Edited Image Courtesy: aces.gov.in

 

The Government should show political will to re-design & stabilize goods and service tax (GST) system. The Government has so far taken in stride both grave concern and suggestions pertaining to this issue. It didn’t appear shaken by valuable advice from diverse quarters including the World Bank (WB) and Comptroller and Auditor General (CAG)

It should at least now bite the reforms bullet in response to repeated calls from Fifteenth Finance Commission (15thFC) Chairman N.K. Singh for reinventing GST to achieve its original objectives. 

On 18th November 2018, Mr. Singh pitched for undertaking GST and other tax reforms. While launching TIOL National Taxation Awards portal, he noted that GST needs to undergo for “fundamental changes” to achieve its intended objective. 

Four days later, he articulated his vision for GST reforms while delivering L.K. Jha memorial lecture organized by Reserve Bank of India (RBI). 

Mr. Singh is epitome of wisdom on GST by virtue of his long association with the revenue administration. He has had unique honour of being entrusted twice by the Modi Government to lay roadmap for fiscal reforms. 

Mr. Singh is now pitching for GST reforms after getting detailed feedback from all stakeholders – the Centre, the States, economists, businessmen and academics. 

And the decisive & exhaustive logic for reforms would, of course, be contained in eagerly awaited report of 15thFC.

Instead of waiting for 15thFC report, the Government should first make up its mind to turn GST from growth retardant to growth booster. 

Delivering the Lecture titled ‘Fiscal Federalism: Ideology and Practice’ Mr, Singh observed: “GST Council is still in its nascent phase and needs to revisit its design and decision-making process in a more fundamental way. This is also necessary to enable it to fulfil its original purpose”.

PTI quoted him as telling SBI Chairman Rajnish Kumar at the Lecture: “If you do not simplify GST, you will be defeating the very purpose and intention of why we took this far reaching step”.

 (Image Courtesy: PIB)

 

India’s decision to not join the Regional Comprehensive Economic Partnership (RCEP) is generating sound and fury. This should lead to a holistic study of the net global benefits, if any, of thickening jungle of regional trade/free trade/preferential trade agreements (RTAs/FTAs/PTAs).

The total number of RTAs signed during 1948-2018 stand at staggering 681. Of these, 301 are active. Had each bilateral or regional RTA led to rise in respective trade, the global trade would have soared to dizzy height. The situation is actually depressing.

According to WTO release dated 1 October 2019, “Escalating trade tensions and a slowing global economy have led WTO economists to sharply downgrade their forecasts for trade growth in 2019 and 2020”.

World merchandise trade volumes are now expected to rise by only 1.2% in 2019, substantially slower than the 2.6% growth forecast in April. The projected increase in 2020 is now 2.7%, down from 3.0% previously, it notes.

This issue also finds mention in United Nations Conference on Trade and Development (UNCTAD) report titled ‘Review of Maritime Transport 2019’.

Released on 30th October 2019, the Report points out that world maritime trade lost momentum in 2018, with volumes expanding at 2.7 per cent, below the historical averages of 3.0 per cent and 4.1 per cent recorded in 2017. 

With these chilling facts in view, we thus need to put common-sensical questions on:1) Correlation between surging RTAs and global slowdown in both trade and economic growth. 2) Hype over RTAs as womb of global value chains (GVCs) and 3) Factors that negate the potential benefits of RTAs.

 Bharat Ratna Atal Bihari Vajpayee laid foundation for telecom bail-outs

 

(Image Courtesy:PIB)

 

It is a tsunami of outcry and anguish over a very fair judgment delivered by the Supreme Court (SC). On 24th October 2019, SC upheld Department of Telecommunications (DOT's) definition of adjusted gross revenue (AGR).

What is there in the definition? Well, truckloads of money as was foreseen by Comptroller and Auditor General (CAG) way back in 2000. 

The verdict requires telecom service providers (TSPs) to pay to the Government the disputed components of AGR along with interest and penalty as specified in licence agreements. The amount to be paid is estimated in the range of Rs 92,000 crore to Rs 1.4 lakh crore for last over 15 years.

Vajpayee Government trashed CAG’s concern over real and presumptive revenue loss recorded in its report numbered 7 of 2000. And there hangs the 20-year saga of telecom revenue leakages that should come under gaze after SC verdict. It has not gone into the issue of leakages that arise to under-reporting, misclassification and other misconduct. The judgment is limited to AGR definition. 

In 2000, CAG also foresaw risk of repeat of the sob story in future. And the risk has recurred in past with telecom bail-outs & phased reduction in percentage of revenue that TSPs share with the Government. The bail-outs happened both under NDA and UPA. More recall of CAG & two other alarming reports later in this column. 

The emerging headlines are similar to the ones that were splashed in late nineties. That created favourable ecosystem for BJP-led NDA Government to shower unprecedented favours on TSPs in 1999.