Economy One Year Current Affairs (Set-2)

Table of Contents

Topics to discuss

15th finance Commission
Economic census
National statistical office
GST
Direct tax code
Disinvestment
Foreign Currency Borrowing
Bodies in news

Which of the following Statements is correct regarding finance commission?

It is a statutory body
Its recommendations are binding on the government
15th Finance commission is headed by N.K.Singh
None of the given option is correct

15th Finance Commission

15th FC is to submit two reports – one for 2020-21 and another for 2021-26. The deadline for 2021-26 Report is October 30, 2020.
15th FC was to submit its report for period 2020-2025. However, its term was extended last year. Now, apart from present interim report, it will submit its second report for 2021-22 to 2025-26 in October.

Background

Article 280 of the Constitution of India provides for a Finance Commission as a quasi- judicial body, which is to be constituted every 5 years to recommend the distribution of net proceeds of taxes between Centre and states, and among state
It is constituted by the president of India every fifth year or at such earlier time as he considers necessary
Members of finance commissions
The chairman should be a person having experience in public affairs and 4 others members should be selected from amongst the following
A judge of high court or one qualified to be appointed as one
A person who has specialised knowledge of finance and accounts of government
A person who has wide experience in financial matters and in administration A person who has special knowledge of economics

Key recommendations

Reduction in share of states in divisible pool of central taxes to 41% from prevailing 42%.
Newly formed Union Territories of Jammu and Kashmir, and Ladakh, will now get funds from Centre’s share.
Reintroduced performance-based incentives to states on 2 parameters – demographic performance (based on Total Fertility Rate) and taxation efforts.
Enhanced devolution to local bodies compared to 14th FC

Economic Census- Background

The process of Economic Census was first held in 1977. So far 6 census have been conducted in the years 1977, 1980, 1990, 1998, 2005, 2013. Present Census will provide disaggregated information on various operational and structural aspects of all establishments in the country.

The census will provide valuable insights into geographical spread/clusters of economic activities, ownership pattern; persons engaged etc. of the establishments engaged in economic activity
Which of the statement is correct regarding the GST council?

It is a constitutional body, for making recommendations to Union & State Govt. on issues related to GST
It is headed by RBI governor.

Which of the above statements is/are correct?

1 only
2 only
Both 1 and 2
Neither 1 nor 2

Goods and Service tax

GST is a destination-based indirect tax and is levied at the final consumption point.
Under GST, a gamut of 17 indirect taxes like excise duty, VAT, service tax, luxury tax etc are subsumed
GST is currently levied on every product [except petroleum products, alcohol, real estate & electricity] in four slabs of 5, 12, 18 and 28%.
Most of the daily use articles have zero GST as per the latest revision of the tax rates last year.
In addition, a cess is levied on automobiles, luxury, and demerit and sin goods.
It was launched on 1st July, 2017 in a special session of Parliament.
GST collection rose 6% to cross Rs 1 lakh crore mark in November

GST Council

It is a constitutional body (Article 279A) for making recommendations to Union & State Govt. on issues related to GST.
It is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States
Every decision of the council has to be taken by a majority of not less than three-fourth of the weighted votes of the members present.
The vote of the central government has a weightage of one-third of the total votes cast, and votes of all the state governments together have a weightage of two-thirds of the total votes cast

Direct Tax Code

The task force, headed by Akhilesh Ranjan, submitted the draft legislation of the Direct tax code WHY IN NEWS
The Direct Tax Code (DTC) is an attempt by the Government of India to simplify the direct tax laws in India.
It will revise, consolidate and simplify the structure of direct tax laws in India into a single legislation.
When implemented, it will replace the Income-tax Act, 1961 (ITA), and other direct tax legislations like the Wealth Tax Act, 1957

Tax Buoyancy

Tax buoyancy is one of the key indicators to assess the efficiency of a government’s tax system.
Generally, as the economy achieves faster growth, the tax revenue of the government also goes up.
Tax buoyancy explains this relationship between the changes in government’s tax revenue growth and the changes in GDP.

Disinvestment

Disinvestment refers to the government selling or liquidating its assets or stakes in PSE (public sector enterprise).
The Department for investment and public asset management (DIPAM) under Ministry of finance is the nodal agency for disinvestment
Methods of Disinvestment
Stock market: Initial Public Offering (IPO), Further Public Offering (FPO), and Offer for sale (OFS) offer are such methods through the stock markets. Institutional Placement Program (IPP): only Institutions can participate in the offering.
Exchange Traded Fund (ETF)- it allows simultaneous sale of government stake in various CPSEs across diverse sectors through single offering. It provides a mechanism to monetize its shareholding in those CPSEs, which form part of the ETF basket. Currently, it consists of (i) CPSE-ETF and (ii) Bharat-22 ETF (Covered in detail in financial market videos)

Strategic Disinvestment

It is the sale of substantial portion of the Government shareholding of a central public sector enterprise (CPSE) of up to 50%, or such higher percentage along with transfer of management control.
It is intended for efficient management of Government investment in CPSEs.
Disinvestment allows the transferring of the Indian government’s enormous public debt of its PSUs to the Indian private sector

National Statistical Office

The ministry of statistics and programme implementation (Mospi) passed an order on 23 May to merge the Central Statistics Office (CSO) and National Sample Survey Office (NSSO) into the National Statistical Office (NSO).
It is responsible for conduct of large-scale sample surveys in diverse fields on All India basis.
The NSSO is a subordinate office and CSO is an attached office under MoSPI. The only major difference is that the NSSO undertakes fieldwork for all surveys and there is no fieldwork undertaken by CSO
The NSO has four Divisions: Survey Design and Research Division (SDRD) , Field Operations Division (FOD) , Data Processing Division (DPD) , Survey Coordination Division (SCD)
Divisions of NSO
Survey Design and Research Division: This Division, located at Kolkata, is responsible for technical planning of surveys, formulation of concepts and definitions, sampling design, designing of inquiry schedules, drawing up of tabulation plan, analysis and presentation of survey results
Field Operations Division (FOD): The Division, with its headquarters at Delhi/Faridabad and a network of six Zonal Offices, 52 Regional Offices and 117 Sub-Regional Offices spread throughout the country, is responsible for the collection of primary data for the surveys undertaken by NSO.
Data Processing Division (DPD): The Division, with its headquarters at Kolkata and 5 other Data Processing Centers at various places, is responsible for sample selection, software development, processing, validation and tabulation of the data collected through surveys.
Survey Coordination Division (SCD): This Division, located at New Delhi, coordinates all the activities of different Divisions of NSO. It also brings out the bi-annual journal of NSO, titled “Sarvekshana”, and organizes National Seminars on the results of various Socio-economic surveys undertaken by NSO

Which of the statement is correct regarding the Financial stability and development council?

It is a statutory body, setup to to strengthen and institutionalize the mechanism for maintaining financial stability
It is headed by Union finance secretory.

Which of the above statements is/are correct?