✌✌✌✌ THE HINDU ✌✌✌✌
✌✌ A goods and services tangle ✌✌
Soon after the seventh meeting of the Goods and Services Tax Council last week, Finance Minister Arun Jaitley said only one difficult issue remains pending to enable the implementation of the new indirect tax regime. The Centre is determined to introduce the GST from April 1, 2017, and given the time constraints posed by that deadline, Mr. Jaitley expressed hope that States would rise to the occasion and help resolve the issue. It can be safely assumed he was referring to the turf battle between the Centre and States on sharing administrative powers over taxpayers in the new system, even if this is not the only hurdle left to cross. This was the first time the Council met after the washed-out winter session of Parliament, with no movement on four enabling GST legislations. Over two days last week, the Council managed to clear the current drafts of the Centre and State GST Bills and agreed on a two-monthly compensation payout to States, instead of a quarterly one, for revenue losses they might incur after the switch. The trickiest tangle of cross empowerment or dual administrative control will now be taken up in the first week of 2017, along with the model integrated GST Bill and the legalese around compensation payments to States.
Even though an April 1 roll-out now looks increasingly unlikely, the Council’s next meeting is critical to enable the GST laws to make it to the Budget session of Parliament. States have mooted a July 1 start for the GST regime, and that date could be pushed as far as September 16, 2017, following which all existing indirect taxes will lapse. Since it is a transaction tax, the GST can technically be started any time of the year. Although that would be an accounting headache for firms, industry may be better off with the extra time to prepare for the new order. Between now and then, the Centre’s self-imposed 50-day deadline for reducing the pain caused by the demonetisation of high-value currency notes would have passed too. States may harden their stance on GST negotiations if the remonetisation process hasn’t picked up by December 30. The Centre has so far brushed aside demands from Tamil Nadu and West Bengal for additional compensation to make good the revenue losses triggered by the slump in demand in the ongoing currency crisis. But even BJP allies have begun to raise concerns. It is unlikely to be a coincidence that soon after the Andhra Pradesh Chief Minister spoke out about the implementation of the demonetisation exercise, his representative in the GST Council said the State would not accept the levy of a cess by the Centre in order to reimburse States. The Centre may need to rise to the occasion as much as States do to steer the GST regime forward.
✌✌ Indictment by abstention ✌✌
In what is yet another diplomatic blow for the two-state principle, the UN Security Council, on Friday, passed a resolution with a 14-0 majority urging Israel to halt its illegal settlements programme in the occupied Palestinian territories. The vote is notable as Israel’s pre-eminent backer, the United States, chose to abstain. By doing so, the Barack Obama administration bucked its earlier record of vetoing a similar resolution in 2011. U.S. President-elect Donald Trump was prompt in promising a different response once his tenure commences on January 20. He had sought to work behind the back of Mr. Obama in trying to scuttle this resolution by reaching out to Egypt, which originally drafted it but backed down from its nomination due to “intense pressure”. But it will be difficult for the Trump administration to have this resolution overturned, passed as it was without a veto. That said, the resolution, by way of its adoption under Chapter 6 of the UN Charter, is not binding and comes only with recommendations. It therefore does not affect the status quo in the occupied territories. Even so, its unambiguous language stating that the settlements constitute a violation of international law offers hope for the Palestinians who have filed a suit (that includes the construction of settlements) against Israel in the International Criminal Court.
Israel’s reaction has been predictable. It has refused to comply with the terms of the resolution. It has repeatedly sought to create “new facts on the ground” by continuing to build settlements, imposing a blockade on Gaza, forcing international censure to only keep apace with its latest violations. This outrageous behaviour has been made possible by the unrelenting support provided by the U.S. in the past. While Mr. Obama has had a testy relationship with Israeli Prime Minister Benjamin Netanyahu, his administration continued to fund and arm Israel despite, for example, the atrocities in Gaza. The U.S. had also recently worked out a deal that provides $38 billion in military aid over 10 years to Israel, cementing long-established strategic ties. Seen in this light, the administration’s decision to abstain in the most substantive resolution on Israeli settlements since 1980 is even more remarkable. It is also a possible parting shot by the outgoing administration before the unambiguously partisan Trump team takes charge. Either way, it is up to the international community to take the cue and find ways to check and censure Israel’s brazen rule-breaking, and forge a fair solution for the Palestinians.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Government must accelerate the remonetisation pace ✌✌
The pace at which new notes are being introduced is too slow. The government has to accelerate the pace, to avoid major harm. At midnight, November 8, around 2,300 crore high-value currency notes, amounting to 86.5 per cent of India’s cash in circulation, were rendered worthless.
A month and a half later, the government’s attempts to replace extant high-value notes with new paper with face values of Rs 500 and Rs 2,000 rapidly, are flailing. With less than a week to go before the 30 December deadline for swapping old notes for new, there are long queues in front of bank branches and automated teller machines (ATMs) are starved for cash, despite cash withdrawals per day or week being capped by fiat.
Demonetisation has already dented agriculture and construction — the two largest employers in India.
The finance ministry and the Reserve Bank of India (RBI) together run four presses — located at Nashik, Dewas, Salboni and Mysuru — that print all legal tender in the country.
Data released by the RBI on December 21 show that in the 41 days between November 10 and December 21, 220 crore ‘high denomination’ notes were distributed, an average of less than 161crore new notes of Rs 500 and Rs 2,000 per month. At this rate, to replace the 2,300 crore notes with face value of Rs 500 and Rs 1,000, it will take the government-RBI team 14 months.
That is late January 2018. Can India afford to wait that long to get fully monetised, with banks and ATMs flush with new tender and the economy back on track? Only 53 per cent of Indians have a bank account; more than 90 per cent of its workforce is designated as ‘unorganised’.
They work for cash. Demonetisation has already dented agriculture and construction — the two largest employers in India.
A failure to distribute new notes faster could have dire consequences for employment, growth and social stability. If this calls for printing money abroad, that must be done.
✌✌ A goods and services tangle ✌✌
Soon after the seventh meeting of the Goods and Services Tax Council last week, Finance Minister Arun Jaitley said only one difficult issue remains pending to enable the implementation of the new indirect tax regime. The Centre is determined to introduce the GST from April 1, 2017, and given the time constraints posed by that deadline, Mr. Jaitley expressed hope that States would rise to the occasion and help resolve the issue. It can be safely assumed he was referring to the turf battle between the Centre and States on sharing administrative powers over taxpayers in the new system, even if this is not the only hurdle left to cross. This was the first time the Council met after the washed-out winter session of Parliament, with no movement on four enabling GST legislations. Over two days last week, the Council managed to clear the current drafts of the Centre and State GST Bills and agreed on a two-monthly compensation payout to States, instead of a quarterly one, for revenue losses they might incur after the switch. The trickiest tangle of cross empowerment or dual administrative control will now be taken up in the first week of 2017, along with the model integrated GST Bill and the legalese around compensation payments to States.
Even though an April 1 roll-out now looks increasingly unlikely, the Council’s next meeting is critical to enable the GST laws to make it to the Budget session of Parliament. States have mooted a July 1 start for the GST regime, and that date could be pushed as far as September 16, 2017, following which all existing indirect taxes will lapse. Since it is a transaction tax, the GST can technically be started any time of the year. Although that would be an accounting headache for firms, industry may be better off with the extra time to prepare for the new order. Between now and then, the Centre’s self-imposed 50-day deadline for reducing the pain caused by the demonetisation of high-value currency notes would have passed too. States may harden their stance on GST negotiations if the remonetisation process hasn’t picked up by December 30. The Centre has so far brushed aside demands from Tamil Nadu and West Bengal for additional compensation to make good the revenue losses triggered by the slump in demand in the ongoing currency crisis. But even BJP allies have begun to raise concerns. It is unlikely to be a coincidence that soon after the Andhra Pradesh Chief Minister spoke out about the implementation of the demonetisation exercise, his representative in the GST Council said the State would not accept the levy of a cess by the Centre in order to reimburse States. The Centre may need to rise to the occasion as much as States do to steer the GST regime forward.
✌✌ Indictment by abstention ✌✌
In what is yet another diplomatic blow for the two-state principle, the UN Security Council, on Friday, passed a resolution with a 14-0 majority urging Israel to halt its illegal settlements programme in the occupied Palestinian territories. The vote is notable as Israel’s pre-eminent backer, the United States, chose to abstain. By doing so, the Barack Obama administration bucked its earlier record of vetoing a similar resolution in 2011. U.S. President-elect Donald Trump was prompt in promising a different response once his tenure commences on January 20. He had sought to work behind the back of Mr. Obama in trying to scuttle this resolution by reaching out to Egypt, which originally drafted it but backed down from its nomination due to “intense pressure”. But it will be difficult for the Trump administration to have this resolution overturned, passed as it was without a veto. That said, the resolution, by way of its adoption under Chapter 6 of the UN Charter, is not binding and comes only with recommendations. It therefore does not affect the status quo in the occupied territories. Even so, its unambiguous language stating that the settlements constitute a violation of international law offers hope for the Palestinians who have filed a suit (that includes the construction of settlements) against Israel in the International Criminal Court.
Israel’s reaction has been predictable. It has refused to comply with the terms of the resolution. It has repeatedly sought to create “new facts on the ground” by continuing to build settlements, imposing a blockade on Gaza, forcing international censure to only keep apace with its latest violations. This outrageous behaviour has been made possible by the unrelenting support provided by the U.S. in the past. While Mr. Obama has had a testy relationship with Israeli Prime Minister Benjamin Netanyahu, his administration continued to fund and arm Israel despite, for example, the atrocities in Gaza. The U.S. had also recently worked out a deal that provides $38 billion in military aid over 10 years to Israel, cementing long-established strategic ties. Seen in this light, the administration’s decision to abstain in the most substantive resolution on Israeli settlements since 1980 is even more remarkable. It is also a possible parting shot by the outgoing administration before the unambiguously partisan Trump team takes charge. Either way, it is up to the international community to take the cue and find ways to check and censure Israel’s brazen rule-breaking, and forge a fair solution for the Palestinians.
✌✌✌✌ THE ECONOMIC TIMES ✌✌✌✌
✌✌ Government must accelerate the remonetisation pace ✌✌
The pace at which new notes are being introduced is too slow. The government has to accelerate the pace, to avoid major harm. At midnight, November 8, around 2,300 crore high-value currency notes, amounting to 86.5 per cent of India’s cash in circulation, were rendered worthless.
A month and a half later, the government’s attempts to replace extant high-value notes with new paper with face values of Rs 500 and Rs 2,000 rapidly, are flailing. With less than a week to go before the 30 December deadline for swapping old notes for new, there are long queues in front of bank branches and automated teller machines (ATMs) are starved for cash, despite cash withdrawals per day or week being capped by fiat.
Demonetisation has already dented agriculture and construction — the two largest employers in India.
The finance ministry and the Reserve Bank of India (RBI) together run four presses — located at Nashik, Dewas, Salboni and Mysuru — that print all legal tender in the country.
Data released by the RBI on December 21 show that in the 41 days between November 10 and December 21, 220 crore ‘high denomination’ notes were distributed, an average of less than 161crore new notes of Rs 500 and Rs 2,000 per month. At this rate, to replace the 2,300 crore notes with face value of Rs 500 and Rs 1,000, it will take the government-RBI team 14 months.
That is late January 2018. Can India afford to wait that long to get fully monetised, with banks and ATMs flush with new tender and the economy back on track? Only 53 per cent of Indians have a bank account; more than 90 per cent of its workforce is designated as ‘unorganised’.
They work for cash. Demonetisation has already dented agriculture and construction — the two largest employers in India.
A failure to distribute new notes faster could have dire consequences for employment, growth and social stability. If this calls for printing money abroad, that must be done.
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