- The Centre is said to have told a parliamentary panel it may not be able to pay goods and services tax (GST) compensation due to states in the near future as tax collections have fallen due to the economic slump on account of the Covid-19 pandemic and the subsequent lockdown.
- The issue of GST compensation was raised by Opposition members.
- Finance secretary Ajay Bhushan Pandey and Department for Promotion of Industry and Internal Trade (DPIIT) secretary Guruprasad Mohapatra were among officials who appeared before the committee.
- They said the government is not in a position to clear all GST compensation dues in the near future as the economy is not robust enough to bear the cost, said people with knowledge of the matter.
- GST collections are likely to fall significantly as consumption has slumped due to the pandemic, the officials were cited as having said.
- In the first three months of the current financial year, the government collected ₹85 lakh crore as GST, down from ₹3.14 lakh crore in the year-earlier period.
- The compensation amount is supposed to be paid to states in bimonthly instalments.
- Official: there are provisions in the legislation that allow the Centre to defer compensation payments to states when GST collections fall short.
PM Modi to meet PSB heads
- Prime Minister Narendra Modi will meet with heads of public sector banks (PSBs) and is likely to assess progress on credit guarantee scheme for the MSMEs.
- Bankers are likely to make presentations before the PM on various aspects including credit flows and issues faced by the sector.
- Big-bang privatization
- To push electronics’ manufacturing as it eyes reducing its import dependence on China.
- The commission will work towards removing roadblocks in manufacturing of electronics and hand holding the companies to steer growth of the sector.
- Electronics import is 32% of India’s total imports from China which stood at $65.26 billion in 2019-20.
- It is estimated that the domestic electronics hardware manufacturing sector lacks a level playing field vis-à-vis competing nations and suffers a disability of around 8.5% to 11% in pricing because of multiple issues.
- Commission will act as a one-stop shop
- Electronic design and manufacturing
- Lack of adequate infrastructure
- High cost of finance
- Inadequate availability of quality power
- Limited design capabilities
- Inadequate skill sets
- India’s exports in July have recovered to 5% of that for the same period last year, data available till July 26 showed.
- Railway freight loading as on July 27 has exceeded that for the corresponding period of last year.
- India exported $26.33 billion worth of goods in July 2019.
- Imports are 72% of the corresponding period of July 2019.
- If India’s foreign trade in goods and services have in recent quarters been a continuous drag on the gross domestic product (GDP), the pull-down effect could be far stronger in the current fiscal.
- By capping the outlay for the Merchandise Exports from India Scheme (MEIS) at Rs 9,000 crore for the April-December period, the revenue department has deprived exporters of over two-thirds of the duty remission benefits they are entitled to.
- The move could also have wider implications for exporters of assorted goods as the denial of the benefit will suffice to blunt the already-narrow edge they enjoy in key markets over competitors, trade source say.
- Fearing a shortage of funds following the revenue department’s decision, the commerce ministry has, for the time being, blocked the online module for claiming MEIS benefits since July 23.
- Federation of Indian Export Organisations (FIEO) president Sharad Kumar Saraf cautioned that many liquidity-starved exporters, especially MSMEs, could go out of business.
- Merchandise exports have been contracting since March.
- The MEIS would remain valid until December this year and is to be replaced with a more WTO-compatible scheme, RoDTEP, which reimburses all levies (that are not subsumed by GST) paid on inputs consumed in exports.