Ajay Srivastava (for Info only, not official)

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Ajay Srivastava

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    ...The US and EU are currently supporting agriculture the way they promoted industry in the 1930s. Which was, to put it in a nutshell: using the latest technology to maximise output, high tariffs to discourage imports and massive subsidies to push exports. Outsmarting everyone, China has acquired large tracts of land along the proposed “New Silk Road” to grow food and avoid food imports from the US and Oceania. And the UN’s Food and Agriculture Organisation says that by 2030, most developing countries will be dependent on imports from developed countries for their food requirements. Where does India stand? These developments add a ticking clock to our plans to transform agriculture. Doubling farmers’ income in next five years can be an apt metaphor and goal for this transformation. Indian agriculture suffers from low productivity, low quality awareness and rising imports. To improve, we must understand the underlying causes for each of these. Droughts in 2014-15 reduced agricultural income substantially as over 60% of farming is rain dependent. ...

    TOI on Nov. 28, 2017, 2 a.m.

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    ...But what is the reality of India-China trade? India exported goods worth $10 billion to China in 2005. India had a trade surplus with China during 2003-5, reveals trade data maintained by China. In 2016 Indian exports are still about $10 billion, but its trade surplus has turned into a deficit of more than $50 billion. What happened in the intervening years? The trade deficit was largely the result of China’s technical advancement. But China’s strategy to stifle Indian imports also played an important part. During 2005-16 India emerged as a competent global supplier of polished diamonds, small cars, generic medicines, buffalo meat, etc. China imports these products in large quantities for domestic consumption, but not Indian products. ...

    TOI on Aug. 19, 2017, 2 a.m.

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    ...But specific GST provisions nullify these gains, making exporting high cost and complex. Worse, most small firms would not qualify to export. This will upset manufacturing, employment, exports and other economic parameters. The GST provisions on exports need an urgent review. Firms have to pay GST at every stage. This is ironic as exports are zero rated under GST, implying no tax burden. An exporter has to pay GST at the time of buying inputs and exporting the finished goods. He can seek a GST refund after the exports. The refund may take place after 3 to 12 months of payment of taxes. This gap makes exports expensive. Firms will have to borrow money not only to buy inputs but also to pay taxes and interest. Let us say a firm adds 30% value to inputs, it would then need to buy raw material of value Rs 77 for exports worth Rs 100. If the GST rate is 18%, he would need to borrow Rs 13.80 from the bank to pay the GST. The capital lock up at the country level would be staggering. ...

    TOI on Aug. 10, 2017, 2 a.m.

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    ...From the largest firms to the smallest mobile phone sellers, everyone is busy getting ready for the new tax law. They are both excited and nervous. Excited as most people find the basic promise of GST compelling. Firms would pay less number of taxes (One GST replaces 17 taxes), less amount of tax (average GST rate for industrial products is 18% compared to 25-28% of tax burden now), and face less tax on tax incidences. The uniform GST rates across the states would further reduce the tax burden and compliance cost. Plus, no more hiring of a large number of staff to pay many taxes levied at the central, state and local levels, each with a different tax compliance system. No need to maintain a cozy relationship with the tax officer. All one needs to do is register with the GST Network website, fill the prescribed online forms and pay tax. Elimination of physical contact with the tax officer will be the game changer, many argue. The general mood is that GST will make doing business transparent and profitable. ...

    TOI on June 29, 2017, 2 a.m.

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    ...The lower tax rate is not the only benefit GST offers. It will provide a push to manufacturing in three big ways. One, GST replaces eight central and nine state taxes such as central excise duty, service tax, state VAT and entry tax. This means the end of an era of multiple taxes levied at central, state and local levels, each with a different tax compliance system. Two, GST reduces the cascading effect of taxes. An example will explain the current system. A manufacturer pays central excise at 20% on a shirt of value Rs 100. Next, the state government charges VAT not on Rs 100 but on Rs 120 which is the value of shirt and the tax already paid. VAT rate of 15% in effect becomes 18%, leading to a higher price of the shirt. GST resolves the issue by integrating tax systems of Centre and state. Also, GST is to be paid only on the value addition and not on absolute value. Three, GST would lead to lower transportation and distribution costs. Currently, firms spend a high 5-8% as product distribution and warehousing cost. ...

    TOI on May 25, 2017, 2 a.m.

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    ...But while team Trump has taken action against H1B visas and the like, one might wonder why nothing tangible has been done on the import duty issue so far. The answer is straightforward: the US has already surrendered its flexibility to increase import duty at the WTO. Any duty increase now will fall foul of WTO commitments. Water shortage is the most fundamental trade policy problem faced by the Trump administration. Water is a standard WTO term that signifies the flexibility available with the countries to increase import duty on a product. It is the difference between bound and applied duty of a product. Bound duty can be understood as the ceiling duty, crossing which would violate WTO commitments. So, if the bound duty for a product is 40% and applied duty is 10%, water will be 30% and the country has flexibility to raise the applied duty from 10% to 40%. Higher the water, greater the flexibility available to a country to raise duty. ...

    TOI on May 13, 2017, 2 a.m.