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CSE Prelims 2012 GS Indian Economics Lecture 10


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CSE Prelims 2012 GS Indian Economics Lecture 10

  1. 1. CSE GS Prelims Indian Economics Lecture 10 ECONOMIC SURVEY 2011-2012 Prof. Subir Maitra, Institute for Civil Service Aspirants, Salt Lake,Kolkata 21.03.2012
  2. 2. The Finance Ministry presents the Economic Surveyin the parliament every year, just before theUnion Budget. It is the ministrys view on the annualeconomic development of the country. A flagshipannual document of the Ministry of Finance,Government of India, Economic Survey reviews thedevelopments in the Indian economy over the previous12 months, summarizes the performance on majordevelopment programmes, and highlights the policyinitiatives of the government and the prospects of theeconomy in the short to medium term. This documentis presented to both houses of Parliament during theBudget Session.
  3. 3. Three DeficitsRevenue Deficit = Revenue expenditure –Revenue receiptsFiscal Deficit = Total expenditure — Revenue receipt—Recovery of loans—Other receipt Primary Deficit = Fiscal Deficit– Interest payment
  4. 4. Constitutional & Legal provisionsbehind levy of Service Tax inIndia. Constitutional Validity        Article 265 of the Constitution lays down that no tax shall be levied or collected except by the authority of law. Schedule VII divides this subject into three categories- a) Union list (only Central Government has power of legislation) b) State list (only State Government has power of legislation) c) Concurrent list (both Central and State Government can pass legislation). To enable Parliament to formulate by law principles for determining the modalities of levying the Service Tax by the Central Govt. and collection of the proceeds thereof by the Central Govt. and the State, the amendment vide Constitution (92nd amendment) Act, 2003 has been made.  Consequently, new article 268 A has been inserted for Service Tax levy by Union Govt., collected and appropriated by the Union Govt., and amendment of seventh schedule to the constitution, in list I-Union list after entry 92B, entry 92C has been inserted for taxes on services as well as in article 270 of the constitution the clause (1) article 268A has been included.
  5. 5. Goods and Services TaxTo operationalize the GST, the Constitution (115th Amendment) Bill has beenintroduced in the Lok Sabha in March 2011 to enable Parliament and statelegislatures to make laws for levying GST on every transaction of supply ofgoods or services or both. Some goods, namely crude petroleum, diesel,petrol, aviation turbine fuel, natural gas and alcohol are not to come under thepurview of the GST. The constitutional amendment bill also seeks toempower the President to set up within 60 days of the passage of thelegislation, a GST Council with the union Finance Minister as chairperson andunion Minister of State for Revenue and Finance Ministers of all the states asmembers. The GST Council is to work on the basis of consensus and makerecommendations on issues like GST rates, exemption lists, and thresholdlimits. Further, the bill provides for setting up of a GST dispute settlementauthority, comprising a chairperson and two members to resolve disputesarising out of deviations from the recommendations of the GST Council eitherby the central or state governments. The draft Bill has since been referred tothe Parliamentary Committee on Finance for examination.
  6. 6. Goods and Services TaxAmong the other steps that are being taken for the introduction of theGST is the establishment of a strong information technology (IT)infrastructure. For this purpose the government has set up anEmpowered Group headed by Nandan Nilekani, Chairman, UniqueIdentification Authority of India (UIDAI). Significant progress has beenmade in the conceptualization and design of the GST Network (GSTN)- a common portal for the centre and states that will enable electronicprocessing of the key business processes of registration, returns, andpayments. The National Securities Depository Limited (NSDL) hasbeen selected as technology partner for incubating the NationalInformation Utility that will establish and operate the IT backbone forthe GST. In this regard the NSDL has set up a pilot project incollaboration with eleven states prior to its roll-out across the country.Three Joint Working Groups of officials have also been constitutedcomprising officials from the central government, state governments,and an Empowered Committee of State Finance Ministers to work onlegislation, business procedures and IT infrastructure respectively.
  7. 7. SUBSIDIESGiven the rising trend in some of the subsidies, recent budgets havefocused on comprehensive reforms without compromising onentitlements to the poor.In so far as food subsidies are concerned, the National Food Security Billseeks to correct the under-consumption by the poor and othervulnerable sections and might entail some rise in levels of subsidy whenoperationalized.In so far as fertilizer subsidies are concerned, with the exception ofurea, a nutrient-based fertilizer subsidy regime is in place. Petroleumproducts’ subsidies have also gone up in the recent years on account ofhigh global prices of crude petroleum.Major subsidies grew appreciably in 2010-11 and were at Rs.1,31,212crore. While BE 2011-12 placed them at Rs.1,34,411 crore, given thebuild-up so far in crude prices, they are likely to be much higher thisyear.As a proportion of GDP major subsidies exceeded the 2 per cent mark in2008-09 and 2009-10. In BE 2011-12, they were placed at 1.5 per centof GDP.