3 MAY 2018
Delivering the goods
GST revenue increase suggests the indirect tax regime is overcoming teething problems
Collections from the Goods and Services Tax crossed the Rs. 1 lakh crore mark in April, according to data released by the Finance Ministry on tax receipts that accrued in March but were payable in April. To be precise, the total revenue from the new indirect tax in April was Rs. 1,03,458 crore, the highest recorded in a single month since its implementation in July 2017. Finance Minister Arun Jaitley has called this a “landmark achievement” and a “confirmation of increased economic activity”. Separate data released last week suggest the number of registered tax-payers filing GST returns by the specified deadline has risen from 57% for July to nearly 63% for March. And since many had consistently failed to meet the deadline in the initial months of confusion over the online returns filing system, it is heartening to note that by the final month of the financial year, they had caught up on their past arrears too. Overall tax compliance for July 2017 is now over 96% of registered taxpayers who are required to file, and ranges from 92% to 80% for each month thereafter, till December. Further simplification of the returns, hanging fire for a while now, must be expedited to improve compliance. Though it referred to the record GST collections as a sign of an upswing in the economy, the government, to be fair, also stressed that this number may be driven by the human tendency to wrap up pending official dues at the last moment — which in this case is the last month of the financial year. Yet, even delayed compliance is a welcome ‘new normal’.
True, the revenue influx in April cannot be taken as a firm trend for the future. But given the tumult the GST caused in its initial months and the fear of high evasion levels that gripped officials when revenues tumbled after three months of Rs. 90,000 crore-plus collections, it is fair to say that the new tax system has ended its first three quarters on a robust note. By virtue of just the April inflows, the average monthly collection has gone from Rs. 89,885 crore in the first eight months to over Rs. 91,300 crore. This number is important, as by the government’s own reckoning the new regime needed to deliver about Rs. 91,000 crore a month to ensure that revenues lost by the Centre and the States under the earlier indirect tax system are covered. Fresh anti-evasion measures introduced in the past few weeks, such as the e-way billing to track movement of goods, could plug leakages to some extent. The government is keen to start matching tax credits claimed by businesses for inputs from suppliers. While these should boost GST revenues in the new financial year, nothing will beat fiscal stress better than a sustained revival in consumption and investment demand. Policymakers need to ensure that the uptick in car sales and demand for steel and cement is catalysed further.
Call to action
WHO highlights the air pollution crisis in urban India; things are no better in rural areas
A new report from the World Health Organisation highlights not only how widespread air pollution is in urban India, but also how deficient air quality monitoring is. The report, which summarised 2016 data for 4,300 cities, ranks 14 Indian cities among the 20 most polluted ones globally. While Delhi comes in at number six, Kanpur, Faridabad, Varanasi, Gaya and Patna are ranked ahead of it, by PM 2.5 levels. And yet, Kanpur, Faridabad and several other pollution-choked cities have only one PM 2.5 monitoring station each, while Delhi has several. WHO researchers get around this problem by using alternative data sources such as satellite remote sensing and chemical transport models, along with ground-monitoring stations. The outcome of this exercise makes it clear that air pollution is not a problem of large metropolises alone, even though they have traditionally been the focus of mitigation efforts. Such wide variations in data quality exist across the world. While Europe has the most extensive monitoring network, countries in Africa and the Western Pacific region perform poorly. This means data from these regions are of poor quality, and likely underestimates, resulting in an under-count of the disease burden as well. The report puts the global death toll from air pollution at seven million a year, attributable to illnesses such as lung cancer, pneumonia and ischemic heart disease. In 2016 alone, it says, around 4.2 million people died owing to outdoor air pollution, while 3.8 million people succumbed to dirty cooking fuels such as wood and cow dung. About a third of these deaths occurred in Southeast Asian countries, which include India. Once monitoring improves in these regions, the numbers will likely be revised upwards.
There are silver linings, however. The report had words of praise for India’s Pradhan Mantri Ujjwala Yojana scheme, which has provided 37 million women living below the poverty line with LPG (liquefied petroleum gas) connections.Such schemes will also help cut the indoor air pollution that plagues much of rural India, which is not covered in the WHO analysis. It is important to remember, though, that rural India has problems beyond inefficient cook-stoves. As the recently published draft National Clean Air Programme noted, there are currently no air pollution monitoring stations in rural India. This does not mean outdoor air pollution is not a problem here. Studies have shown that ozone levels are higher in rural areas, as is pollution from insecticide use and crop-burning. The WHO has asked Southeast Asian countries to take swift action to tackle the twin problems of indoor and outdoor pollution. India must realise that its problems are larger than the WHO estimates, and take the call to action seriously.