Kashmiriyat, GST And Indian Economic History

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Updated: Thu, 18 May 2017 21:54:35 IST Updated: Thu, 18 May 2017

Few could have imagined that Srinagar would be the host city for the crucial meeting of the GST Council. And even fewer realise the significance of the moment: It is creating unprecedented history.

As a venue, given the state of near conflict the city finds itself in thanks to sponsored cross-border terrorism from Pakistan, Srinagar is an unlikely choice. Consequently, it has provided all stakeholders, who believe in a different future for Kashmir, to rewrite the negative narrative of the state.

Finance Minister of Jammu and Kashmir Haseeb Drabu thinks so, though he sees the impulses working out differently.

“I don’t think this will change the narrative. But what it does (is), it also brings a different perspective to the city and state. There is obviously a huge amount of conflict here, there is no denying that. But there are other things as well. It is a much more layered reality; a much more complex reality. I would call it the Rashmonian reality of Kashmir—there are lots of layers to it, lots of angles to it. And somehow the media only focuses on one aspect,” he said in an interview to a business daily. 

Drabu is right. Day in and day out all we get to see on Kashmir are stone pelters or encounters with terrorists exported from Pakistan.

The media forgets that yes while there is conflict, the state does have a life. And now Kashmir is at the centre of one of the most high-profile reform efforts: GST.

The moment also captures the significance of the new federal polity promoted by the BJP-led NDA. “I personally feel that we are in transition from a coercive federalism to a cooperative federalism en route to competitive federalism. That is where ultimately a lot of political issues will get resolved,” said Drabu.

At the meeting, Mamata Banerjee’s West Bengal was isolated -- in the face of an otherwise universal support to the country’s most radical tax reform so far -- on the question of an elastic deadline for rolling out GST.

The two-day meet has been convened to work out product-specific rates while deciding on slabs for service tax. Most issues, in view of the overwhelming support from most states, are expected to be ironed out at this meeting of the GST Council, which is the highest decision-making body for the implementation of the new tax.

On day one of the meeting, West Bengal Finance Minister Amit Mitra stood out like a sore thumb in the meet, where most states -- cutting across party lines -- assured Finance Minister Arun Jaitley that they were working on rolling out the GST from July. Mitra, however, told the gathering that businesses in his state were not ready for a transition and that pushing it through at this juncture could adversely impact the economy and state finances.

While the Centre is determined to work towards the July 1 deadline, Mitra himself refused to recommend a date by which West Bengal would be comfortable rolling out the GST. The outer limit for the rollout of the country’s biggest tax reform is mid-September, going by the one year window provided by the relevant Constitutional amendment.  

Given that, there were some suggestions that perhaps it would be a better idea to implement the GST from September instead of July 1. None, though, were in sync with Mitra’s own open ended suggestion to delay the rollout of the GST until such time as businesses in his state found themselves “ready” for the landmark move.

Interestingly, for all the bitter relations between the AAP and the ruling BJP back in the nation's Capital, even Delhi deputy Chief Minister Manish Sisodia showed willingness to launch the GST by July 1, as desired by the Centre. However, he urged the Centre to come up with a clearer definition of service where it is delivered. The current definition, it was felt, was “vague.”

Kerala Finance Minister Thomas Isaac said most issues had by and large been ironed out. “It’s only a question of details, now and it is almost decided that we will work towards the July 1 GST rollout deadline. However, we need to ensure that the exercise is revenue-neutral and not impact customers,” he said.

Among the key issues that were being battled out among states on day one of the meet was the minimum levy that had to be imposed on gold. Kerala has demanded a minimum levy of 5 pc on gold. “Gold is luxury, not a necessity. In the last one decade, price has quadrupled and nobody had any problem. So, what is the big trouble with a 5% tax,” Isaac said, justifying his position.

States including Tamil Nadu and Maharashtra, however, do not see eye to eye with Kerala and are keen on a one per cent tax on the precious metal that many across the country still buy, not just as a luxury item, but as a crucial investment instrument.

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Modi Govt Approves Scrapping Of 25 Year Old FIPB

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Updated: Wed, 24 May 2017 20:39:44 IST Updated: Wed, 24 May 2017

The Union Cabinet on Wednesday approved the winding up of the 25-year-old Foreign Investment Promotion Board (FIPB) that looked into FDI proposals requiring government approval. Finance Minister Arun Jaitley had in his Budget speech on February 1 announced scrapping of the inter-ministerial body, which comes under the finance ministry’s Department of Economic Affairs.

The FIPB was initially constituted under the Prime Minister’s Office in the wake of economic liberalisation in the early 1990s. Currently, FDI in 11 sectors including defence and retail trading requires government approval. As per the proposed mechanism, respective ministries would take care of the FDI proposals going forward.

Last month Jaitley had said, “With the government easing the process of doing business by eliminating discretion and adopting market mechanism for allocation of resources, the industry does not have to visit corridors of power anymore. And in that series of reforms, efforts are being made to simplify direct and indirect tax structure.” Its winding up is expected to ease of doing business.

Further liberalization of the FDI policy is expected to be spelt out in the annual consolidated FDI policy circular of the Department of Industrial Policy and Promotion (DIPP), expected soon. The DIPP will act as the nodal body for all foreign investment proposals from now on. The decision of the Union Cabinet is expected to give a sizeable boost to job creation with the easier entry of foreign investment in different sectors.

FDI inflows touched a high of USD 60.1billion in 2016-17. In the last three years of its term, the Narendra Modi government has relaxed 87 FDI rules in 21 sectors to give a boost to jobs and to economic growth.

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IT Dept Summons Lalu’s Daughter Misa And Hubby To Explain Get-Rich-Quick Schemes

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Updated: Wed, 24 May 2017 20:03:22 IST Updated: Wed, 24 May 2017

The Income Tax department on Wednesday summoned RJD chief Lalu Prasad Yadav’s daughter Misa Bharti and her husband Susheel Kumar in a benami assets probe and tax evasion case.

The development follows the Enforcement Directorate’s (ED) arrest of Rajesh Kumar Agarwal, a chartered accountant, associated with a company linked to Bharti in connection with a money laundering racket worth Rs 8,000 crore run by Virender and Surender Jain. The ED in a statement said Agarwal was “also associated with some transactions involving M/S Mishail Packers and Printers Pvt Ltd” – a company controlled by Misa and her husband.

ED officials had on Tuesday said Agarwal has been helping those with black money to legitimise their cash through shell companies. The documents in ED’s possession show that Agarwal handed Rs 1.2 crore in cash to the Jain brothers. The money eventually reached Misa's company through a web of transactions in which her company's shares were acquired by the Jains at exorbitant prices.

The chartered accountant’s arrest could lead to a formal probe against others involved in the money laundering scandal under the PMLA- a stringent law which provides for confiscation of properties allegedly acquired through the proceeds of crime. The law also allows for prosecution of the beneficiary owner, the benamidar, the abettor and the inducer to benami transactions, which could result in rigorous imprisonment up to seven years and fine up to 25 per cent of fair market value of the property.

The shell companies of the Jain brothers paid Rs 100 for one share in Misa’s company worth Rs 10. Within a year, the company allegedly bought back the shares at Rs 10 per each through accommodation entries provided by Agarwal and Jain brothers. Misa has not declared her status as a director of Mishail while disclosing her assets for Rajya Sabha polls.

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Nepal PM Resigns as Per Pact Made in August 2016

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Updated: Wed, 24 May 2017 19:54:49 IST Updated: Wed, 24 May 2017

Nepal Prime Minister Pushpa Kamal Dahal ‘Prachanda’ resigned on Wednesday as per a power-sharing pact between his party and the ruling partner Nepali Congress last August. Prachanda had been in office just nine months and according to the understanding, the government is to be run on a rotational basis until elections to Parliament are held in February 2018.

Dahal, 62, announced his resignation while addressing the nation in a live telecast. It was his second stint as the Prime Minister. Dahal, who is the Chairman of CPN (Maoist Centre), was elected the 39th Prime Minister after reaching an understanding with Nepali Congress President Sher Bahadur Deuba.

The parliamentary vote for Prachanda's successor Deuba's appointment will be confirmed in the next 10 days. The Nepali Congress party along with the other parties had helped Prachanda in winning 363 out of 595 votes in the House to form a government. When the government was being formed, Prachanda reached an understanding with Deuba that he would step down as PM after nine months.

Nepal on May 14 voted in the first local polls in two decades as it took a critical step towards cementing democracy amid political turmoil. Local elections couldn't be held after 1997 largely due to the decade-long Maoist insurgency that claimed more than 16,000 lives. The elections were supposed to be held every five years but were stopped in May 1997. Prachanda, who led the Maoists during the armed struggle from 1996 to 2006, is credited with transforming the rebel movement into a political party after a 2006 peace deal. 

He was to hold office till local polls are held and remaining two elections — provincial and central — are to be conducted under Deuba. Millions of Nepalese, on May 14, voted in the country’s first local level polls in two decades as the Himalayan nation took a crucial step towards cementing democracy amid political turmoil. Local level elections could not be held after 1997, largely as a result of the decade-long Maoist insurgency that claimed more than 16,000 lives in Nepal. Elections should be held in every five years but due to political instability, they were halted since May 1997. 

(With inputs from PTI)

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Political, Corporate and Bureaucratic Big Fish to Lose Big Time as Assault on Benami Property Intensifies

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Updated: Wed, 24 May 2017 19:51:28 IST Updated: Wed, 24 May 2017

The assault on black money has got underway with the government today confirming the attachment of 400 benami properties worth Rs 600 crore.

“These include deposits in bank accounts, plots of land, flats and jewellery. Provisional attachment of properties under the Benami Act has been done in more than 240 cases. The market value of the properties under the Act is more than Rs 600 crore. Immovable properties have been attached in 40 cases with total value of more than Rs 530 crore in Kolkata, Mumbai, Delhi, Gujarat, Rajasthan and Madhya Pradesh.

Although a press release issued by the finance ministry restricted itself to the value of benami properties detected by the authorities, sources confirmed that few big fishes in politics, bureaucracy and corporates would lose their ill-gotten wealth. “This is just the beginning,” the official said.

The action comes in the midst of a crackdown on political bigwigs that include former Finance Minister P Chidambaram’s son Karti Chidambaram, family members of RJD supremo Lalu Yadav, Himachal Pradesh Chief Minister VB Singh and former Karnataka Chief Minister HD Kumaraswamy.

The press release issued by the government detailed the ways employed by influential people to acquire wealth. “In one case in Jabalpur, the benamidar, a driver, was found to be the owner of a land worth Rs 7.7 crore. The beneficial owner is a Madhya Pradesh-based listed company, his employer. In Mumbai, a professional was found to be holding several immovable properties in the name of shell companies which exist only on paper. In another case in Sanganer, Rajasthan, a jeweller was found to be beneficial owner of nine immovable properties in the name of his former employee, a man of no means. Certain properties purchased through shell companies have also been attached by the department in Kolkata,” the release said.

The government also informed that searches have been undertaken on 10 senior officials during the past one month. “Every economic misdeed will be identified and punished,” said the release.

That the government was determined to go after fraud transactions was evident when the ministry said it has already constituted 24 dedicated Benami Prohibition Units across the country to “enable swift action and follow up, especially in cases where criminality has been detected.”

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