Economy & Business
All services, including air travel, telephony, eating out and banking turned expensive from November 15 as the Central Government decided to impose a 0.5 per cent on all taxable services to fund the Swachh Bharat programme. The additional cess would be over and above the 14 per cent Service Tax rate which is already being levied and may yield the government an additional about 400 crore during the remainder of the current fiscal.
The Union Finance Minister Arun Jaitley had in Budget 2015-16 proposed to levy a Swachh Bharat cess of up to 2 per cent “on all or certain services, if need arises”. The decision to impose 0.5 per cent cess will translate into a tax of 50 paise only on every 100 worth of taxable services.
“Swachh Bharat cess is not another tax but a step towards involving each and every citizen in making contribution to Swachh Bharat. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives,” Mr Jaitley had then said. Swachh Bharat is among the major initiatives of the Modi government, which has embarked on a major drive to ensure cleanliness across the country.
The government had in Budget 2015-16 estimated to collect over 2.09 lakh crore from Service Tax. The 400 crore collection from the cess would be over and above that.
The Finance Ministry statement said that being a vast and populous country with 120 crore people, there is a fair share of cleanliness concerns. It said persons entrusted with the job of keeping our country clean, struggle constantly. Cleanliness also has huge impact on public health. Dirty surroundings also cause many diseases like malaria, dengue, diarrhoea, jaundice, and cholera with associated high public health xpenditure.
According to government estimates, expenditure on health adds up to 6,700 crore annually (approximately 60 per capita). “Increased allocation for Swachh Bharat Abhiyan can prevent many of these diseases with consequential benefit to one and all,” it added.
India, Brazil and South Africa are set to sign an agreement on India–Brazil–South Africa (IBSA) fund for alleviation of poverty and hunger. The Union Cabinet approved the signing of the tripartite agreement among the three IBSA countries. The decision will help in strengthening the IBSA Fund which is a unique vehicle in the context of South-South cooperation.
The IBSA countries contribute U.S.$1 million each annually to the Fund, which till January 2015 had accumulated to U.S.$28.2 million, with total implemented/approved projects commitment of U.S.$26.2 million, and remaining U.S.$2.09 million available for programming. India on its part has contributed U.S.$9.1 million so far to the IBSA Fund.
The IBSA Fund for the alleviation of poverty and hunger was set up in 2004 as one of the three pillars of cooperation under the IBSA dialogue forum. The other two pillars are consultation and coordination on global political issues and trilateral collaboration in concrete areas and projects.
The IBSA Fund undertakes development projects in third countries. The first project to be financed by the IBSA Fund was in support of agriculture and livestock development. The IBSA Fund was conferred the South-South Partnership Award at the 2006 UN Day event held in New York in December 2006.
Bihar has emerged as the fastest growing state in terms of gross state domestic product (GSDP), clocking a growth rate of 17.06 per cent in FY 2014-15, while Maharashtra grew by 11.69 per cent to become the biggest state with 16.87 trillion economy, according to the report by Brickwork Ratings.
Tamil Nadu and Uttar Pradesh come in the second place, but far behind Maharashtra, with a GSDP of 9.67 trillion each. However, Gujarat leads Maharashtra when it comes to composition of industry in GSDP at 27.26 per cent, versus the latter’s 25.18 per cent, the domestic rating outfit said.
Fastest-growing states are Bihar at 17.06 per cent, Madhya Pradesh at 16.86 per cent and Goa at 16.43 per cent, while the newly-formed Telangana, with expansion of 5.3 per cent, is the laggard.
Along with Karnataka, Tamil Nadu and Andhra Pradesh, Maharashtra is at the forefront of development in the services sector with a healthy growth in the IT/BPO/KPO space, it said.
On infant mortality rate (the number of infant deaths for every 1,000 live births), Maharashtra’s 25 is half of the national average of 50. Maharashtra is also the leader when it comes to dependence on taxes collected within the state, which account for 70 per cent of total revenue receipts, it said, adding it is followed by Gujarat and Tamil Nadu.
Bihar, Odisha, Tamil Nadu and Kerala spend the most on pensions, while Karnataka and Maharashtra have kept this item of expense ‘reasonable’, the report said.
Andhra, West Bengal, Uttar Pradesh, Maharashtra and Tamil Nadu account for about 60 per cent of the outstanding debt of States. Agriculture contributed 19 per cent of states’ GSDP and supported between 40 to 60 per cent of the workforce.
Top five states with higher share of farm sector are Punjab, Madhya Pradesh, Bihar, Andhra and West Bengal, where agriculture contributes between 23 and 29 per cent of the GSDP, the report said, but rued the key segment remains neglected for 60 years in spite of emphasis on it by all political parties. The futures markets are not well developed and farmers have to bear the price risk of crops. That results in everyone going for the same crop like sugarcane and the sugar factories unable to crush the standing cane, the report said.
Contribution of industry to states’ GDP is very low at an average of 27 per cent compared to 40 per cent-47 per cent in other developing countries. “Access to finance, regular technology upgradation, skill enhancement, regular supply of power and market support through stronger links with larger firms have to be improved to boost competitiveness of manufacturing sector,” it said.
On the expenditure front, the report said states spent an average 43 per cent towards social services, 22 per cent on economic services and 23 per cent on general services.