New Delhi, January 4, 2017
Stands by decision to advance Budget date
While some states have complained of declining tax revenues due to demonetisation, the Centre is hopeful of exceeding Budget Estimates for both direct and indirect tax collections in the current financial year. The Centre also stood by the decision to advance the Budget date to February one as it is a constitutional necessity, despite objections raised by the opposition.
"We will end this year with higher revenues for both direct and indirect taxes compared to budget estimates," said finance minister Arun Jaitley after the GST Council meeting and pre-budget consultation with states finance ministers.
State finance ministers raised concerns over declining revenues and sought relaxation in the fiscal responsibility and budget management (FRBM) limit, besides seeking Centre's support to revive labour intensive industries.
To a query, Jaitley said the RBI will remove restrictions on cash withdrawals after assessing market situation. He ruled out interfering with the conditions barring anyone other than NRIs and Indians returning from abroad from depositing the junked notes in select central bank branches.
"RBI will decide by assessing market situation. Many a time, actions are taken in phases, so relaxations are also done in phases," he said when asked by when restrictions on cash withdrawals are expected to be removed.
The union government's indirect tax collections, which include Central Excise, service tax and customs, was up by 26.2% in the April-November period at Rs 5.52 lakh crore as against the full year's target of 10.8%.
Excise duty collections rose 43.5 per cent in the first eight months (April-November) of 2016-17 to Rs 2.43 lakh crore against Budget Estimates of 12.15 per cent rise in 2016-17 over that in the previous financial year, service tax collections made the government kitty richer by 25.7 per cent against at Rs 1.60 lakh crore during the first eight months of the current financial year against ten per cent projected in BE.
These rose by just 5.6 per cent at Rs 1.48 lakh crore in the first eight months of the current financial year. BE had projected these tax collections to grow 9.78 per cent in FY'17.
Till December 19,, the net increase in direct taxes has been 13.6 percent after factoring in the refunds, already higher than the budget target of 12.5%.
The growth in corporate tax collections stood at 8.75 per cent till December 19 against BE growth of 9.04 per cent for the entire current financial year. The personal income tax yielded 23.89% more money to the exchequer till December 19 against BE of 18.09 per cent.
So, basically corporate tax collections and customs duty receipts are lagging behind BE.
Most states pressed for relaxation in the FRBM limits. Jharkhand sought relaxation by 1 percentage point. Andhra Pradesh also sought an increase in the FRBM limit to 4% from 3% currently.
Andhra Pradesh finance minister Yanamala Ramakrishnudu urged for making an exception in case of his state by relaxing the norms laid out in the Fiscal Reforms and Budget Management (FRBM) Act and approve fiscal deficit to state GDP ratio to four per cent from 3 per cent.
Delhi finance minister Manish Sisodia pointed out that the revenues declined by 24% in December in the capital city.
Haryana on the other hand said that the tax revenues remained steady. "Our tax revenue growth has remained the same as last year, rather better. There has been no visible adverse impact of demonetization," said Captain Abhimanyu, finance minister of Haryana.
To a query that the opposition is demanding postponing of the Budget due to state elections, Jaitley said,"They say that popularity of demonetisation is very low, why are they worried about the Budget then."
He said the reason behind advancing the budget date is that actual expenditure must start from April.
To a query that the Budget for 2012-13 was postponed due to state elections, he said," This is not a tradition every time. Immediately before the lok sabha elections, interim budget is presented. This has not been discontinued so far. This is constitutional necessity."
The Election Commission is examining the representation of various political parties for not allowing the presentation of the Union Budget during the poll process of five states and will take a call on it soon.
Chief Election Commissioner Nasim Zaidi said various political parties have represented to the Election Commission regarding the issue of presentation of Union Budget which is likely to be presented on February 1 by the central government as it falls during the election campaign to five states.
"The Commission has received one representation sent by some political parties. This representation is with regards to presentation of the budget. The Commission is examining this representation and in due course of time will take a call on this," he told reporters when asked about the issue.
The Congress, Left, Samajwadi Party and some others, have written to the EC questioning the Budget date. Congress spokesperson Ajoy Kumar said the Centre presents a vote-on-account and presents a full-fledged budget later.
Communist Party of India (Marxist) chief Sitaram Yechury said an 'early budget' was a bad idea considering that it would only take into account the actual Gross Domestic Product (GDP) data of the first two quarters (only till September 2016).
"This is bound to present a misleading picture of India's GDP growth rate which is bound to be revised heavily later on," he said. This, Yechury said, will not only hurt the credibility of the government, and India, but also make people suffering hardships to lose faith in such numbers that "appear hyped and evidently rosier than the truth."
An early budget will not cover the expected downward slide in economic indicators because of Narendra Modi government's note ban decision. Yechury pointed out that the Economic Survey will now cover only half the financial year 2016-17, while the full year will be covered by the mid-year review in July, well after the budget. He said such a budget making exercise, with partial data, is bound to lead to "looking for trouble, finding it everywhere, diagnostic it incorrectly and applying the wrong remedies."
A BJP leader said the Budget exercise should not be linked to the poll cycle, as the budget is for the entire country. He said Budget was a constitutional exercise and does not fall in the purview of the Election Commission's 'model code of conduct'.
Tamil Nadu seeks revival of Nokia plant
Tamil Nadu on Friday sought Centre's support for revival of Nokia Corp's plant in Chennai during the pre- Budget consultations with finance minister Arun Jaitley.
"We believe, in Make in India, they need to adopt this and support this transition," Tamil Nadu Education Minister K. Pandia Rajan said after the meeting.
Foxconn is learnt to be in talks with Nokia to revive the Plant and has sought waiver of tax liabilities and resolution of legal issues concerning the plant before finalising the deal. "In order for the Nokia-Foxconn deal to go through, the Central government
needs to unfreeze the assets. Central government has a key role to perform in this (Foxconn acquisition of Nokia's Chennai plant)," Pandia said.
[The Business Standard]