The HINDU Notes – 12th February 2020 - VISION

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Wednesday, February 12, 2020

The HINDU Notes – 12th February 2020

πŸ“° States given Rs. 81,043 cr. as GST compensation for April-Sept.: Thakur

Cess collection up since October

•The Centre has released Rs. 81,043 crore as GST compensation to States for April-September 2019, Minister of State for Finance Anurag Singh Thakur said on Tuesday.

•In a written reply to a question in the Rajya Sabha, he said GST compensation cess collection had shown an upward trend since October 2019.

•GST compensation cess of Rs. 7,607 crore was collected in October, Rs. 7,727 crore in November, Rs. 8,331 crore in December and Rs. 8,637 crore in January.

•For 2019-20, the amount targeted to be collected from cess in GST was Rs. 1.09 lakh crore. Of this, Rs. 70,534 crore has been collected between April-December 2019.

•The amount of GST compensation released to States for April-September 2019 stood at Rs. 81,043 crore, Mr. Thakur said.

•For 2018-19 fiscal, the net collection of GST compensation cess stood at Rs. 95,081 crore as against the target of Rs. 90,000 crore. For full fiscal, the government had released Rs. 81,141 crore to states as compensation.

•For 2017-18, the net collection from cess stood at Rs. 62,612 crore, as against the target of Rs. 61,331 crore. The compensation amount released to states was Rs. 48,785 crore.

•Under GST law, States were guaranteed to be paid for any loss of revenue in the first five years of GST implementation, which came into force on July 1, 2017.

•The shortfall is calculated assuming a 14% annual growth in GST collections by States over the base year of 2015-16.

•“For providing such compensation to States, compensation cess is being levied on certain luxury and demerit goods as per provisions in Section 8 of the GST (Compensation to States) Act, 2017, and compensation cess is being credited into a non-lapsable Fund known as Goods and Services Tax Compensation Fund which forms part of the Public Account of India,” Mr. Thakur said.

Fraudulent claims

•As many as 634 cases of fraudulent GST refund claim by exporters amounting Rs. 1,912 crore had been detected by the central tax authorities between July 2017 and January 2020, Parliament was informed on Tuesday.

•In a written reply to a question in the Rajya Sabha, Mr. Thakur said of this, Rs. 238.97 crore had been recovered by the Central GST authorities from the entities which claimed the fraudulent refunds.

•A total of 35 persons had been arrested by the CGST authorities, he added.

•“The government has taken measures to use data analytics to identify risky taxpayers and verify them before sanction of refunds,” Mr. Thakur added.

πŸ“° Trump confirms India visit on February 24, 25

He will travel to Ahmedabad and Delhi

•U.S. President Donald Trump will visit India on February 24 and 25, as per an official announcement from the White House on Monday.

•Mr. Trump and First Lady Melania Trump will visit New Delhi and Ahmedabad. The White House said Ahmedabad was chosen for the visit as Gujarat was home to Prime Minister Narendra Modi and played an “important role” in Mahatma Gandhi’s life.

•“The President and The First Lady will travel to New Delhi and Ahmedabad, which is in Prime Minister Modi’s home State of Gujarat and played such an important role in Mahatma Gandhi’s life and leadership of the Indian independence movement,” a statement from the Office of the Press Secretary said.

•Confirming the visit, the Ministry of External Affairs in statement on Tuesday said, “During the visit, President Trump and the First Lady will attend official engagements in New Delhi and Ahmedabad, Gujarat, and interact with a wide cross section of Indian society.”

•Prime Minister Modi and Mr. Trump had spoken over the weekend, the White House said.

•The Hindu has learned that India’s newly appointed Ambassador to the U.S., Taranjit Singh Sandhu, who presented his credentials to Mr. Trump last week, also handed over an official invitation to the President to visit India. (The White House had waited for this prior to announcing the visit officially.)

•Preparations are under way in India. American security teams with scanners and equipment arrived in India last week.

Trade deal

•The Indian and the U.S. sides are trying to put together a limited trade deal which Mr. Modi and Mr. Trump will sign during the visit. The two leaders could not sign on the dotted line when they met on the sidelines of the United Nations General Assembly in September and talks had continued since then.

•Sources close to the negotiations told The Hindu last week that while they were “hopeful” a deal would be reached before Mr. Trump’s visit, it was not a given, as there were gaps in the negotiating positions of the two sides.

•A defence deal is also reportedly on the cards. India is preparing to approve a $ 2.6 billion deal for 24 MH-60 Seahawk helicopters from Lockheed Martin, as per a Reuters report.

πŸ“° China denies role in cybertheft following Equifax accusations

U.S. ‘indicted’ four military hackers for personal data theft

•China denied involvement in any hacking activities on Tuesday after the U.S. indicted four members of the Chinese military for allegedly breaking into the computer networks of the Equifax credit reporting agency and stealing the personal information of tens of millions of people.

•The Justice Department accused Beijing on Monday of engineering one of the biggest hacks in history targeting consumer data of some 145 million Americans.

•Foreign Ministry spokesman Geng Shuang said China was committed to “firmly oppose and combat cyberattacks of any kind,” adding that it is a staunch defender of cybersecurity and its institutions “never engage in cybertheft of trade secrets.”

•Mr. Geng also turned the accusation back on the U.S., saying past events had shown Washington is “engaging in large-scale, organized and indiscriminate cyberstealing, spying and surveillance activities on foreign governments, enterprises and individuals.”

•“China is also a victim of this,” Mr. Geng said.

•The accusation is the latest against Chinese suspected of breaching the computer networks of American corporations, including steel manufacturers, a hotel chain and a health insurer. It comes as the Trump administration has warned against what it sees as the growing political and economic influence of China, and efforts by Beijing to collect data for financial and intelligence purposes and to steal research and innovation.

•Experts and officials say the theft represents Beijing’s interest in accumulating as much information about Americans as possible.

πŸ“° Economy not in trouble, asserts FM

Points to ‘green shoots’ in IIP growth, GST collections and higher FDI; slams UPA’s ‘faulty remedies’

•The economy is not in trouble, Finance Minister Nirmala Sitharaman told the Lok Sabha in her response to the debate on the Union Budget on Tuesday, highlighting seven macro-economic indicators as signs of revival.

•These ‘green shoots’ included higher foreign investment, improvement in industrial output and GST collections, all-time high forex reserves and an upbeat stock market.

•Defending her government’s handling of the economy, Ms. Sitharaman lashed out at former finance minister and Congress MP P. Chidambaram, saying she had nothing to learn from the ‘competent doctors’ who gave ‘faulty remedies’, resulting in a mountain of non-performing assets (NPAs) and double-digit inflation.

•In both Houses of Parliament, the Finance Minister cited data to show improvements in foreign direct investment (FDI) flows and net foreign portfolio investment (FPI), growth registered by the Index of Industrial Production (IIP) after several months of contraction, healthy forex reserves, a rise in gross GST collections and a 5% growth in market cap of the BSE Sensex.

•In the Lok Sabha, she also outlined details of the government’s initiatives to drive the four engines of growth, public and private investment, public consumption, and exports.

•In the Rajya Sabha, however, she embarked on a stinging attack against Mr. Chidambaram and the UPA government’s economic record.

•“I heard former Finance Minister’s speech with great intent and keenness. There was more sarcasm than content,” she said, adding that her government would not “repeat the faulty remedies” prescribed by UPA government during the economic crisis of 2008-09 .

•She said the UPA government’s actions then had led to the twin balance sheet crisis faced by banks, mounting non-performing assets and fleeing defaulters. There was a flight of capital and foreign investment in 2012-13, she said.

•Rebutting charges of fudging accounts, she instead accused the UPA of shifting the burden of oil bonds onto the books of oil marketing companies.

•Ms. Sitharaman, however, refused to answer a question by Congress leader Anand Sharma. “The hon’ble minister said that in 2019-20 fiscal deficit was 3.8% (of GDP) and revenue deficit was 2.4%. Out of the borrowed money, the capital expenditure was 1.4%. This time, she has reduced the fiscal deficit to 3.5%. The revenue deficit is pegged at 2.8%. That leaves only 0.9% for the capital expenditure. Can you clarify,” Mr. Sharma asked.

πŸ“° Six years on, Lokpal is a non-starter

The necessary rules, regulations and machinery are still not in place

•The massive public campaign in 2011 demanding an independent anti-corruption ombudsman resulted in the passage of the Lokpal law. The political dividend of the agitation was reaped at the national level by the BJP, which vociferously supported the demand for an effective Lokpal and rode to power in 2014 on the plank of anti-corruption.

•More than six years after the Lokpal law received the President’s assent, the institution of the Lokpal is yet to play any significant role in tackling corruption in the country. The manner in which the Lokpal has been emasculated by the current regime closely mirrors the undermining of other institutions of oversight and accountability.

•The preambular statement of The Lokpal and Lokayuktas Act, 2013 notes that the law has been enacted to ensure prompt and fair investigation and prosecution in cases of corruption against public servants. The Lokpal was envisioned to be independent. It was accorded a high stature and given extensive powers including the power to inquire, investigate and prosecute acts of corruption.

Delay in appointments

•For more than five years, the chairperson and members of the Lokpal were not appointed. The government claimed that since no one could be recognised as the Leader of the Opposition (LoP) after the 2014 general election, the committee responsible for selecting members of the Lokpal could not be constituted. This malady could have been easily remedied by either recognising the leader of the single largest party in Opposition in the Lok Sabha as the LoP, or by amending the Lokpal law to allow the leader of the largest Opposition party to be a member of the committee in the absence of a recognised LoP (this was done for the selection committee of the CBI Director). However, neither recourse was taken.

•The chairperson and members of the Lokpal were appointed only in March 2019 after a contempt petition was filed in the Supreme Court following the failure of the government to comply with the 2017 ruling of the court to initiate the process of making appointments.

•A truncated selection committee, without the LoP, was set up. The Prime Minister, Speaker, and the then Chief Justice of India appointed Mukul Rohatgi, who had earlier served as Attorney General of India during the BJP regime, as the eminent jurist on the selection panel. The leader of the largest Opposition party in the Lok Sabha was invited for meetings of the selection committee as a ‘special invitee’, which he declined on grounds that it was mere tokenism.

•The four-member selection committee, having a preponderance of representatives of the ruling party with an inherent bias towards recommending candidates favoured by the government, selected the Chair and members of the Lokpal. The manner in which the appointments were made raised doubts about the independence of the Lokpal even before it became operational.

•Despite the fracas over appointments, many had hoped that once constituted, the Lokpal would nevertheless be a significant oversight body to check corruption and the arbitrary use of power by the government. More than 10 months later, however, evidence suggests that the Lokpal is a non-starter. Till date, the government has not made rules prescribing the form for filing complaints to the Lokpal. The Central government has also failed to formulate rules regarding asset disclosure by public servants.

•In order to ensure independent and credible action on allegations of corruption, the Lokpal was empowered under the law to set up its own inquiry wing headed by a Director of Inquiry and its own prosecution wing headed by a Director of Prosecution. However, information accessed under the Right to Information Act has confirmed that the inquiry and prosecution wings of the anti-corruption ombudsman are yet to be set up. The Lokpal has also not appointed the Director of Inquiry or Prosecution. Further, regulations which the Lokpal was obligated to make under the law are yet to be made, including those specifying the manner and procedure of conducting preliminary inquiry and investigation.

•The website of the Lokpal states that it scrutinised 1,065 complaints received till September 30, 2019 and disposed of 1,000. Since necessary procedures to operationalise the law are yet to be put in place, the legal veracity of the decisions of the Lokpal could potentially be challenged in a court of law.

Failure to meet expectations

•Without the requisite rules, regulations and machinery in place, it is not surprising that the Lokpal has failed to meet expectations. In recent times, the only reason for the Lokpal being in the news has been the resignation of its judicial member, Justice Dilip B. Bhosale, for undisclosed reasons.

•The failure to operationalise the Lokpal in an effective manner lays bare the lack of political will of the BJP government. It took nearly half a century for the Lokpal law to be enacted from the time the need for the oversight institution was first articulated. It is anybody’s guess how much longer it will take before India has an effective, independent and empowered Lokpal.