India to build 20 km roads per day
Business Standard, January 5, 2010, Page 1
Road trade and Highways Minister Kamal Nath said India had increased its per day construction of roads to 9 km and the target of developing 20 km daily would be accomplished by April. Thirty-five Malaysian companies are already involved with various infrastructure projects in India.
Tuesday, January 5, 2010
India to build 20 km roads per day
No monetary tightening expected: Basu
No monetary tightening expected: Basu
Business Standard, January 05, 2010, Page 1
BS Reporter / New Delhi
Two key functionaries in the government expect no monetary tightening measures soon, despite the rising food inflation. Instead, they see food prices cooling by the next month.
Kaushik Basu, chief economic advisor in the Ministry of Finance, today said there was no need to take steps which could have implications for growth and employment. “Right now, there are no expectations of monetary tightening, nor do I believe there is a reason for it,” Basu said at a Ficci event. He added that food inflation would peter out in few months.
Planning Commission Deputy Chairman Montek Singh Ahluwalia, too, said food prices were expected to moderate by the next month, as the current price rise was not due to excess liquidity in the economy. Food inflation reached an 11-year high of 19.95 per cent in the second week of December.
Commenting on the country’s gross domestic product, Basu further said, “India might grow slightly above 7.5 per cent in the current year (fiscal), and achieve 9 per cent growth in 2010-11…If India’s growth crosses that of China in 4-4 years, it should not be a surprise.”
Business Standard, January 05, 2010, Page 1
BS Reporter / New Delhi
Two key functionaries in the government expect no monetary tightening measures soon, despite the rising food inflation. Instead, they see food prices cooling by the next month.
Kaushik Basu, chief economic advisor in the Ministry of Finance, today said there was no need to take steps which could have implications for growth and employment. “Right now, there are no expectations of monetary tightening, nor do I believe there is a reason for it,” Basu said at a Ficci event. He added that food inflation would peter out in few months.
Planning Commission Deputy Chairman Montek Singh Ahluwalia, too, said food prices were expected to moderate by the next month, as the current price rise was not due to excess liquidity in the economy. Food inflation reached an 11-year high of 19.95 per cent in the second week of December.
Commenting on the country’s gross domestic product, Basu further said, “India might grow slightly above 7.5 per cent in the current year (fiscal), and achieve 9 per cent growth in 2010-11…If India’s growth crosses that of China in 4-4 years, it should not be a surprise.”
Lax Oversight Caused Crisis, Bernanke Says
Lax Oversight Caused Crisis, Bernanke Says
Business Standard, January 05, 2010, Page 11
By CATHERINE RAMPELL, ATLANTA
Regulatory failure, not low interest rates, was responsible for the housing bubble and subsequent financial crisis of the last decade, Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Sunday.
Mr. Bernanke’s remarks, perhaps his strongest language yet assessing the roots of the financial crisis, came as he awaited confirmation for a second term as Fed chairman and as he sought greater regulatory authority from Congress.
“Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates,” Mr. Bernanke said in remarks to the American Economic Association.
Mr. Bernanke, addressing accusations that the Fed contributed to the financial crisis, argued in his speech that the interest rates set by the central bank from 2002 to 2006 were appropriately low. He was a member of the board of governors of the Federal Reserve system for most of that period.
“When historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment,” Mr. Bernanke said.
Some lawmakers and economists have argued that the Fed kept interest rates too low in the aftermath of the 2001 recession, making loans cheap and feeding reckless lending by banks.
“I strongly disapprove of some of the past deeds of the Federal Reserve while Ben Bernanke was a member and its chairman, and I lack confidence in what little planning for the future he has articulated,” Richard Shelby of Alabama, the Senate Banking Committee’s top-ranking Republican, said in December during a committee vote on Mr. Bernanke’s reconfirmation.
The Senate Banking Committee approved Mr. Bernanke’s renomination last month. He is expected to be reconfirmed by the full Senate before his current term expires on Jan. 31, despite some vocal opposition.
Even if confirmed, however, Mr. Bernanke is likely to face further political challenges over financial regulatory reform and the governance of the Fed.
The House passed a provision to audit the Fed as part of a larger financial reform package last month. Representative Ron Paul, Republican of Texas, has been carrying the banner for such an audit for decades.
The debate over what caused the financial crisis comes as the economy shows signs of recovery and as Congress considers a wide-ranging overhaul of financial regulation.
In a separate talk on Sunday at the conference, Donald L. Kohn, the Fed’s vice chairman, listed several measures the central bank was likely to take to shed the problematic assets it took from banks during the financial crisis. He said “the appropriate use and sequencing of these tools is under active discussion” by regulators.
But, as members of the rate-setting Federal Open Market Committee said last month, he noted that the fragile economic recovery and weak job market would “warrant exceptionally low” interest rates “for an extended period.”
Mr. Bernanke, in his talk, echoed his previous calls for Congress to grant the Fed greater oversight powers over the financial system, like the ability to help monitor and regulate against “systemic risk.”
Business Standard, January 05, 2010, Page 11
By CATHERINE RAMPELL, ATLANTA
Regulatory failure, not low interest rates, was responsible for the housing bubble and subsequent financial crisis of the last decade, Ben S. Bernanke, the Federal Reserve chairman, said in a speech on Sunday.
Mr. Bernanke’s remarks, perhaps his strongest language yet assessing the roots of the financial crisis, came as he awaited confirmation for a second term as Fed chairman and as he sought greater regulatory authority from Congress.
“Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates,” Mr. Bernanke said in remarks to the American Economic Association.
Mr. Bernanke, addressing accusations that the Fed contributed to the financial crisis, argued in his speech that the interest rates set by the central bank from 2002 to 2006 were appropriately low. He was a member of the board of governors of the Federal Reserve system for most of that period.
“When historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment,” Mr. Bernanke said.
Some lawmakers and economists have argued that the Fed kept interest rates too low in the aftermath of the 2001 recession, making loans cheap and feeding reckless lending by banks.
“I strongly disapprove of some of the past deeds of the Federal Reserve while Ben Bernanke was a member and its chairman, and I lack confidence in what little planning for the future he has articulated,” Richard Shelby of Alabama, the Senate Banking Committee’s top-ranking Republican, said in December during a committee vote on Mr. Bernanke’s reconfirmation.
The Senate Banking Committee approved Mr. Bernanke’s renomination last month. He is expected to be reconfirmed by the full Senate before his current term expires on Jan. 31, despite some vocal opposition.
Even if confirmed, however, Mr. Bernanke is likely to face further political challenges over financial regulatory reform and the governance of the Fed.
The House passed a provision to audit the Fed as part of a larger financial reform package last month. Representative Ron Paul, Republican of Texas, has been carrying the banner for such an audit for decades.
The debate over what caused the financial crisis comes as the economy shows signs of recovery and as Congress considers a wide-ranging overhaul of financial regulation.
In a separate talk on Sunday at the conference, Donald L. Kohn, the Fed’s vice chairman, listed several measures the central bank was likely to take to shed the problematic assets it took from banks during the financial crisis. He said “the appropriate use and sequencing of these tools is under active discussion” by regulators.
But, as members of the rate-setting Federal Open Market Committee said last month, he noted that the fragile economic recovery and weak job market would “warrant exceptionally low” interest rates “for an extended period.”
Mr. Bernanke, in his talk, echoed his previous calls for Congress to grant the Fed greater oversight powers over the financial system, like the ability to help monitor and regulate against “systemic risk.”
Volatile capital flows could pose problems, says RBI
Volatile capital flows could pose problems, says RBI
Business Standard, January 05, 2010, Section II, Page 2
BS Reporter / Mumbai
Rapid and volatile capital inflows or outflows could pose significant policy challenges, potentially leading to exchange rate overshooting, asset price volatility and financial instability, Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said in Mumbai today.
“In this context, appropriate and pragmatic use of capital account regulations may have to be considered by emerging markets to maintain financial stability,” said Gopinath
However, Gopinath said capital inflows were not a concern at the moment.
“We don't look at the levels (of the rupee), only the volatility. There have been no concerns on inflows,” Gopinath told reporters on the sidelines of a conference.
In 2009, foreigners bought $17.5 billion worth of domestic shares, just $327 million short of the 2007 record of $17.78 billion. The heavy buying helped the rupee rise 12.2 per cent from a record low of 52.2 hit in early March.
Separately, Gopinath said RBI would issue norms on repos in corporate bonds before its third quarter monetary policy review on January 29.
The central bank had in September last year proposed guidelines for repurchase agreements, or repos, in corporate bonds, a move bankers said would add depth to the relatively illiquid market.
However, the markets will have to wait longer for introduction of credit default swaps (CDS).
“We are looking very closely at what is happening in the international markets. This is something which is at a very embryonic stage and there are complex issues to be sorted out,” Gopinath said.
The deputy governor hinted that these instruments would be traded over-the-counter, saying that single-name CDS’ were not easily amenable to an exchange-traded or a central counterparty (CCP) platform. “Even in international markets I have not seen a single-name CDS traded on a CCP platform,” she said.
The deputy governor said public sector banks should improve their ability to lend in the term-money market. “The term-money market continues to remain dormant with low turnover despite several initiatives taken by the Reserve Bank, mainly reflecting the inability of the market participants to take a medium-term view on interest rates and liquidity,” Gopinath said. “However, the CD market is active and reflects the unsecured term-money market rates,” she added.
RBI is not in favour of relaxing the minimum tenor of non-convertible debentures from the current 90-day limit it had imposed in the second-quarter monetary policy review.
“The suggestion… cannot be acceded to as under the law, corporates are prohibited from issuing unsecured debentures with maturity of less than 90 days. Allowing markets to issue very short-term instruments could have systemic implications,” Gopinath said. She added that there were other instruments in the short-end like repo, CBLO (collateralised borrowing and lending mechanism) and CPs that could meet the requirement of investors.
Business Standard, January 05, 2010, Section II, Page 2
BS Reporter / Mumbai
Rapid and volatile capital inflows or outflows could pose significant policy challenges, potentially leading to exchange rate overshooting, asset price volatility and financial instability, Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said in Mumbai today.
“In this context, appropriate and pragmatic use of capital account regulations may have to be considered by emerging markets to maintain financial stability,” said Gopinath
However, Gopinath said capital inflows were not a concern at the moment.
“We don't look at the levels (of the rupee), only the volatility. There have been no concerns on inflows,” Gopinath told reporters on the sidelines of a conference.
In 2009, foreigners bought $17.5 billion worth of domestic shares, just $327 million short of the 2007 record of $17.78 billion. The heavy buying helped the rupee rise 12.2 per cent from a record low of 52.2 hit in early March.
Separately, Gopinath said RBI would issue norms on repos in corporate bonds before its third quarter monetary policy review on January 29.
The central bank had in September last year proposed guidelines for repurchase agreements, or repos, in corporate bonds, a move bankers said would add depth to the relatively illiquid market.
However, the markets will have to wait longer for introduction of credit default swaps (CDS).
“We are looking very closely at what is happening in the international markets. This is something which is at a very embryonic stage and there are complex issues to be sorted out,” Gopinath said.
The deputy governor hinted that these instruments would be traded over-the-counter, saying that single-name CDS’ were not easily amenable to an exchange-traded or a central counterparty (CCP) platform. “Even in international markets I have not seen a single-name CDS traded on a CCP platform,” she said.
The deputy governor said public sector banks should improve their ability to lend in the term-money market. “The term-money market continues to remain dormant with low turnover despite several initiatives taken by the Reserve Bank, mainly reflecting the inability of the market participants to take a medium-term view on interest rates and liquidity,” Gopinath said. “However, the CD market is active and reflects the unsecured term-money market rates,” she added.
RBI is not in favour of relaxing the minimum tenor of non-convertible debentures from the current 90-day limit it had imposed in the second-quarter monetary policy review.
“The suggestion… cannot be acceded to as under the law, corporates are prohibited from issuing unsecured debentures with maturity of less than 90 days. Allowing markets to issue very short-term instruments could have systemic implications,” Gopinath said. She added that there were other instruments in the short-end like repo, CBLO (collateralised borrowing and lending mechanism) and CPs that could meet the requirement of investors.
India GDP growth could touch 9% in next fiscal, says CEA
India GDP growth could touch 9% in next fiscal, says CEA
Hindustan Times, January 05, 2010, Page 25
The country could be looking to return to a 9 per cent annual economic growth as early as April. Kaushik Basu, the government's Chief Economic Advisor, said on Monday that 2010-11 could be the year of a big rebound, suggesting that India had put behind last year's local downturn and the impact of a global meltdown faster than expected.
But double-digit growth would need a snipping of red tape and inefficiencies, he said, indicating room for more reforms ahead.
“The prognosis is very good and the growth rate should be 9 per cent towards the end of the next year,” Basu said at a function organised by the Federation of Indian Chambers of Commerce and Industry.
Basu said India, with its strong economic fundamentals that include high savings and investment rates, was likely to overtake China’s growth rate in the next four to five years. “Double digit growth is entirely within the cards. Crossing
over the growth rate of China in the next four to five years is not impossible,” he said.
However, he underlined that uneven income distribution and poverty continue to haunt the government and could spoil the party. To achieve a double-digit growth rate, the government would need to restructure itself by removing systemic inefficiencies, he said, adding that bureaucratic decision-making must be speeded up.
Basu said that the country’s savings rate that is over 35 per cent has contributed significantly in the recovery process apart from the stimulus packages rolled out by the government. The savings rate could rise to 40 per cent in the coming years and trigger sustained growth, he said.
Hindustan Times, January 05, 2010, Page 25
The country could be looking to return to a 9 per cent annual economic growth as early as April. Kaushik Basu, the government's Chief Economic Advisor, said on Monday that 2010-11 could be the year of a big rebound, suggesting that India had put behind last year's local downturn and the impact of a global meltdown faster than expected.
But double-digit growth would need a snipping of red tape and inefficiencies, he said, indicating room for more reforms ahead.
“The prognosis is very good and the growth rate should be 9 per cent towards the end of the next year,” Basu said at a function organised by the Federation of Indian Chambers of Commerce and Industry.
Basu said India, with its strong economic fundamentals that include high savings and investment rates, was likely to overtake China’s growth rate in the next four to five years. “Double digit growth is entirely within the cards. Crossing
over the growth rate of China in the next four to five years is not impossible,” he said.
However, he underlined that uneven income distribution and poverty continue to haunt the government and could spoil the party. To achieve a double-digit growth rate, the government would need to restructure itself by removing systemic inefficiencies, he said, adding that bureaucratic decision-making must be speeded up.
Basu said that the country’s savings rate that is over 35 per cent has contributed significantly in the recovery process apart from the stimulus packages rolled out by the government. The savings rate could rise to 40 per cent in the coming years and trigger sustained growth, he said.
Fund raising through QIP route brings in Rs 34,100 crore
Fund raising through QIP route brings in Rs 34,100 crore
The Hindu Business Line, January 05, 2010, Page 10
But debt offerings mop up Rs 1,44,700 cr; set five-year record.
BL Research Bureau
With foreign institutional investors taking a fancy to QIPs (qualified institutional placements), 2009 turned out to be a better year for equity fund-raising by Indian companies than the previous year.
However, equity issuances for the year – at Rs 72,000 crore (37 per cent higher than 2008) – were still dwarfed by debt offerings. Debt issuances, which raked in Rs 1,44,700 crore, set a five-year record in 2009.
These are the trends evident from Bloomberg's India Capital Markets League Table 2009, released on Monday.
While a resurgent stock market saw all modes of equity offering – IPOs, rights offers and QIPs – stage a revival, it was the last category that proved most popular in 2009.
A record Rs 34,100 crore were raised by the 51 QIPs made during the year. IPOs, 17 in number, mobilised a much lower Rs 19,300 crore, with the NHPC, Adani Power and Oil India offers garnering the lion's share. The bulk of QIP funds flowed into financial services companies, which took in nearly 45 per cent of the sum raised, followed by consumer products (17 per cent) and industrial companies (15 per cent).
According to Bloomberg, Morgan Stanley took the top slot in underwriting QIP offers, accounting for Rs 6,200 crore in deal value.
Despite the buoyant equity markets, IPOs did not raise much more than 2008, at Rs 19,300 crore compared to Rs 18,500 crore the previous year. Domestic investment bankers occupied the top honours as underwriters of IPOs, with Kotak Mahindra doing a deal value of Rs 4,100 crore followed by Enam Securities at Rs 3,600 crore.
It was, however, the debt market that took care of much of India Inc's appetite for funds in 2009. The Rs 1.44 lakh crore raised by companies through domestic bond offerings in 2009 exceeded the 2008 number by nearly 48 per cent. IIFCL, the largest bond issuer, raised Rs 7,300 crore.
Nearly three-fourths of these funds went to the financial services industry, followed by oil, gas and power majors who took in about 10.7 per cent of the debt funds raised. Axis Bank maintained its top position for the second consecutive year on Bloomberg's 2009 India Domestic Debt Table with a market share of 13.9 per cent.
Apart from bond offers, syndicated loans also grew strongly, raising Rs 4,660 crore in 2009. SBI continued to dominate the syndicated loan market, arranging over 59 per cent of the loans for the year.
Indian economic growth may outstrip China's in 4-5 years
Indian economic growth may outstrip China's in 4-5 years
The Hindu Business Line, January 05, 2010, Page 15
Our Bureau, New Delhi
India's economic growth could touch 10 per cent in the next couple of years and may even beat that of China in the next four years, Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, has said.
The country is likely to return to the 9 per cent growth trajectory by the end of next fiscal, Dr Basu said, at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Monday.
On monetary tightening to tame inflation, Dr Basu later told reporters that there is “no expectation of monetary tightening, nor do I believe there is a reason for this”.
Dr Basu highlighted that India was only seeing a sector-specific inflation.
“You don't want to have an effect across the board which increases unemployment. Right now, we need sector-specific intervention which is in the food sector and that is what the Government is doing. My expectation is, it is going to have an effect. Inflation will peter out in the next few months,” he said.
On how Indian economic growth rate compared with that of China, Dr Basu said the fundamentals of the Indian economy were very strong.
“If India can get back to the 9 per cent growth path and take a couple of complementary policies….. because there is so much slack in the economy. If India follows those, it should not surprise anyone if growth rate crosses the Chinese one in about four-five years”.
On when the fiscal stimulus would be rolled back, Dr Basu said that at some time the fiscal stimulus has to be rolled back but declined to conjecture on when that point would come.
Dr Basu also said that he expected the savings rate to exceed 40 per cent in the coming years and this could give a boost to the economic growth.
The senior Finance Ministry official also said that India's economic growth would be more than 7.5 per cent this fiscal.
The Hindu Business Line, January 05, 2010, Page 15
Our Bureau, New Delhi
India's economic growth could touch 10 per cent in the next couple of years and may even beat that of China in the next four years, Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, has said.
The country is likely to return to the 9 per cent growth trajectory by the end of next fiscal, Dr Basu said, at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here on Monday.
On monetary tightening to tame inflation, Dr Basu later told reporters that there is “no expectation of monetary tightening, nor do I believe there is a reason for this”.
Dr Basu highlighted that India was only seeing a sector-specific inflation.
“You don't want to have an effect across the board which increases unemployment. Right now, we need sector-specific intervention which is in the food sector and that is what the Government is doing. My expectation is, it is going to have an effect. Inflation will peter out in the next few months,” he said.
On how Indian economic growth rate compared with that of China, Dr Basu said the fundamentals of the Indian economy were very strong.
“If India can get back to the 9 per cent growth path and take a couple of complementary policies….. because there is so much slack in the economy. If India follows those, it should not surprise anyone if growth rate crosses the Chinese one in about four-five years”.
On when the fiscal stimulus would be rolled back, Dr Basu said that at some time the fiscal stimulus has to be rolled back but declined to conjecture on when that point would come.
Dr Basu also said that he expected the savings rate to exceed 40 per cent in the coming years and this could give a boost to the economic growth.
The senior Finance Ministry official also said that India's economic growth would be more than 7.5 per cent this fiscal.
India losing IT to emerging rivals
India losing IT to emerging rivals
The Economic Times, January 05, 2010, Page 1
Top Outsourcers Like GE, Citibank Opting For Nearshore Vendors
Pankaj Mishra BANGALORE
EMERGING nearshore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek, are increasingly becoming attractive for top outsourcers such as General Electric, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India.
At a time when India’s top tech firms such as Tata Consultancy Services, Infosys and Wipro are redefining their positioning as global service providers by growing their presence in emerging markets such as Latin America, Eastern Europe and Asia, they are facing stiff competition from these newer rivals.
“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, research director of outsourcing advisory firm Everest Group. “Some customers having 70-80% of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” he added.
Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for outsourcing contracts being fleshed out by “first-time outsourcers”.
“When it comes to new business from first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals,” added Amneet Singh, vice-president, global sourcing, Everest Group.
The Economic Times, January 05, 2010, Page 1
Top Outsourcers Like GE, Citibank Opting For Nearshore Vendors
Pankaj Mishra BANGALORE
EMERGING nearshore rivals, including Ness Technologies of Israel, CPM Braxis of Brazil and Mexico-headquartered Softtek, are increasingly becoming attractive for top outsourcers such as General Electric, Citibank and several others seeking to work with local, specialised vendors instead of sending all projects to offshore locations like India.
At a time when India’s top tech firms such as Tata Consultancy Services, Infosys and Wipro are redefining their positioning as global service providers by growing their presence in emerging markets such as Latin America, Eastern Europe and Asia, they are facing stiff competition from these newer rivals.
“For many customers who already have significant presence in offshore locations like India, it’s a risk diversification,” said Jimit Arora, research director of outsourcing advisory firm Everest Group. “Some customers having 70-80% of their offshore resources in India are realising that they need to look at the third category of suppliers that are local and niche,” he added.
Over the past two years, companies such as CPM Braxis, EPAM Systems, Ness, Softtek, Merchants and Spi Global have emerged as stronger rivals for Indian tech firms, especially while bidding for outsourcing contracts being fleshed out by “first-time outsourcers”.
“When it comes to new business from first-time outsourcers, these local suppliers may be gaining at the expense of multinational and offshore rivals,” added Amneet Singh, vice-president, global sourcing, Everest Group.
GST set to miss Apr 1 deadline
GST set to miss Apr 1 deadline
The Economic Times, January 05, 2010, Page 3
Devesh Kumar NEW DELHI
THE roll-out of the Goods and Services Tax (GST) is certain to be delayed beyond its scheduled launch date of April 1 this year because of administrative and constitutional constraints.
Even though a final call on the issue is expected to be taken only on January 8 at a meeting of states finance ministers convened by Union finance minister Pranab Mukherjee, it’s now certain that its roll-out date will be rescheduled. A task-force set up by the 13th Finance Commission has already come out in favour of deferment of its introduction by six months to October 1 this year
“Neither the Centre nor the states are ready for GST roll-out. The task-force set up by the 13th Finance Commission has already recommended that its launch be delayed by six months. But we feel that no major tax reform measure should go on stream in the middle of the financial year,’’ Bihar deputy chief minister Sushil Kumar Modi told ET on Tuesday.
There are too many outstanding issues yet to be resolved. The Centre, for instance, is yet to compensate the states for the revenue losses suffered by them because of the slashing of rate of central sales tax from 4% to 2%. Moreover, the union finance ministry is yet to circulate the draft of the constitutional amendment bill. The states, too, have to enact similar laws, but they too are not ready. Again, the states do not have the expertise to collect service tax.
Union finance minister Pranab Mukherjee, while participating in a function here on October 31, had dropped enough hints to suggest that the GST roll-out may be delayed by a few months.
I am trying to stick to the time schedule, but I will not be surprised if there is slippage of a few months,’’ Mr Mukherjee had then told newspersons, adding that the government was sincerely trying for convergence on various issues.
In its meeting held on December 17, the empowered committee of state finance ministers on GST had decided to hold a meeting with the union finance minister in early January to thrash out certain constitutional and administrative hitches pertaining to the new indirect taxation regime. Briefing newspersons after the previous round of the empowered panel’s meeting, chairman Asim Dasgupta had then remarked: ``For certain difficulties [which] were reported to us, it would be difficult to introduce the bill for GST in this winter session…He [Pranab Mukherjee] has said he is very willing to discuss with us in January after this Parliament session is over.’’
“After our meeting with him, we would be able to take a decision on constitutional amendment and other preparations,” he added.
The January 8 conclave will be preceded by a meeting of the empowered committee, in which the revenue-neutral rate is is expected to come up for discussion.
The Economic Times, January 05, 2010, Page 3
Devesh Kumar NEW DELHI
THE roll-out of the Goods and Services Tax (GST) is certain to be delayed beyond its scheduled launch date of April 1 this year because of administrative and constitutional constraints.
Even though a final call on the issue is expected to be taken only on January 8 at a meeting of states finance ministers convened by Union finance minister Pranab Mukherjee, it’s now certain that its roll-out date will be rescheduled. A task-force set up by the 13th Finance Commission has already come out in favour of deferment of its introduction by six months to October 1 this year
“Neither the Centre nor the states are ready for GST roll-out. The task-force set up by the 13th Finance Commission has already recommended that its launch be delayed by six months. But we feel that no major tax reform measure should go on stream in the middle of the financial year,’’ Bihar deputy chief minister Sushil Kumar Modi told ET on Tuesday.
There are too many outstanding issues yet to be resolved. The Centre, for instance, is yet to compensate the states for the revenue losses suffered by them because of the slashing of rate of central sales tax from 4% to 2%. Moreover, the union finance ministry is yet to circulate the draft of the constitutional amendment bill. The states, too, have to enact similar laws, but they too are not ready. Again, the states do not have the expertise to collect service tax.
Union finance minister Pranab Mukherjee, while participating in a function here on October 31, had dropped enough hints to suggest that the GST roll-out may be delayed by a few months.
I am trying to stick to the time schedule, but I will not be surprised if there is slippage of a few months,’’ Mr Mukherjee had then told newspersons, adding that the government was sincerely trying for convergence on various issues.
In its meeting held on December 17, the empowered committee of state finance ministers on GST had decided to hold a meeting with the union finance minister in early January to thrash out certain constitutional and administrative hitches pertaining to the new indirect taxation regime. Briefing newspersons after the previous round of the empowered panel’s meeting, chairman Asim Dasgupta had then remarked: ``For certain difficulties [which] were reported to us, it would be difficult to introduce the bill for GST in this winter session…He [Pranab Mukherjee] has said he is very willing to discuss with us in January after this Parliament session is over.’’
“After our meeting with him, we would be able to take a decision on constitutional amendment and other preparations,” he added.
The January 8 conclave will be preceded by a meeting of the empowered committee, in which the revenue-neutral rate is is expected to come up for discussion.
Subscribe to:
Posts (Atom)
Posts
