News in Numbers, Mar 30, 2017: Bills and losses

14 paise/minute

What is it? The least possible retail price for calls according to leading mobile players Bharti Airtel, Vodafone India and Idea Cellular.

Why is it important? Telecom Regulatory Authority of India (Trai) has rejected the claim. This puts a spanner in the works of embattled telecom players. They had rallied around to protest call charges lower than the interconnect charge of 14 paise a minute. This is paid by the operator on whose network a call originates to the recipient network operator. At the centre of the storm is Reliance Jio, whose pricing is being termed as predatory as its ‘free’ consumer offers involves paying other networks the interconnect charge. It has ardently lobbied for dropping of even the interconnect charges to be able to price its products even lower. But it would hit the income of other networks for connecting Jio’s calls.

Tell me more: Trai will present its argument of rejecting interconnect charges as the minimum retail price to the Telecom Disputes Settlement and Appellate Tribunal this week.

 

213 megawatts

What is it? India’s net exported power in April-February, 2017, turning it into a net exporter for the first time since exports began the mid-80s.

Why is it important? Even as states like Bihar continue to reel from scarce power supply, India turns net exporter, after commissioning new power lines through parts of Bihar, Uttar Pradesh and Nepal. It exported 5,798 megawatts to Nepal, Bangladesh and Myanmar, and imported 5,585 megawatts from Bhutan.

Tell me more: India started exporting electricity in the mid-80s but remained a net importer so far. More cross-border linkages with higher voltage will raise the quantity.

 

4

What is it? The number of money bills, part the last GST-related statutes batch, passed by the Lok Sabha on Wednesday, during the ongoing budget session of the Parliament.

Why is it important? The seminal tax reform, Goods and Services Tax, could now see the light of day as early as July 1, across India. GST will create a uniform indirect tax structure and making the states and Centre equal stakeholders in it through the GST council. With the last four bills — central GST bill, the integrated GST bill, the Union Territory GST bill, and the GST (compensation to states) bill — passed by the lower house, the Rajya Sabha has 14 days to make recommendations only on the laws (money bills).

Tell me more: Between April and May, the GST council will have to categorise goods and services in the four taxation slabs for GST — 5%, 12%, 28% and 28%.

 

5

What is it? The number of amendments with which the finance bill was passed in Rajya Sabha.

Why is it important? The amendments included those relating to additional powers to income tax officials and political funding by companies. These moves by the government were not only criticised for giving too much power to tax officials and reducing transparency, they were also criticised for using Finance Bill to pass far reaching reforms. Rajya Sabha has limited power over Money Bill, it can suggest changes, but Lok Sabha need not accept them. BJP has a majority in Lok Sabha.

Tell me more: Three amendments were moved by Digvijaya Singh of Congress and the remaining two by Sitaram Yechury of CPI(M)

 

Rs 12,000 crore

What is it? The projected loss to automobile sector, including manufacturers and dealers, if the sale of BS-III (those complying to Bharat Stage 3 emission norms) vehicles are stopped from April.

Why is it important? Supreme court banned the sales of all the BS-III vehicles effective April, saying emissions from these vehicles impact the health. Manufacturers still have 8.24 vehicles that comply to BS-III norms, and junking them would result in the losses. However, the Supreme Court said the deadline was set 6 years ago, and the industry was given enough time to prepare for the transition. The vehicles in stock include 96,724 commercial vehicles, 6,71,308 two-wheelers, 40,048 three-wheelers and 16,198 cars. They are now rushing to clear these inventories now.

Tell me more: BS III corresponds to Euro III norms. BS IV – corresponding to Euro IV – is slated to be imposed from April 1st 2017, and BS VI, with even higher standards is expected to come into force by 2020.

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GST: The population factor

The tug of war over the Goods and Services Tax (GST) between the central government and state governments has raised questions on when this system of taxation—which collapses a multitude of taxes into one—will be implemented. When it does, it will change many things, one of which will be how much a state collects by way of taxing goods and services, something that is especially of concern to states with larger industrial bases but smaller populations.

That’s because the basis of GST is different from the basis of the two main taxes it will replace. The first main tax in the present system is excise levied by the Centre: a tax on production, it benefits states with larger industrial bases. The second is VAT (value added tax): a tax on sales levied by states, it benefits states with larger population and consumption.

However, since a company cannot set off the excise paid by it against VAT, states with a higher share of manufacturing collect and retain more taxes than states with a large population and consumption. Basically, the two taxes don’t talk to each other.

GST will change that as it will be levied at the point of consumption, and not production. Thus, prima facie, it will tilt the balance in favour of states with higher population and consumption, even if they don’t have a large industrial base.

So, with GST, which states stand to gain and which stand to lose? This realignment will play out at two levels. Graph 1 below maps three variables at the state level: population (red line), area (blue circle) and tax revenue (green line). The first two are also determinants to calculate a state’s share in GST.

Thus, at the first level, a downward sloping line is indicative of high population states (Uttar Pradesh, Bihar and West Bengal), and they are likely to benefit from GST. An upward sloping line is indicative of states with large industrial bases (Tamil Nadu, Maharashtra and Gujarat), and they could be impacted by the point of sale becoming the point of taxation.

But it’s also true that several states in India with the largest industrial bases (notably, Maharashtra and Tamil Nadu) also have a large population and are leaders in per capita income. So, what these states lose in the first-level shift from manufacturing basis to consumption basis might be offset by their own consumption quotient.

The scatter diagram in Graph 2 below plots similar variables as Graph 1 (with the added nuance of tax per capita). So, for example, while a state like Tamil Nadu might lose revenues because of consumption-based taxation, its high tax per capita, an indicator of higher consumption, would offset this.

The net impact of both factors will determine how much a state loses or gains when GST is implemented.

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News in Numbers, Jan 17, 2017:

Rs 10,000

What is it? The daily limit of cash withdrawal at ATMs, raised from Rs 4,500 by the Reserve Bank of India.

Why is it important? Higher ATM withdrawal limit could be a signal from the central bank that it can now handle cash better since the withdrawal of old Rs 500 and Rs 1,000 notes. Though the overall withdrawal limit a week remains unchanged at Rs 24,000, the decision will reduce the number of trips one has to make to the ATM.

Tell me more: Cash withdrawal limit at ATMs has been raised from the initial Rs 2,000 to Rs 2,500 two days into demonetisation, to Rs 4,500 on December 31, to the current value. Limits on current accounts have been revised from Rs 50,000 to Rs 1,00,000.

8 million

What is it? Estimated tax-payers under the Goods and Services Tax (GST) regime, slated to be unveiled from July 1 of this year.

Why is it important? A crucial milestone was reached on Monday as the centre and the states agreed on the ratio of control over small taxpayers and when to roll out the GST. Small taxpayers with turnover below Rs 1.5-crore will be shared between centre and the states in the ratio of 10:90 for audit and scrutiny. This will be randomly generated.

Tell me more: The draft laws for GST and various tax slabs are yet to be constituted. But in the ninth GST council meeting, there was consensus to meet the new deadline.

Rs 1,243 crore

What is it? The amount of money the Bombay Stock Exchange (BSE) may raise in its initial public offering (IPO) next week.

Why is it important? BSE, Asia’s oldest stock exchange, will be the first IPO in 2017. Last year, 26 firms raised Rs 26,000 crore through IPOs – the third biggest in the last 25 years. Seventeen out of the 26 firms are trading above their listing price.

Tell me more: Singapore Exchange Ltd, Atticus Mauritius and billionaire George Soros’ Quantum will be selling 15.4 million shares for Rs 805-806 a share. The other Indian stock exchange, National Stock Exchange, too, is looking to dilute 22.5% stake for Rs 10,000 crore

$30-50 billion

What is it? Saudi Arabia’s investment in its renewables energy programme to produce 10 gigawatts of power.

Why is it important? The producer of 13.6% of the world’s crude oil production is betting on non-fossil fuels to generate energy for itself. The project’s first stage would be generating nuclear energy. With crude oil bringing in 85% of its forex and accounting for 50% of its GDP, Saudi Arabia is taking steps to ensure its continuity by resorting to other fuels at home and cutting back crude production to prop up global prices.

Tell me more: The first two nuclear reactors would be for 2.8 gigawatts of energy. It will also look to connect to other countries such as Jordan and Egypt for the renewables energy projects

35%

What is it? US President-elect Donald Trump threatened to levy the import tax on German-made cars if they are not locally made.

Why is it important? Trump has legal powers to impose 15% import tariff for 150 days without US Congress approval, and if companies file litigation, it will take 18 months to decide, says Simon Evenett, an international trade expert. Earlier, Trump asked GM and Toyota to shift operations from Mexico to service local demand.

Tell me more: The German automakers’ shares were hit, following the outburst. BMW shares fell by 1.5% in Frankfurt, VW by 1.8% and Daimler (Mercedes Benz-owner) by 1.6%

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News in Numbers, Jan 04, 2017: Unicorns’ babies…

700

What is it? The number of startups spawned by India’s 12 unicorns (with $1 billion plus valuations), according to startup and venture capital tracker Tracxn.

Why is it important? Indicates the kind of contribution such unicorns make towards the startup ecosystem – could be in terms of experience, exposure to the startup culture, financial security orsupport from the unicorn. However, just like any other startup, these also face trouble in terms of sustainability and scaling up and raising resources. For instance, less than one of every 10 startups are able to get funding from an institutional investor and less than 3% are able to get Series B stage funding, according to Abhishek Goyal, co-founder of Tracxn.

Tell me more: This is similar to the host of entrepreneurs created by Infosys and Wipro, whose ex-employees have gone on to set up 867 and 685 companies so far.

 

Rs 23,528.73 crore

What is it? The amount the government has raised via disinvestment in the first eight months of 2016-17.

Why is it important? This is 41.6% of the disinvestment target of Rs 56,500 crore set for 2016-17, better than the previous fiscal’s 36.4%. To accelerate disinvestment process, the Department of Investment and Public Asset Management has replaced annual plans with rolling ones, fast tracked approval process and reserved 20% of shares on public sector units’ offer for sale (OFS) transactions for retail investors.

Tell me more: The government has focussed more on share buybacks(cash-rich public sector units buying the government’s stake in companies) this year rather than raise money from the equity market through the OFS route. Of the total amount raised through this route until November, about 91% (or Rs 21,432.38 crore) has been through minority stake sale in 14 central public sector enterprises and the rest (Rs 2,096.35 crore) through strategic disinvestment.

 

12 nautical miles

What is it? The offshore distance up to which some coastal states wants to levy goods and services tax.

Why is it important? The demand by states such as Kerala, Karnataka and West Bengal could delay GST rollout. Besides, some states also asked for increasing the number of items on which cess would be levied to compensate for the loss in revenues (after the rollout of GST) by up to 40% due to demonetisation. The government was initially aiming for an April 1 rollout but it may reportedly be done by June or July 1, within the mandatory deadline of September.

Tell me more: The earlier proposal was a Rs 55,000 crore GST compensation fund in the first year by levying cess on luxury items and demerit or sin goods over and above the highest tax slab of 28% but now, states expect this to go up to Rs 90,000 crore.

 

Rs 3,500 crore

What is it? The estimated annual fiscal impact of the measures announced by Prime Minister Narendra Modi on the New Year’s eve, according to a report by the State Bank of India research team.

Why is it important? The report has termed this cost to the Indian economy as “minimal” given the “social and economic benefits” of the schemes announced. It has suggested a tweak to the scheme announced for senior citizens: to decrease the lock-in period to five years from 10 and that the maximum deposit limit should be Rs 15 lakh instead of the proposed Rs 7.5 lakh. Under the scheme, senior citizens are to receive a fixed interest rate of 8% for 10 years on deposits up to Rs 7.5 lakh where the interest can be paid monthly.

Tell me more: The Pradhan Mantri Awas Yojana (a housing scheme) is available for those belonging to the Economically Weaker Section (households with annual income up to Rs 3 lakh) and Low Income Group (households with annual income between Rs 3 lakh and Rs 6 lakh). As a rule of thumb, a person with annual income of Rs 6 lakh is eligible for a housing loan of Rs 24 lakh and if this is the case, then the revised scheme announced recently could be a “game changer” as nearly two-thirds of housing loans of 26 public sector banks are in the category of less than Rs 25 lakh.

 

88 million

What is it? The number of cows and buffaloes that would get a 12-digit unique identification number this year.

Why is it important? The idea is to tag and track cattle in order to vaccinate them regularly and to use scientific interventions for better breeding and improve milk production. The government has earmarked Rs 148 crore for the procurement of tags, tag applicators, health cards and tablets. In 2014-15 and 2015-16, milk production has increased by around 6.2-6.3% on a year-on-year basis. India ranks number one in milk production, accounting for nearly a fifth (18.5%) of the global production.

Tell me more: About a lakh technicians with 50,000 tablets have set out this year to affix a tamper-proof polyurethane tag inside the ears of the cattle. After assigning the tag, the technician would enter the number in an online database and provide an animal health card to the cattle owner, which would contain the unique identification number, details of the owner, breeding details, status of deworming and vaccinations.

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