NEW DELHI, Jan 1: Strong macro-economic fundamentals and reforms for sustained growth defined 2017 for Ministry of Finance, according to ‘Year End Review ? 2017’ released by Ministry of Finance.
According to it, 2017 was a historic year for the Ministry with significant recognition by Moody’s Investors Service upgrading India’s local and foreign currency issuer ratings after 13 years.
India moving up 30 ranks in the World Bank’s Doing Business Report and visible signs of financial system cleansing by the Demonetisation exercise. It said that transformational reforms, overhauling of indirect tax system by the introduction of the Goods and Services Tax (GST) to replace multiple Central and State taxes and a new direct tax code also initiated to re-write the Income Tax Act.
It said that recapitalisation of Public Sector Banks (PSBs) and an Alternative Mechanism for their consolidation, the Financial Inclusion and Social Security Schemes PMJDY and APY achieved significant milestones. It said that enhancing the quality of life remained primary goal for Government when it put into implementation the recommendations of the 7th Central Pay Commission to benefit more than 48-lakh Central Government Employees.
On the achievements of Department of Economic Affairs, it said that overall fundamentals of the economy remained strong for the Year 2017-18 as GDP Growth Rate remained at 6.0 per cent (Up to Q2).
Similarly, CPI stood at 3.6 per cent (Q2), WPI at 3.6 per cent (Q2), Current Account Deficit at 14.3 billion dollar in Q1, Trade Deficit was at 41.2 billion dollar in Q1. It said that country saw Foreign Direct Investment (FDI) inflows of 1,350.93 million dollar (As on October, 2017) whereas Foreign Exchange Reserves went up to 401,942.0 million dollar (As on December 1, 2017).
According to Ministry, manufacturing, electricity, gas, water supply & other utility services and trade, hotels, transport & communication and services related to broadcasting sectors registered growth of over 6.0 percent in Q2 of 2017-18 over Q2 of 2016-17.
Moody’s Investors Service upgraded Government of India’s local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive after a period of 13 years in recognition of the Government’s commitment to macro stability which led to low inflation, declining deficit and prudent external balance along with Government’s fiscal consolidation programme. India’s ranking in World Bank’s doing Business Report rose to 100 – 30 places up over its rank of 130 in the Doing Business Report 2017 – highest jump in rank of any country in the Ease of Doing Business (EoDB) Report, 2018. This made India the only country in South Asia and BRICS economies to feature among most improved economies of the EoDB Report this year. One year after the landmark move to cleanse the economy of Black money, 8th November 2017 was a day to recount the successes of the continued operations after Demonetisation with High Denomination Notes been brought down by 50 per cent of value in circulation, 50 lakh new bank accounts opened to enable cashless transaction of wages, 26.6 per cent increase in number of taxpayers added from FY 2015-16 to FY 2016-17 and 27.95 per cent increase in number of e-returns filed, the value of IMPS transactions increasing almost 59 per cent from August 2016 to August 2017, 2.24 Lakh shell companies were struck off, undisclosed income worth Rs 29,213 crore was detected and admitted and revenues of the ULBs across the country increased. According to the Year End Review, the Logistics Sector was granted Infrastructure status in the 14th Institutional Mechanism (IM) Meeting held on 10th November, 2017 to meet the need for integrated Logistics sector development in view of the fact that the logistics cost in India is very high compared to developed countries. It will thus enable the Logistics Sector to avail infrastructure lending at easier terms with enhanced limits, access to larger amounts of funds as External Commercial Borrowings (ECB), access to longer tenor funds from insurance companies and pension funds and be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL). On Department of Revenue’s achievements, the Year End Review said that Goods and Services Tax (GST) was rolled out on the midnight of 30 June 2017 and came into effect from 1 July 2017 which is bringing transparency and accountability in business transactions along with ensuring ease of doing business and rationalisation in tax rates. GST has removed the hurdles in inter-State transactions resulting in the setting up of a common market and has allowed taxpayers to take credit of taxes paid on inputs (input tax credit) and utilise the same for the payment of output tax. But Ministry still feel that GST evolving and responding to needs of the hour. Subsequent to the rollout of GST, 22 States in India abolished their check posts for smooth movement of goods across the country on 3rd July 2017. On Direct tax, it said that Central Board of Direct Taxes (CBDT) notified new Safe Harbour Regime on 8 June 2017 to minimise transfer pricing disputes, provide certainty to taxpayers, align safe harbour margins with industry standards, and to enlarge the scope of safe harbour transactions. Income Tax Department undertook a slew of measures to widen the tax base and bring about efficiency, transparency and fairness in tax administration. Some of the initiatives include ? introduction of Single Page ITR-1 (SAHAJ) Form for taxpayers with income up to Rs. 50 lakhs and slashing of corporate tax to 25 per cent for companies with turnover of up to Rs. 50 crore. With these initiatives, the numbers of taxpayers increased significantly from 4.72 crore in FY 2012-13 to 6.26 crore during F.Y. 2016-17 as of 18th September 2017. As part of Government’s efforts to widen the tax base, Direct Tax collections for FY 2017-2018 reached Rs 4.39 lakh crore up to October 2017, accounting for 15.2 per cent growth from the corresponding period last year. Touching Demonetisation and Operation Clean Money, the Year End Review said that Income Tax Department (ITD) has been undertaking extensive enforcement action including search and seizure, and surveys largely based on the information received during the demonetisation period. It launched Operation Clean Money (OCM) on 31st January 2017 to leverage technology for e-verification of cash deposits made during the demonetization period i.e. 9th November to 30th December 2016. The operation involves the use of advanced data analytics, allowing for optimization of government resources and causing minimum inconvenience to the taxpayers. Extensive enforcement action by the Income Tax Department (ITD) during 9th November 2016 to 28th February 2017 has led to seizures worth over Rs 818 crore and detection of undisclosed income of over Rs 9,334 crore. The impact of Government action translated to an increase of 21.7 per cent in the returns of Income received in FY 2016-17, 16 per cent growth in Gross Collection (the highest in the last five years), 14 per cent Growth in Net Collection (the highest in last three years) and above 18 per cent, 25 per cent and 22 per cent growth in Personal Income Tax, Regular Assessment Tax and Self-assessment Tax respectively. Subsequent to demonetisation, 91 lakh taxpayers were added to the tax net as of May 2017 as a result of action taken by the Income Tax Department. On the issue of combatting corruption and pilferage, it said that a task force was constituted in July 2017 to effectively tackle the malpractices by shell companies. The Government of India undertook various measures to curb benami transactions across the country. Some of the measures include setting up of 24 Benami Prohibition Units (BPUs) for taking effective action under the Benami Act and empowering relevant authorities to attach and eventually confiscate benami properties. Department of Financial Services advised banks in September 2017 to put restrictions on bank accounts of over two lakh struck-off companies and use enhanced diligence while dealing with companies. The Income Tax Department intensified actions under the new Benami Transactions (Prohibition) Amendment Act, 2016 (the Act) w.e.f. 1st November, 2016 and framed the Prohibition of Benami Property Transactions Rules, 2016. About Department of Financial Services (DFS), it said that in order to strengthen the banks, which are the key pillars of the economy, the Government decided to take a massive step to recapitalise PSBs in a front-loaded manner, with a view to support credit growth and job creation entailing mobilisation of capital of about Rs. 2,11,000 crore over the next two years, through budgetary provisions of Rs. 18,139 crore, Recapitalisation Bonds to the tune of Rs. 1,35,000 crore, and the balance through raising of capital by banks from the market while diluting Government equity.
Government also undertook some major legislative changes to facilitate recovery and resolution of stressed assets.
The Insolvency and Bankruptcy Code, 2016 was enacted as a unified framework for resolving insolvency and bankruptcy matters to put in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the Code. Loans extended under the Pradhan Mantri Mudra Yojana (PMMY) during 2017-18 crossed the target of Rs. 121450.31 crores till 8th December 2017.
Under the scheme a loan of upto Rs. 50000 is given under sub-scheme ‘Shishu’ between Rs. 50,000 to 5.0 Lakhs under sub-scheme ‘Kishore’ and between 5.0 Lakhs to 10.0 Lakhs under sub-scheme ‘Tarun’. About 6.28 crore loans were extended to women entrepreneurs till 21st July 2017. 76 per cent of the borrowers under PMMY were women entrepreneurs. (UNI)
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