The Economic Survey was presented in Parliament which draws a blue print of Indian economy. It advocates at fiscal expansion and suggests of a calibrated fiscal policy (India’s fiscal stimulus as a percentage of GDP in Covid times). Economic survey highlights expansion in Government spending and borrowing. It defends farm laws and even comments positively on India’s handling the Covid pandemic.
The Union Budget for financial year 2021-22 has been laid in Parliament today by the Finance Minister. This is the first budget of the new decade and the first amid Covid pandemic with focus on unconventional areas.
The Budget revolves around three themes i.e., inspirational India, economic development and caring society. FM further asserted that India is now the fifth largest economy of the world. India’s foreign direct investment got elevated to the level of US$ 284 billion during 2014- 19 from US$ 190 billion in that came in during the years 2009-14. The Central Government debt that has been the bane of our economy got reduced, in March 2019, to 48.7% of GDP from a level of 52.2%in March 2014.
The Budget made a statement that fundamentals of the economy are strong and that has ensured macroeconomic stability. Inflation has been well contained. Banks saw a thorough cleaning up of accumulated loans of the past decade and then they were recapitalized. Of the structural reforms, the Goods and Services Tax (GST) has been the most historic in our country.
The Goods and Services Tax has been gradually maturing into a tax that has integrated the country economically. It has consolidated numerous taxes and cesses to one tax and facilitated formalization of economy. It has resulted in the efficiency gains in logistic and transport sectors. The turnaround time for trucks has witnessed a substantial reduction to the tune of 20% due to abolition of check posts in GST. The dreaded Inspector-Raj has also vanished.
It further states that an average household now saves about 4% on its monthly spends on account of reduced GST rates. During the phase of maturing, GST did face certain challenges. This was natural as transition was daunting. GST Council has been proactive in resolving issues during transition. In the last two years India had added more than 60 lakh new taxpayers, a total of about 40 crore returns were filed, 800 crore invoices were uploaded, and 105 crore e-way bills were generated. There has been extensive engagement with stakeholders. A simplified new return system is being introduced.
On GST, the budget states that simplification is ongoing. A simplified return shall be implemented which is under pilot run. It will make return filing simple with features like SMS based filing for nil return, return pre-filling, improved input tax credit flow and overall simplification. Refund process has been simplified and has been made fully automated with no human interface.
Deep data analytics and AI tools are being used for crackdown on GST input tax credit, refund, and other frauds and to identify all those who are trying to game the system. Invoice and input tax credit matching is being done wherein returns having mismatch more than 10 percent or above a threshold are identified and pursued. Significant policy level changes have also been made. GST rate structure is also being deliberated so as to address issues like inverted duty structure.
A new cess called Agriculture cess shall be levied w.e.f. 2nd February, 2021 on diesel @ Rs. 4 per liter and petrol @ Rs. 2.50 per liter.
GST Collection in January, 2021 have been buoyant and reported to be Rs. 1.19 lakh crore, highest ever since inception. It crossed Rs. 1 trillion for 4th month in succession. It grew by 8% as compared to Rs. 1.15 trillion on YoY basis. The GSTR-3B returns also rose to 9 million as against 8.7 million in December, 2020.
The GST revenues during January, 2021 are the highest since introduction of GST and has almost touched the Rs. 1.2 lakh crore mark, exceeding the last month’s record collection of Rs.1.15 lakh crore. GST revenues above Rs. 1 lakh crore for a stretch of last four months and a steep increasing trend over this period are clear indicators of rapid economic recovery post pandemic. Closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, Income-tax and Customs IT systems and effective tax administration have also contributed to the steady increase in tax revenue over last few months.