened to $22.3 billion in the second quarter of 2012-13 as compared to $16.4 billion in the preceding quarter and $18.9 billion in the second quarter of 2011-12.
Contribution by CPSEs to exchequer rises : The Public
Enterprises Survey 2011-12 was released on March 9, 2013. According to the survey, the gross value addition by the Central public sector enterprises (CPSEs) increased to 5.67 percent of the gross domestic product (GDP) in 2011-12. In the previous fiscal (2010-11), the gross value addition of CPSEs stood at 5.44 percent. However, if the underrecoveries of oil marketing companies (amounting to Rs. 55,041 crore in 2011- 12 and Rs. 37,190 crore in 2010-11) are included, then the share of gross value addition of all these CPSEs in the GDP comes to 6.29 percent in 2011-12 and 6.78 percent in 2010-11. As per the
survey, the CPSEs contribute to the Central Exchequer by way of dividend payment, interest on government loans, and payment of taxes and duties.
There was a significant increase in the total contribution of the CPSEs to the exchequer from Rs. 1,56,751 crore in 2010-11 to Rs. 1,60,801 crore in 2011- 12. This was primarily due to increase in contribution towards corporate tax and excise duty which increased from Rs. 40,324 crore to Rs. 44,358 crore and Rs. 57,755 crore to Rs. 61,165 crore, respectively, in 2010-11 and 2011-12. There was, however, a decline in customs duty, other duties & taxes, and dividend tax during the year under review as compared to the previous year. There was also a marginal decline in payment of Central sales tax by the CPSEs.
It is worth mentioning here that the CPSEs were brought under the purview of the 1985 Sick Industrial Companies (Special Provision) Act in 1991. The condition of sick CPSEs (whose accumulated losses have exceeded their net worth) has been improving over the years. The number of sick CPSEs, which was 90 in 2004-05, came down to 66 in March 2012. The Central Government set up the Board for Reconstruction ol Public Sector Enterprises (BRPSE) in 2004 to advise the government on the measures to restructure/revive both industrial and non-industrial CPSEs. The cases of 67 sick CPSEs were referred to the BRPSE up to October 2012. Out of these, the Board has made recommendations in respect of 62 cases. Five cases have been returned to the concerned ministries and departments for further examination.
Guar gum emerges as India’s top agric ultural export: I .atest of ficial data released on March 9, 2013 showed that guar gum has emerged as India’s top farm export overtaking traditional heavyweights such as cotton and rice. Exports of guar gum by India have shot up nearly 139 percent between April 2012 and January 2013 with shipments of about $4.9 billion.
At $4.9 billion, guar gum exports during the April-January period of 2012- 13 were a tad below the exports of plastics and linoleum products at $5 billion. Basmati rice exports during the same period stood at $2.7 billion, while raw cotton exports totalled $2.6 billion. Growing demand from the petroleum industry in the US has seen in a sharp increase in the prices of the gum. The commodity, commonly known as guar phalli, has a variety of uses in sectors ranging from food to oil and gas drilling.
The steep increase in exports, driven by huge demand from the American gas and oil industry which uses the commodity while drilling for shale gas, has taken its prices to high levels. In 2012, prices shot up by 900 percent to 1000 percent, with a quintal of guar gum fetching more than Rs. 1,00,000.
Growth down to 4.5 percent in third quarter of 2012-13 fiscal : According to figures released by the Central Statistical Organisation (CSO) on February 28, 2013, India’s economic growth in the third quarter (October- faecember) of the current (2012-13) fiscal slipped to 4.5 percent. This is the lowest quarterly growth in a decade. In the same quarter of 2011-12, the economy had registered a growth of 6 percent. The main reason for the fall wras poor performance by the farm, mining and manufacturing sectors.
The economic growth in the first nine months (April-December) of 2012-13 stood at 5.1 percent, markedly lower than the 6.6 percent growth witnessed during the same period of the previous fiscal. India’s GDP had grown by
5.5 percent and 5.3 percent in the first quarter and second quarter, respectively, of 2012-13. Growth in the first half stood at 5.4 percent.
During the third quarter of 2012-13, the manufacturing sector grew marginally by 2.5 percent, against a growth of 0.7 percent in the same period of 2011-12. Farm sector output rose by just 1.1 percent in the quarter under review as against 4.1 percent in the same quarter of the previous fiscal. The mining sector shrank by 1.4 percent during the quarter, compared to, a decline of 2.6 percent in the comparable quarter of 2011-12.
Government cancels Rs. 12,000 crore borrowing to contain fiscal deficit : The Centre on February 18, 2013 cancelled the Rs. 12,000-crore borrowing programme for the current financial year (2012-13). The Centre had sought to go for a bond auction plan to lower its borrowing in order to contain the fiscal deficit at 5.3 percent.
Following the latest decision, the total market borrowing by the Centre would come down to Rs. 5.58 lakh crore from Rs. 5.70 lakh crore as envisaged in the 2012-13 Budget. The government had already borrowed Rs. 3.70 lakh crore in the first half of the fiscal that ended in September 2012. This constitutes 65 percent of the total planned borrowing for the entire financial year. The front-loading of borrowing was done as part of the government’s strategy to make available capital to the private sector in the second half of 2012-13.
In November 2012, Union Finance Minister Mr. P. Chidambaram had raised the fiscal deficit projection for the current financial year to 5.3 percent from 5.1 percent estimated in the 2012-13 Budget. Despite this heightened deficit projection, the government’s cash position has already improved with the flow of over Rs. 14,000 crore through disinvestment alone in February 2013. According to official figures, until now, the Central Government has collected around Rs. 21,500 crore trom PSU stake sales as against a fiscal target of Rs. 30,000 crore.
Latest official data showed that the total plan spending up to December 31, 2012 stood at 56.8 percent of the full- year target, lower than the previous year’s 62.7 percent. Non-plan spending, on the other hand, touched 71.7 percent, slightly lower than the 75.9 percent posted in the same period a year ago. Economists said that the cancellation of the bond auction showed that the Central Government was confident of meeting the 5.3 percent fiscal deficit target for the 2012-13 financial year.
Gold demand in India falls 12 percent in 2012 : The report “Gold Demand Trends”, released by the World Gold Council (WGC) on February 14, 2013, showed that demand for gold in India at 864.2 tonnes in 2012 declined by 12 percent over 2011 (in volume terms). Total demand in value terms, however, during the year under review increased by 6 percent to Rs. 2,47,501.7 crore.
India’s appetite for the yellow metal came to the fore in the fourth quartet of 2012 when it grew 41 percent in volume terms to 261.9 tonnes (it was
185.5 tonnes in the same period a year ago). In value terms also, it rose 54 percent to Rs. 78,477.5 crore from Rs. 51,076.1 crore.
During 2012, jewellery demand fell 11 percent in volume terms to 552 tonnes. It, however, rose 8 percent in value terms to Rs. 1,58,089.5 crore during the year. Investment demand fell 15 percent in volume terms to 312.2 tonnes but rose 3 percent in value terms to Rs. 89,412.2 crore.
The WGC report said that 2012 was a mixed year for India in terms of gold demand. In the first half, demand was affected due to higher import duties, market turmoil due to proposed measures to curb gold imports, and a sharp rise in the local price of gold. In the second half of 2012, however, Indian demand staged a strong comeback, with the market continuing to thrive in the fourth quarter wedding season and festive period. Demand was further stimulated in December 2012 on speculations of a hike in the import duty of gold.
Job generation under MGNREGS declines : In a report released on February 2, 2013, the Ministry of Rural Development said that employment was on a decline under the Centra) Government’s flagship job generation programme—the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The-revelations made bv the latest data run counter to the claims of success of the scheme being made bv the government.
Between 2009-10. and 201 1-12, the total work generated by this flagship programme declined from 284 crore persondavs to 211 persondavs. This * represents a decline of about 25 percent in the first three rears ot the second tenure of the UPA Government. It is worth mentioning here that one personday is one person working for a day. The data up to end-Januarv 2013 suggests that there will be a further fall in job generation under MGNREGS in 2012-13.
Some States that have shown major decline in job generation over this period are Karnataka (a decline of 65 percent), Rajasthan (53 percent), Assam (52 percent), Gujarat (47 percent), Bihar (45 percent) and Madhya Pradesh (40 percent). Only a handful of States— Maharashtra, Tamil Nadu, Haryana, Chhattisgarh and Jammu & Kashmir— have shown an increase in job generation under this scheme.
More surprising is the fact that jobs created for the most marginalised sections—adivasis and dalits—have witnessed the biggest decline in generation. In most of the abovementioned States where job generation has taken a beating, jobs for marginalised sections have declined by as much as 70 percent or even more.
CSO estimates 2012-13 GDP growth to fall to 5 percent: Sharply scaling down the country’s growth, prospects, the Central Statistical Organisation (CSO) said on February 7, 2013 that India’s gross domestic-product (GDP) growth rate would slump to a dismal 5 percent in the 2012-13 fiscal. This estimate is drastically lower than what has been projected so far by the Central Government and the Reserve Bank of India.
The CSO said that growth in 2012-13 would be in the vicinity of 5 percent, as against a growth rate of 6.2 percent in 2011-12. In 2002-03, the gross domestic product had grown at 4 percent. Since then, the Indian economy has been expanding at over 6 percent every year. The highest growth rate was registered in fiscal 2006-07 at 9.6 percent.
The CSO’s advance estimates lowered the growth in agriculture and allied
activities to 1.8 percent tor 2012-13. in 2011-12, it was 3.6 percent, li said that the growth in the manufacturing sector was also expected to drop to 1.9 percent from 2Hpercent in the previous financial year. According to the advance estimates, the services sector including finance, insurance, real estate and business services are likely to grow bv 8.6 percent in 2012-13. as against 11.7 percent in 2011-12. The latest estimates mean that the pace of economic expansion slowed markedly in the second half ot the fiscal, as during the first half the growth stood at 5.4 percent.
The CSO’s latest GDP growth projection, which is the lowest in a decade, is lower than the 5.5 percent forecast made by the Reserve Bank of India in its latest quarterly review of monetary policy. The government also, in its Mid-year Economic Review, had. estimated GDP growth for the fiscal ranging from 5.7 percent to 5.9 percent. The latest CSO estimate is also sharpy lower than the 7.6 percent growth projection for the financial year made by the government in the 2012-13 budget.
Government lowers GDP growth for 2011-12 to 6.2 percent: The Central Government announced on January 31, 2013 a downward revision in GDP (gross domestic product) growth to
6.2 percent for the fiscal year 2011-12 from the earlier provisional estimate of 6.5 percent. Alongside, however, the GDP growth for‘2010-11 fiscal stands revised upwards to 9.3 percent from
8.4 percent, as per the first revised estimates of ‘National income, consumption expenditure, saving and capital formation’, released by the Central Statistical Organisation (CSO) for 2011-12 along with second revised estimates for 2010-11 and the third revised estimates for 2009-10.
GDP at factor cost at constant (2004-05) prices in 2011-12 was estimated at Rs. 52.43 lakh crore as against Rs. 49.37 lakh crore in 2010-11, registering a growth of 6.2 percent during the year as against a growth of
9.3 percent in the year 2010-11. As per the statement, the GDP in 2011-12 at current prices is estimated at Rs. 83.53 lakh crore as against Rs. 72.67 lakh crore in 2010-11, marking an increase of 15 percent as against an increase of 19 percent in the previous fiscal year.
The per capita income in real terms (at 2004-05 prices) was estimated at Rs. 38,037 for 2011-12 as against Rs. 36,342 in 2010-11, which works out to an increase of 4.7 percent during the fiscal as against an increase of
7.2 percent in the previous fiscal.
However, the per capita income at current prices is estimated at Rs. 61,564 in 2011-12 as against Rs. 54,151 in the previous fiscal to mark a lower growth ot 13.” percent as compared to an increase of l“.l percent posted m 2010 11. As a measure to assess the standard ot living, the per capita income on a monthly basis works out to Rs. 5,130 during the tiscal as compared to Rs. 4,513 in 2010-11.
The GDP expansion in 2011-12 was on account ot growth in sectors such as financing, insurance, real estate and business services bv 11,7 percent, transport, storage and communication (8.4 percent], electricity, gas and water supply (6.5 percent) and trade, hotels and restaurants (6.2 percent).
As for gross domestic savings (GDS), the growth in 2011-12 at current prices feli to .30.8 percent of the GDP at market prices and is estimated at Rs. 27.65 lakh crore during the year as compared to an increase of 34 percenr to Rs. 26.52 lakh crore in 2010-11.
The deceleration in GDS growth in 2011-12 was mainly owing to declines in household financial savings from
10.4 percent to 8 percent, in private corporate sector savings from 7.9 percent to 7.2 percent and in public sector savings from 2.6 percent to
1.3 percent compared to a year ago.
Among other major indicators, the gross national income (GNI) at constant (2004-05) prices and at factor cost in 2011-12 was estimated at Rs. 51.97 lakh crore as compared to Rs. 48.82 lakh crore in 2010-11, which works out to an increase of 6.4 percent during the year under consideration.
On the other hand, the GNI at current prices in 2011-12 was estimated at Rs. 82.77 lakh crore as compared to Rs. 71.85 lakh crore in 2010-11, an increase of 15.2 percent which is lower than the 18.4 percent growth achieved in the previous year.
Household sector savings in absolute terms increased from Rs. 18.33 lakh crore in 2010-11 to Rs. 20.04 lakh crore in 2011-12 to register an increase of 9.3 percent while private corporate sector savings rose by 4.1 percent from Rs.6.19 lakh crore in 2010-11 to Rs. 6.44 lakh crore in 2011-12.
Savings of the public sector, however, went down by a hefty 41.4 percent from Rs. 1.99 lakh crore in 2010-11 to Rs. 1.17 lakh crore in 2011-12.
As per the data, gross domestic capital formation increased from Rs. 28.72 lakh crore in 2010-11 to Rs. 31.41 lakh crore in 2011-12 at current prices.
At constant prices (2004-05), it increased from Rs. 21.20 lakh crore in 2010-11 to Rs. 21.32 lakh crore in 2011- 12. Accordingly, the rate of growth of gross capital formation at current prices stood at 35 percent in 2011-12 as against
36.8 percent in 2010-11 and at
37.9 percent and 40.0 percent during the two years at constant prices.
Over Rs. 24,000 crore stuck with rogue borrowers, shows data : Data released on January 13, 2013 showed that rogue borrowers—or wilful defaulters who have the capacity to repay but default on repayments—^have siphoned off another Rs. 8,000 crore despite “stringent credit appraisal s}rstem and recovery measures” being adopted by the banking system. With this, the total amount stuck in wilful defaults by borrowers shot up to Rs. 24,283 crore as on June 30, 2012 as against Rs. 15,324 crore in March 2011. As many as 4,158 loan accounts were classified as wilful defaults as of June 2012. The amount diverted by wilful defaulters has gone up by 133 percent in the last three years from Rs. 10,395 crore in September 2009, clearly revealing the loopholes in the system.
RBI rules stipulate that a loan will become wilful default if the unit has defaulted in meeting its repayment obligations to the-lender even when it has the capacity to honour the said obligations. If the unit has defaulted in meeting its repayment obligations to the lender and has diverted the funds for other purposes, it will become a wilful default. Loan defaulters who try to dispose of the mortgaged property without the knowledge of bank or the lenders are also classified as wilful defaulters. Lenders are then required to initiate criminal proceedings against wilful defaulters and wherever possible, the banks should adopt a proactive approach for a change of management of the wilfully defaulting borrower unit.
However, the fact is that in many cases, no assets are found at the time of legal process and in some cases promoters are not traceable. In many cases, funds were diverted for other private purposes of the borrowers.
Among banks, State Bank of India tops the list of wilful defaulters at Rs. 5,946 crore. Indian Overseas Bank has classified Rs. 3,247 crore as wilful defaults. Canara Bank’s tally stands at Rs. 1,735 crore and UCO Bank’s at Rs. 1,232 crore. Gross non-performing assets (NPAs) recorded a year-on-year rise of 45.3 percent and net NPAs grew by 55.6 percent in 2011-12.
India’s trade with China falls 12 percent:As per figures released by China’s General Administration of Customs (GAC) on January 10, 2013, India’s bilateral trade with China fell by 12 percent to $66 billion in 2012. The fall was driven by a record slump in exports, which has expanded the trade deficit to $29 billion. The latest figures showed that India’s exports to China had fallen by as much as 19.6 percent year- on-year in December 2012. It reflected the challenges faced by both the countries to find a new driver of trade after iron ore exports have slumped following bans.
India’s exports to China in 2012, comprised largely of ores,
cotton, chemicals and raw materials, reached $18.8 billion, while
imports from China amounted to $47.7 billion. It was driven by
growing demand for power and telecom equipment and
machinery. Overall bilateral trade in 2012 reached $66.47 billion,
down from $73.9 billion in 2011 when China became India’s
biggest trade partner.
The gloomy oudook for India’s future trade ties with China came
even as overall exports out of the world’s second-largest
economy rebounded in December 2012, recording a higher than
expected 14.1 percent growth in the Chinese economy following
the downturn during most months of the year.
China’s, exports in 2012 rose by 7.9 percent despite a deepening
debt crisis in the Eurozone, a sharply slowing world economic
recovery, continuously sluggish demand on the global market and
big downward pressure on the domestic economy.
On the India-China trade front, the year 2013 is expected to be a
difficult one. Experts said that with bans on iron ore exports,
import duties on power equipment, and likely restrictions in the
telecom sector, the oudook for bilateral trade—and the likelihood
of meeting the $100 billion target for 2015—remains uncertain.
A silver lining in recent months was increasing interest among Chinese firms to invest in India. Reflecting a new trend, more small and medium Chinese enterprises and newer firms are joining the bigger and more established companies in investing in Indian facilities
India’s external debt up : As per
figures released by the Finance Ministry on December 31, 2012,
India’s external debt stood at $365.30
billion as on September 30, 2012, a rise of $20 billion over the
level in end-March 2012. The reasons
included higher NRI deposits, short-term debt and commercial
borrowings. Long-term debt stood at
$280.8 billion at the end of September 2012, representing a rise of
5.1 percent over end-March 2012.
Short-term debt was up by 8.1 percent to $84.5 billion.
Component-wise, the share of commercial borrowings was higher at
29.8 percent, followed by NRI deposits at 18.3 percent and multilateral debt at
13.9 percent. The US dollar-denominated debt remained the highest with a share of 55.7 percent in total external debt. It was followed by the Indian rupee (22.9 percent) and Japanese yen (8.6 percent). The country’s forex reserves provided a cover of 80.7 percent to the total external debt, compared with 85.2 percent at end-March 2012.
Investor wealth up by 27 percent in 2012 : According to Data released by the Securities and Exchange Board of India (SEBI) on December 29, 2012, India’s investor wealth soared by 27 percent to around Rs. 67.8 lakh crore in 2012. During the year, the country’s stock indices gained nearly 25 percent on hefty capital inflows, helped by a slew of reform measures, even as concerns continued to remain over economic growth and rising fiscal deficit. Indian bourses made a dramatic turnaround after a meltdown in 2011, leaving behind a strong sense of optimism among investors. The smart recovery helped investor wealth to soar by over $14.5 lakh crore to Rs. 67,78,609 crore (as on December 21, 2012), in comparison to Rs. 53,12,875 crore at the end of the year 2011.
Investors ignored falling industrial output, declining exports, ballooning fiscal deficit, overall gloomy economic scenario in domestic and international markets amid fears of the European debt crisis to spiral over worldwide. Foreign institutional investors (FIIs) made the second largest investment in the Indian capital market during the year under review. As per the SEBI data, FIIs pumped in Rs. 1,21,652 crore ($23.15 billion) in 2012. It is second only to the inflows witnessed in 2010, which accounted for Rs. 1,33,266 crore ($29.36 billion).
India ranks 40th among 50 most dynamic economies in the world :
According to the Global Dynamism Index (GDI) released by reputed tax and advisory firm Grant Thornton on December 27, 2012, India ranked” a lowly 40th among 50 economies in the world in terms of dynamism. The index, put together on the basis of an analysis of 22 indicators on dynamism, is topped by Singapore. The indicators were spread across five categories.: business operating envi-ronment, economics & growth, science & technology, labour & human capital, and financing management.
The GDI index defined dynamism as the changes to the economy which have enabled recovery from the 2008-09 economic recession and are likely to lead to a fast rate of future growth. Singapore was followed by Finland in the list. The others in the top ten were : Sweden (3rd), Israel (4th), Austria (5th), Australia (6th), Switzerland (7th), South Korea (8th), Germany (9th) and USA (10th).
India fared well in the parameter of economic ‘& growth, ranking as high as fifth behind Argentina, China, Uruguay and Chile. In terms of other parameters, however, India fared badly. Out of 50 countries, India was ranked 46th for its business operating environment. It is at number 43 in financing management. In terms of labour & human capital, the •^country was 33rd. In science & technology, the country was placed 37th.
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