Little gain from current GST
Apropos of the column “NDA’s Parliamentary track record under threat” (July 20), there seems to be a valid point in the columnist advising the government not to press for the passing of the GST Bill. Revenue collections can increase if cenvat credit is not allowed to be adjusted against the service tax collected from consumers. Service-tax is just like expenditure tax, which used to be a direct tax under the Expenditure Tax Act, 1957, which was repealed in 1987. At that time, the minimum rate of expenditure tax was 10% and maximum 80% with basic exemption of R30,000. Today, even maid servants are paying service tax @14%. Even if GST is withdrawn or withheld for a year, India can have buoyancy of revenue collection on the account of service-tax (if no cenvat credit is allowed against service tax collected). In my opinion, the service tax collection itself will go beyond R4 lakh crore as against R2 lakh crore, the budgeted estimate for FY16.
SC Aggarwal, Delhi
Clean India needs innovation
I believe Santosh Tiwari has it got it correct in his Corridors of Power column “NDA’s Parliamentary track record under threat” (July 20). The NDA government needs to consistently innovate to deliver better governance. On garbage and climate change, I tried a low-cost garbage garden that can give us great relief on the waste management front. I contacted the urban development, water resources and environment ministries as well as the PMO, but there was hardly any response. India needs to solve its energy, pollution and waste management crises. Why not encourage the market for non-fossil fuel energy even more? Action on climate change needs new, India-specific answers, not solutions imported from the West. The government needs to encourage problem-solvers and innovators, if it can’t come up with solutions itself.
Apropos of the edit “Peaceful exit” (July 21), allowing private sector players to exit is hardly a solution to the problem of stuck UMPPs, tied up thanks to agreements that do not factor in the shift in ground realities from the date of signing of the agreement to the date of actual commissioning of the project. Bankers should do more legwork while assessing the venture, carefully scrutinising the track-record of the promoters. The ambitious UMPP projects are falling flat and the progress has been dismal. The government would like to put the setback behind and make the terms and conditions of bidding for UMPPs more investor-friendly. However, there is not much improvement in the financial health of SEBs as most of them are still running huge losses. Therefore, the lull in the distribution business is likely to affect generators no matter how much the policy is tweaked to favour them. This is a big negative for attracting foreign investment to the Indian power generation business. The politicians arbitrarily fixing power tariff and ignoring input cost in the power sector must wake up and address the issue.