Indian Economy - News & Discussion Oct 12 2013

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 07 May 2015 09:00

India Eases Rules to Allow Foreign Investment in REITs
India eased rules to allow overseas investments in real estate investment trusts, bringing the country one step closer to as much as $20 billion of listings.
REITs will be allowed as an eligible financial instrument under the Foreign Exchange Management Act, the government said in a statement Wednesday.

Trusts will be able to access foreign investments, which were prohibited under foreign-exchange rules. The move clears one more hurdle to the introduction of REITs and will help reduce pressure on the banking system to fund the real estate sector. REITs will enable the industry to raise fresh equity, while attracting long-term finance from foreign and domestic investors, the government said.

The development of the country’s REITs, which Cushman & Wakefield estimates will raise $20 billion through initial stock offerings, has been hindered by tax rules that limit their appeal to investors. Changes announced by Finance Minister Arun Jaitley in the budget for the fiscal year starting April 1 haven’t meaningfully improved the situation, office landlord RMZ Corp. said in March.

The government further amended some taxes last month to remove levies on gains as a result of transfering the asset from the property owner to the REIT.
DLF Ltd., India largest developer, said last month it plans to set up its first REIT when it gets approval.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Austin » 07 May 2015 11:03

FORBES 2015 World Biggest Public Company ( India )

http://www.forbes.com/global2000/list/#country:India

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Karthik S » 07 May 2015 17:47

^^ hope to see 2 or 3 companies in top 100 in the next 5 years.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby wig » 08 May 2015 10:18

the salient features of the GST Constitutional Amendment Bill, it is much the same system that is presently existing. I just hope the drafting leads to lesser litigation and simpler laws.
•Insertion of new Article 246A conferring simultaneous power to the Union and the State legislatures to legislate on GST.
•Insertion of new Article 279A for the creation of a Goods & Services Tax Council, which will be a joint forum of the Centre and the States. This Council would function under the Chairmanship of the Union Finance Minister.
•To do away with the concept of ‘declared goods of special importance’ under the Constitutional.
•Central Taxes like Central Excise Duty, Additional Excise Duties, Service Tax, Additional Customs Duty (CVD) and Special Additional Duty of Customs (SAD), etc. will be subsumed in GST.
•At the State level, Taxes like VAT/ Sales Tax, Central Sales Tax, Entertainment Tax, Octroi and Entry Tax, Purchase Tax and Luxury Tax, etc. would be subsumed in GST.
•The Centre will compensate States for loss of revenue arising on account of implementation of the GST for a period up to five years (The compensation will be on a tapering basis, i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year).
•All Goods and services, except alcoholic liquor for human consumption, will be brought under the purview of GST. However, it has also been provided that petroleum and petroleum products shall not be subject to the levy of GST till notified at a future date on the recommendation of the GST Council. The present taxes levied by the States and the Centre on petroleum and petroleum products, i.e., Sales Tax/VAT, CST and Excise duty only, will continue to be levied in the interim period.
•Both Centre and States will simultaneously levy GST across the value chain. 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 Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of Goods and Services. There will be seamless flow of input tax credit from one State to another. Proceeds of IGST will be apportioned among the States.
•GST is a destination-based tax. All SGST on the final product will ordinarily accrue to the consuming State.
•GST rates will be uniform across the Country. However, to give some fiscal autonomy to the Centre and States, there will a provision of a narrow tax band over and above the floor rates of CGST and SGST.
•It is proposed to levy a non-vatable Additional Tax of not more than 1% on supply of goods in the course of inter-State trade or commerce for a period not exceeding 2 years, or further such period as recommended by the GST Council. This Additional Tax on supply of goods shall be assigned to the States from where such supplies originate.
•The term is proposed to be exhaustively defined as “anything other than goods”.


I have copied pasted the above from this source:
http://www.caclues.com/tax/indirect-tax ... s/Services

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby A_Gupta » 08 May 2015 16:47

http://www.firstpost.com/business/forei ... 33724.html

Overseas funds chalked up their biggest single-day sales of Indian shares and bonds in 1-1/2 years, fuelling concerns that an emerging market darling is losing its allure over growing anger over a tax on foreign investors.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Yagnasri » 08 May 2015 17:17

A_Gupta wrote:http://www.firstpost.com/business/foreign-funds-lose-their-love-for-india-over-tax-slow-reform-dump-shares-and-bonds-2233724.html

Overseas funds chalked up their biggest single-day sales of Indian shares and bonds in 1-1/2 years, fuelling concerns that an emerging market darling is losing its allure over growing anger over a tax on foreign investors.


Now anger of Investers drama by paid media workers will start.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 08 May 2015 18:03

It is leading to rupee depreciation. A stable and predictable tax regime is a necessity for growth and investments. Why does the govt suddenly discover that some people need to pay tax. It is a gift of the UPA but Modi govt is tying itself in knots over it. Jaitley has been going back and forth. He should clarify the issue.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby satya » 08 May 2015 18:10

^^^ Its Fed Granny's comments that spooked the market across the globe nothing India specific. But as usual Indian MSM chose not to mention it . Nothing to worry so far.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby nawabs » 08 May 2015 18:13

As has been mentioned before, the Gov wants to follow a solid legal process while dealing with tax claims cases

MAT row: Foreign investors to get tax treaty shield on tax demands

http://www.livemint.com/Politics/bqRziO ... chief.html

MAT row: Arun Jaitley seeks Law Commission advice on FPIs

http://www.livemint.com/Politics/pN1QFf ... =also_read


It's only those who are not protected by such treaties who are making the noise.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Prem » 09 May 2015 03:35

https://www.rbi.org.in/scripts/WSSView.aspx?Id=19809
Its up 71/2 Bucks to 352 Billion in a weak market week.
Cash Reserves have increased. Seems RBI has bought $ to weaken INR last week.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 09 May 2015 03:56

That is a pretty huge 1-week jump. Seems like RBI is deliberately keeping the Rupee weak for now.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Karthik S » 09 May 2015 05:24

Gurus, we have a trade deficit, in that case, wouldn't we be better off if Rupee strengthens so that we pay less for our imports?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby gakakkad » 09 May 2015 07:25

w.r.t MAT I ll not be surprised if some behind the scene arm twisting is going on of the non treaty countries...

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 09 May 2015 08:21

is GST not the anti thesis of the idea of devolution of power and decentralization of administration? While no one can deny the benefits of a "common" market where goods can move freely and without encumbrances. is GST the only answer to that issue? Is over centralization a good idea for India, because no matter which way we cut it, that is what this is. Thoughts?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Hari Seldon » 09 May 2015 08:32

ShauryaT wrote:is GST not the anti thesis of the idea of devolution of power and decentralization of administration? While no one can deny the benefits of a "common" market where goods can move freely and without encumbrances. is GST the only answer to that issue? Is over centralization a good idea for India, because no matter which way we cut it, that is what this is. Thoughts?


^^ Economics is a strong bond. Binds different regions of the country together in ways that are hard to break. Also allows for regions to compete on comparative advantage rather than some regions artificially trying to restrict competitiveness by misusing state power.

A country with a common market is a country with a common set of opportunities to all its constituent peoples. Previously, we only had a common currency, not a common market. We had a common constitution but not commonly applied law and principle. The Breaking India project becomes harder when people are invested in the status quo of a common currency and a common taxonomic pie. JMTPs etc only.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Hari Seldon » 09 May 2015 08:34

Karthik S wrote:Gurus, we have a trade deficit, in that case, wouldn't we be better off if Rupee strengthens so that we pay less for our imports?


When the US Fed raises rates (and its a WHEN not an IF), there'll be a giant sucking sound as dollahs rush back to US shores for "safety". I expect this t come about in the second half of this calendar year. Sri Rajan is prolly building up a sufficiently large forex mountain to forestall panic about dollah availability here.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Austin » 09 May 2015 10:07

IF the Rupee depreciates further either by plan or by chance then we could have inflation and price rise , We are already screwd up in India with high price for every thing hope they work towards lowering inflation and making the rupee stronger else we end up with Kharab din instead of Acche din

And a weaker rupee didnt help us in export last time around

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby chetak » 09 May 2015 10:54

satya wrote:^^^ Its Fed Granny's comments that spooked the market across the globe nothing India specific. But as usual Indian MSM chose not to mention it . Nothing to worry so far.


Any links, satya ji??

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_27845 » 09 May 2015 12:36

The INR has been propped up mainly by hot money inflows ( FIIs ) and lower crude oil prices. But for these 2 and some limited restrictions on gold imports, the INR would have hit 70 to the dollar.

Now that crude prices are going up and with exports remaining sluggish ( + the possibility of FED increasing interest rates ) , there is a good possibility that the INR will continue to weaken.
The only way to get a stronger rupee is through increased exports and ( reduction in imports of oil/gold/electronics )

Oil - we need to look at bio fuels like ethanol seriously.

And regarding the weaker Rupee not helping exports : the rupee is actually at a much stronger level than warranted by fundamentals.Please check the cross country exchange rates of INR vs a basket of currencies such as the EUR, JPY etc and not just against the USD.

When was the last time that India did COMPETITIVE devaluation to prop up exports ? At the very least , a truly low INR ( around 75-80 ) would deter imports of low value items from China etc and help domestic manufacture . It would also force the reduction in consumption of gasoline / diesel and maybe gold , and eventually the CAD would attain some equilibrium.


We are begging everyone to Make in India , but why would they ? The situation needs to be forced so that they have no alternative but to make in India , or forget about the market. Hopefully then some Indian company would step up to the plate and start local production.

Right now , it is so easy to import anything . Just go to any CFS / bonded warehouse in India and it will sicken you to see the level of imports . In turn , the extent of our exports seems laughable.

I have seen how difficult it is for Chinese companies and importers to import anything into China - they need to get approval before they can make a forex payment. The banks simply dont give them the FOREX required to import.

The current situation in India is simply unsustainable.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby satya » 09 May 2015 12:46

ChetakJi :http://www.reuters.com/article/2015/05/06/us-usa-fed-yellen-idUSKBN0NR1JI20150506

"I would highlight that equity market valuations at this point generally are quite high," Yellen said. "There are potential dangers there."

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 09 May 2015 19:53

Hari Seldon wrote:
ShauryaT wrote:is GST not the anti thesis of the idea of devolution of power and decentralization of administration? While no one can deny the benefits of a "common" market where goods can move freely and without encumbrances. is GST the only answer to that issue? Is over centralization a good idea for India, because no matter which way we cut it, that is what this is. Thoughts?


^^ Economics is a strong bond. Binds different regions of the country together in ways that are hard to break. Also allows for regions to compete on comparative advantage rather than some regions artificially trying to restrict competitiveness by misusing state power.

A country with a common market is a country with a common set of opportunities to all its constituent peoples. Previously, we only had a common currency, not a common market. We had a common constitution but not commonly applied law and principle. The Breaking India project becomes harder when people are invested in the status quo of a common currency and a common taxonomic pie. JMTPs etc only.
My question has to do with normative principles of tax assignment such as who should tax, where and what in multi-tier government structure. The question is about a fiscal model that we as a nation are going for. States do not have direct taxes in their control and with this they further loose their power to tax on goods and services in a "self governing" domain. The third tier which does not have any fiscal powers now and is further at the mercy of higher structures (look at the debate on the Mumbai situation).

I understand there is no ONE answer to the above questions, for most tax models are an outcome of political bargaining in a particular historical situation than the consistent application of any normative principles. However a point needs to be made that the principle governing GST is in opposition to the construct of cooperative federalism. Without the power to tax, federalism has no meaning in the modern nation-state.

Hari Seldon: I understand your answer and have a view on the same, however it would be way out of context for this thread and in the realm of an ideological, if not an outright political view of a Tax model.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Hari Seldon » 09 May 2015 20:41

^ Modi sarkar in its first few months had gone federalist and announced that henceforth the majority of tax receipts would automatically go to the states. No planning commission discretion in allocations.

So states' tax receipts are not adversely affected anyway. All taxes are applied and collected as part of one national uniform system GST.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 09 May 2015 22:24

Hari Seldon wrote:^ Modi sarkar in its first few months had gone federalist and announced that henceforth the majority of tax receipts would automatically go to the states. No planning commission discretion in allocations.

So states' tax receipts are not adversely affected anyway. All taxes are applied and collected as part of one national uniform system GST.
Hari Seldon, maybe your understanding of federalism is different from mine. A federal model as normally understood is about powers vested in its constituent units, powers shared and powers delegated to a central authority. I hope you realize that India's traditions are vested in a decentralized model and the current unitary model is a gift from the British.

From my perspective, we could have monkeys in power in Delhi but thankfully that is not the case today. A model is not subservient to the individual in power at the center and does not rest on an individual's goodwill. So, if your only point is modi this and modi that, then that is not what my posts are about, so rest easy.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 09 May 2015 22:46

Federalism enshrined in Indian constitution is adequate. States normally go about their own businesses. The two main grouses were - first - lack of fiscal power. This was due to the Nehruvian top-down socialist model based on the Soviet model. This is being slowly dismantled. The other was misuse of central powers which the Congress often used for political purposes. This has virtually stopped helped by SC judgments. Only in extreme circumstances will state govts be dismissed. Beyond this I don't think anything more is necessary unless one wants to encourage fissiparious tendencies.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 09 May 2015 22:51

Supratik wrote:Federalism enshrined in Indian constitution is adequate. States normally go about their own businesses. The two main grouses were - first - lack of fiscal power. This was due to the Nehruvian top-down socialist model based on the Soviet model. This is being slowly dismantled.
I will stick to the fiscal part of your argument. How does GST help states get more fiscal power, it is the opposite, is it not?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Supratik » 09 May 2015 22:59

Per my understanding it will create a common market and states will be adequately compensated for initial loss of revenue. It will remove impediments in cross-border trade, improving efficiency, encourage local value addition, encourage more tax compliance and add about 2% to GDP. Besides common sense suggests states are not going to like GST if it was a loosing proposition and it cannot be imposed as it requires CA.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 09 May 2015 23:06

Supratik wrote:Per my understanding it will create a common market and states will be adequately compensated for initial loss of revenue. It will remove impediments in cross-border trade, improving efficiency, encourage local value addition, encourage more tax compliance and add about 2% to GDP. Besides common sense suggests states are not going to like GST if it was a loosing proposition and it cannot be imposed as it requires CA.
The question was HOW do states get MORE fiscal powers or do you concede it does not but there are other benefits - as presented by multiple governments that convince constituent units to allow the center to "subsume" the units' power to tax on goods and services? So, do you agree this is a step that reverses decentralization?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 09 May 2015 23:38

How does GST makes the states subservient to the center ?

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 09 May 2015 23:47

Suraj wrote:How does GST makes the states subservient to the center ?
As it relates to the "ability" to tax goods and services, those powers will no longer be vested in the states, if this amendment goes through.

On Subservient: In the Indian model, the states are largely administrative units and mostly entirely subservient, through article 200, which requires central approval for ALL state laws. So, the word has to be used in context.

The Constitution (122nd Amendment) (GST) Bill, 2014

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 09 May 2015 23:54

Then what is the state GST ? All GST does is to take away the power of each state to tax interstate commerce, i.e. they cannot have a border tax. Interstate transactions go into the central GST regime. The states continue to be able to generate revenue internally through the taxation of all applicable goods and services transactions within their borders. In addition, the new Finance Commission was accepted, which means states get a far greater share of central revenues. I support federalism, but I don't accept a state's right to implement any form of border tax as a component of federalism.

Let's restrict the discussion to just the topic of GST. Article 200, 356 etc are not relevant to this thread.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_23365 » 10 May 2015 02:09

^^^^
States will loose power to tax general goods and services as per their wishes i.e the idea of GST, uniform taxes all over India for goods and services.
As per my dad ex-sales tax officer for Haryana Govt., sales taxes are not major revenue generator( needs verification could be different for different states) Major revenue generating dept is Land and Revenue dept and other is excise duty on liquor which is still with states.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 10 May 2015 02:26

Why shouldn't land and revenue be part of state GST list ? And what are the states losing here - the ability to tax some goods or services, or the ability to exclude it from taxation, or both ? Could you please explain how GST affects the Haryana state finance ministry, for example ? This isn't a challenge - I'm curious to know why land being under or outside GST (e.g. stamp duty/registration) matters. The GST bill does not state what the rate will be, nor does it state whether or not the rate will or will not be in a band.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 10 May 2015 02:50

Suraj wrote:Then what is the state GST ? All GST does is to take away the power of each state to tax interstate commerce, i.e. they cannot have a border tax. Interstate transactions go into the central GST regime. The states continue to be able to generate revenue internally through the taxation of all applicable goods and services transactions within their borders. In addition, the new Finance Commission was accepted, which means states get a far greater share of central revenues. I support federalism, but I don't accept a state's right to implement any form of border tax as a component of federalism.

Let's restrict the discussion to just the topic of GST. Article 200, 356 etc are not relevant to this thread.
The ability to "collect" and "levy" GST would be the exclusive preserve of the center under this GST amendment. Although revenue collected under GST is being split between the center and the states and the states have a "say" in rates, exemptions, distribution ratios through the GST council, it would be safe to presume that sates will loose the "right" to collect and levy or determine rates at their discretion and as the elected government of the state determines to be in their best interest. The states indeed LOOSE the right to levy tax on goods and services within their borders under the bill and that is exactly what is being "subsumed". The recommendations of the finance commission are not binding on the center and again it is at the center's discretion to change allocations as they deem fit. This question is one about powers and not about "revenue loss".

The state's have a "right" to levy a border tax today, which is the crassest and least efficient way to collect a tax is not debatable. The root causes of this mode of collection has to do with the weaknesses of many state administrations to offer effective governance and hence such brute force and inefficient methods are in vogue. In Germany, for example, the provinces have the right to collect the EU VAT with their own administration even if they do not have the right to set rates of policies of application. The other issue apart from a loss of right to levy and collect taxes on goods and services is this bill will make an already weak state administration further dependent on the center the provide such administration services. Without a doubt this smacks of centralization.

In an amendment such as this, the central question is, is power being devolved or is power being centralized?
Last edited by ShauryaT on 10 May 2015 06:59, edited 1 time in total.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 10 May 2015 03:06

Suraj wrote:Why shouldn't land and revenue be part of state GST list ? And what are the states losing here - the ability to tax some goods or services, or the ability to exclude it from taxation, or both ? Could you please explain how GST affects the Haryana state finance ministry, for example ? This isn't a challenge - I'm curious to know why land being under or outside GST (e.g. stamp duty/registration) matters. The GST bill does not state what the rate will be, nor does it state whether or not the rate will or will not be in a band.
My best guess is there is poor understanding of federal constructs and hence instead of looking at issues from the question of "rights" it is being looked at from tactical perspectives of what are the constituent sources of revenue and as far as the most lucrative sources are not being taken over by the center as of "today" the states are willing to go with the amendment. In reality, political equations will dominate this decision.

so, today land, liquor, petroleum are out of scope - However tomorrow they can be in scope and this will be decided at the GST council.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_23365 » 10 May 2015 05:31

Suraj Sir,
Land and Revenue(stamp/registration) is the major source of state revenue for Haryana. I have to check again but if I remember correctly, sales tax and excise collection was about 3000 to 4000 crores per annum for Har out of which major portion was liquor excise duty.
There are too many complicated rules and too many lists of goods and too many different rates for different products that no-one even in dept will have full knowledge or clarification. My Dad says its very good to have simplified rules as it will remove ambiguity in lots of things.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Hari Seldon » 10 May 2015 05:56

ShauryaT wrote:Hari Seldon, maybe your understanding of federalism is different from mine. A federal model as normally understood is about powers vested in its constituent units, powers shared and powers delegated to a central authority. I hope you realize that India's traditions are vested in a decentralized model and the current unitary model is a gift from the British.


My understanding is not different from yours.

What has changed in the last year is that the constituent units (states) have rights vested in them, in law, on their share of tax revenue collected --> the center can no longer influence the process of revenue shares as rights (rather than granting them as a matter of privilege or discretionary authority).

From my perspective, we could have monkeys in power in Delhi but thankfully that is not the case today. A model is not subservient to the individual in power at the center and does not rest on an individual's goodwill. So, if your only point is modi this and modi that, then that is not what my posts are about, so rest easy.


Yes, Guj state faced problems in the past when a hostile center held up payments, delayed approvals for projects and in general played havoc out of spite. NM knows this too well and has made the system "govt-neutral" and "institution-centric". If that ain't federalist progress, wonder what is.

So, chillax. Your worries about India doing a Brit era redux regarding centralization of power are overblown. Only.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby member_23365 » 10 May 2015 06:09

Apologies for earlier wrong data.
Land Revenue was major source of income during British rule. Now sales tax is major revenue source.
Google chacha gave me this link while looking for Haryana govt revenue

http://www.emrj.net/Ritu_Vikas%20&%20Naresh.pdf

Will get good idea about states revenue

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby ShauryaT » 10 May 2015 07:07

Hari Seldon wrote:What has changed in the last year is that the constituent units (states) have rights vested in them, in law, on their share of tax revenue collected --> the center can no longer influence the process of revenue shares as rights (rather than granting them as a matter of privilege or discretionary authority).
What law are you referring to that vests these rights? If you are referring to the finance commission recommendations, then that is all they are recommendations and executing upon them is at the discretion of the government of the day and not vested in law.

NM knows this too well and has made the system "govt-neutral" and "institution-centric". If that ain't federalist progress, wonder what is.
Devolution of power. I really do not want to discuss NM this or NM that. If you can refer to specific actions then I can respond. I am not sure what your are referring to as govt-neutral and institution-centric systems.

So, chillax. Your worries about India doing a Brit era redux regarding centralization of power are overblown. Only.

No, I am not worried that we are going a Brit era redux, for it is a reality since independence. My worry is, we have gone worse than the brits themselves in not being able to execute on our federal ambitions in the past 67 years. Decentralization and devolution of power is the defining issue for Indian power structures and we have so far done a piss poor job of it.
GST is NOT an example of devolution of power is the limited point.

Suraj
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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 10 May 2015 08:01

ShauryaT wrote:In an amendment such as this, the central question is, is power being devolved or is power being centralized?

That question has many parts, and unfortunately, this thread should limit itself to the question of economics. Discussions about a reversion to British era unitary rule are not on topic, unfortunately. In other words:

"Is the move to GST, and any implied loss of federalist independence on the part of states, a cause of loss of revenues ?"

Clearly, the planners have spent years trying to establish a revenue neutral GST rate, which effectively amounts to an effort to find a rate at which no state has a net loss of revenue once they move to GST. It's impossible for this exercise to be perfectly pre-estimated. We are simply too large a country, with a significant informal economy.

Two, is a single rate good enough ? Here, I think SGSTs should have a range, within with state finance ministers can raise or lower rates to suit the state economy.

Ultimately I care about results, and in this thread, specifically economic results. Federal vs unitary are just systems, NOT aspirations in themselves where seeking perfection is the point. There are economically strong large economies with either of those systems.

Currently states have the 'right' to impose a border tax. Is the system efficient ? By and large, no. They use the taxation of a popular social ill, e.g. alcohol or tobacco, to sustain a sizeable part of revenue. Again, is that noteworthy ? No.

GST doesn't seek perfection. It's an effort to harmonize a disjointed economic system. Does it impose new tradeoffs ? Sure. But it's a decision arising out long-winded effort to fix an existing economic distortion. It's by no means an effort to tinker with perfection, or even a greater degree of perfection. What exists now is quite inefficient and distortionary.

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Re: Indian Economy - News & Discussion Oct 12 2013

Postby Suraj » 10 May 2015 08:02

atamjeetsingh wrote:Suraj Sir,
Land and Revenue(stamp/registration) is the major source of state revenue for Haryana. I have to check again but if I remember correctly, sales tax and excise collection was about 3000 to 4000 crores per annum for Har out of which major portion was liquor excise duty.
There are too many complicated rules and too many lists of goods and too many different rates for different products that no-one even in dept will have full knowledge or clarification. My Dad says its very good to have simplified rules as it will remove ambiguity in lots of things.

Yes, it's not my dispute that land revenue is a major source of revenue to HR. My question is, why would land revenue being within the ambit of SGST be a problem to HR ? Either way they get to tax it since it is within their own state.


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