Happy Deepavali to all!
While much attention is focused on the ongoing saga of RBI vs. Government of India (my MINT column today too is part of that focus, I admit), the Sardar Vallabhai Patel ‘Statue of Unity’, one needs to focus on substantive developments too. I have done that in my MINT column today.
The data on direct taxes released by the Income Tax Department last week provides cause for cheer. One can see their press release here and the data table here. The press release is full of interesting and important information.
Just a sample:
While 88,649 taxpayers disclosed income above Rs. 1 crore in AY 2014-15, the figure was 1,40,139 for AY 2017-18 (growth of about 60%). Similarly, the number of individual taxpayers disclosing income above Rs. 1 crore increased during the period under reference from 48,416 to 81,344, which translates into a growth of 68%. [Link]
Indeed, the data help to recalibrate the costs and benefits of demonetisation exercise, if one were open-minded to recalibrate. Let us admit that the short-term costs fell disproportionately on rural India and especially those who relied on informal employment and cash payments for wages, etc.
But, at the same time, it cannot be denied that the rising tax buoyancy, rising share of direct taxes in the total tax collection, the jump in the number of taxpayers, in the number of those having an income of more than INR10.0 million (one crore of rupees) paying taxes, etc., mean more money available for development expenditure not just in one year, but year after year. That would help the poor and the marginalised. How does one square one’s trial balance that only shows costs now?
Second the Prime Minister’s twelve-point announcement for micro, small and medium enterprises (MSME) has one important nugget. His point no. 3 was this:
3. Cash flow certainty
It is now mandatory for companies with a turnover of more than Rs 500 crore to join Trade Receivables e- Discounting System (TReDS) so that MSME do not face trouble in cash flow, PM Modi said. [Link]
This is probably the most important of the twelve points the PM had announced for MSME. In fact, it may well obviate the need for flow of directed bank credit to MSME. Point numbers 9 and 10 are also highly laudable. Those are the things that would make India go up in the ‘Ease of Doing Business’ rankings in which it had climbed to 77 on the back of improvement in the ease of securing construction permits. That is the impression I have.
It is a happy coincidence that in the panel discussion on ‘Inclusive growth and prosperous India’ at the India Ideas Conclave in Delhi on Oct. 27, I had mentioned the importance of getting corporate buyers on the TReDS system as access to working capital was a big issue for MSME.
Earlier, on Oct. 26, I had received the B.R. Shenoy award for ‘Outstanding Economist’ announced by Swarajya. You can see the announcement here.
This morning, the BusinessLine reported the following good news on digital banking transactions:
As per data available with the RBI and National Payments Corporation of India (NPCI), the increase in digital payments has been profound in popular channels such as National Electronic Fund Transfer (NEFT) and mobile banking between September 2016 and September 2018.
The value of NEFT transactions had gone up from ₹988,000 crore in September 2016 (just two months before demonetisation) to ₹14,182,000 crore in September 2017, and to ₹18,015,000 crore in September 2018.
The value of mobile banking transactions, too, shot up from ₹2,700 crore in September 2015 to ₹104,300 crore in 2016, and to ₹186,200 crore in 2017. [Link]