Eight Months of GST: How Prices Have Moved

    This story first appeared in Livemint.

    The goods and services tax (GST)—which subsumed multiple indirect taxes at the central and state levels—completes eight months on 1 March. How has it impacted consumers and the companies that service them? To answer this, we looked at prices of goods that make up an average middle-class shopping cart, at five points of time after GST, for the five main metros.

    We sourced prices from India’s largest online grocer BigBasket’s website for 71 items, covering 18 categories of the consumer price index. GST was applicable on 47 of these items, and the total billed amount for this basket was around Rs7,000, of which GST was between Rs1,300 and Rs1,700 depending on the city.

    What companies are paying as tax: Up

    Other than in Kolkata, the amount companies paid as tax under GST for our basket is higher now than when the new indirect tax system was launched (see graph 1 below). This could be on account of companies facing higher costs. At the same time, prices paid by consumers have not increased by a similar degree—in fact, they have fallen in most cases. This suggests companies are facing higher costs, but are unable to pass it on; or that they are not passing it on to avoid being seen to be profiteering by the government.

    Screen Shot 2018-02-28 at 11.26.48 AMWhat consumers are paying as prices: Down

    Consumers, though, are paying less for this shopping basket. There are two prices of consequence here. The first is the maximum retail price (MRP), or the price listed on the packet.The second is the selling price (SP), which factors in discounts given by a retailer (here, BigBasket).

    At the MRP level, the price of the overall shopping basket has increased in some instances, notably in Delhi, or has fallen marginally (graph 2). But at the SP level, the consumer is better off. Companies are unable to increase prices and retailers are extending greater discounts to keep customers (graph 3).

    Screen Shot 2018-02-28 at 11.27.44 AM

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      How Have NDA, UPA Governments Fared On Budget Projections?

        This story was first published on Livemint.

        When the finance minister Arun Jaitley presents the budget on 1 February, he will present three sets of numbers. The first is the budget estimates, which are projections for the coming year (FY2018-19).

        The second is the revised estimates for the ongoing year that still has two months to run (FY2017-18), and indicate how close or how far the government was in meeting the projections it made in February last year. The third is the actual numbers for FY2016-17, which shows what the government delivered for the period that ended 10 months ago.

        The tables below show how governments in the last 18 years fared on what they budgeted for and what they delivered in three key areas. Green is good and red is bad. Roughly, half the time governments miss key projections, at times by a long way, as the National Democratic Alliance (NDA) did in its ­first term and the United Progressive Alliance (UPA) did in its second term.hil-kNCD--621x414@LiveMint

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          What Are Governments Spending Their Budget Money On?

            This story was first published on Livemint.

            In 2015-16, on an average, 21% of the budgets of the centre and states was set aside for interest payments and pensions—‘bad spending’ that doesn’t yield any return. Chhattisgarh allocated a greater percentage of its budget to agriculture than any other state: two-and-a-half times that of Madhya Pradesh, from which it was carved out in 2000. Goa and Jammu & Kashmir spent close to one-fifth of their budgets on power.

            The matrix below shows where the Union government and 31 state governments spent in 2015-16. It shows how a state’s spending on 15 key items broken across three categories compares with peers, with the gradation going from green (relatively better) to red (relatively worse).


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              How NDA Compares With UPA On Government Workforce

                This story was first published on Livemint.

                For a government whose stated calling card is “minimum government, maximum governance”, for a government battling to create jobs, its own house paints another picture: in four years under this Bharatiya Janata Party-led National Democratic Alliance (NDA), the number of central government employees is projected to increase 7.2%.

                Staff strength

                In the past, even the government—more specifically, the Fifth Pay Commission—has said the central government is overstaffed. So, what has happened to the government in the past 14 years? The number of central government employees under United Progressive Alliance-I (UPA-I) rule fell 2.7% and those under UPA-II rose 3.4%. In the four years under BJP, the number of central government employees is projected to increase 7.2% by 2017-18. And across ministries, an increase is projected for 50 out of 55 ministries.


                Top 20 ministries

                Just 20 of the 55 ministries account for 98% of the 2017-18 projected central government staff. Even among them, just four ministries account for 91% of staff: railways, home affairs (includes Delhi Police), communications (includes India Post) and finance. Under the previous two UPA governments, several of the top 20 ministries registered cuts. But under the present government, 19 have seen an increase in staff strength, the exception being health and family welfare.


                Where is the increase of government employees happening?

                239,453: That’s the total addition to central government employees projected between 2013-14 and 2017-18. While about 70% of this addition is earmarked for three ministries—finance, home and defence—sizeable numbers are also being added in other ministries. In finance, the big increase is in direct taxes and indirect taxes departments, both of which are expected to double their counts.


                How are salaries increasing?

                In 2017-18, the central government is projected to pay one-tenth of its budget in salaries to employees. In the last 14 years, a period that has seen the recommendations of two Pay Commissions being implemented, the total salary outgo has increased at a compounded annual rate of 14%. As a result, the median salary of ministries has increased more than four-fold.


                2017-18 figures are projections for the year made by the government in February 2017; figures exclude defence forces personnel.

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