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Current Affairs - 29 July 2017


General Affairs 

Akash missiles, aimed at taking-down Chinese fighters in eastern sector, not installed: CAG
  • Indigenously built Akash, surface-to-air missiles (SAM) that were to be positioned in the vulnerable Siliguri corridor (also referred to as the Chicken's neck) to take-down incoming Chinese Air Force fighters, have not been installed, the Comptroller Auditor General of India (CAG) has observed.
    What is worse, at least 30 per cent of the missiles supplied to the IAF have been found to be faulty.
    The stand-off at Doklam in Bhutan between Indian and Chinese troops is a few kilometres away from the Siliguri Corridor. National Security Advisor Ajit Doval met his Chinese counterpart Yang Jiechi on the sidelines of the BRICS NSAs meeting in Beijing.
    ALL YOU NEED TO KNOW ABOUT THE CAG REPORT
    1. The CAG calls the missiles "strategic" and says "the missile systems were to be installed at six designated sites between 2013 and 2015". But till date, none of the missiles systems have been installed. The CAG report was placed before the Parliament today.
    2. The total cost of the project was about Rs 3,900 crore, out of which the IAF has already paid Rs 3,800 crore.
    3. The IAF was to deploy six Akash missile squadrons east to counter China's build-up of military infrastructure all along the Line of Actual Control (LAC). China has eight fully-operational airbases in Tibet.
    4. And, that isn't all. The CAG report says that about 30 per cent of "strategic missiles" made by BEL - a defence public sector unit - failed when they were test-fired. "The larger issue is that 30 per cent failure rate of the sample tested puts a question mark on the reliability, based on which 95 per cent of the payment was already done", the CAG said.
    5. Even worse, the CAG has observed that a life-span of at least 70 missiles was reduced by more than three years because there was no storage facility available. Each Akash missile costs a few hundred crores.
    6. The life-span of other 150 missiles was diminished by at least "two to three" years and that of another 40-odd missiles by at least a "year or two years". The Akash missiles, which have a range of about 25 km, have a lifespan of about 10 years "from the manufacturing date" and they need to be stored under controlled conditions.
    7. "Due to delay in the creation of prescribed storage rooms, all the missiles received during April 2014 to May 2016 were kept at alternate facilities that lacked the required storage conditions", the CAG report says and adds that at least 71 missiles were affected by "moisture."
    8. The then UPA government cleared the deployment of Akash missiles in 2010 in the Siliguri corridor as Indian changed its China policy from "dissuasive to deterrence".
    9. After the 1962 debacle, India followed a policy of dissuasion against China. Areas along the Line of Actual Control (LAC) were deliberately left under-developed, roads weren't built to dissuade China from going on the offensive.
    10. But as China added to border infrastructure, and added troops and muscle to its military, India moved to a posture of deterrence, positioning troops, fighters, along the border.

Nitish Kumar wins trust vote in Bihar Assembly with 131 votes
  • Two days after he dramatically embraced the BJP, Chief Minister Nitish Kumar today proved his majority in the Bihar Assembly while the RJD protested in the House during the confidence vote. Kumar won the crucial vote a day after he was sworn in as the head of a Janata Dal (United)-BJP government. 
    The ruling coalition of the JD-U, the BJP and others won the floor test with 131 votes in his favour in the 243-member Assembly.The Opposition led by Lalu Prasad's Rashtriya Janata Dal (RJD) could manage 108 votes, Speaker Vijay Kumar Chowdhury said.
    The trust vote was taken through lobby division. The NDA had earlier submitted a list of 132 MLAs to the Governor. These include 71 of the JD-U, BJP 53, RLSP two, LJP two, HAM one and three Independents. 
    In the 243-member Bihar Assembly, the RJD has 80 MLAs, the Congress 27 and the CPI-ML has three. Contrary to fears, no cross-voting took place during the show of strength.
    Soon after the assembly met, Nitish Kumar moved a resolution to seek a trust vote. Apparently convinced that the JD-U-BJP government had adequate support to win the motion, RJD members protested in and out of the House.
    Nitish Kumar said the 2015 mandate was for 'janta ki sewa' (serving people), not for anything else. "The mandate was for governance," he said in a short speech in the Assembly.
    He said no one can lecture him on secularism. "I know and understand secularism."
    OPPOSITION CRIES FOUL
    The Rashtriya Janata Dal (RJD) accused Nitish Kumar of insulting the mandate of 2015 by joining hands with the Bharatiya Janata Party and dumping his election allies the RJD and the Congress which made him the Chief Minister.
    Leader of Opposition Tejashwi Yadav, who was the Deputy Chief Minister, said voters had been stabbed in the back. "People who voted for the Grand Alliance are being betrayed. Nitish Kumar got the mandate against the BJP but joined hands with it to form the government," he said.
    Tejashwi Yadav, son of RJD chief Lalu Prasad, said Nitish Kumar had insulted the people of Bihar by joining hands with the BJP. "We will go to the people to expose Nitish Kumar's doublespeak and hypocrisy."
    Earlier, the JD-U and BJP issued whips to their legislators to support Nitish Kumar during the confidence vote. The RJD and Congress also issued similar whips.

    Nitish Kumar on Wednesday resigned as Chief Minister and tied up with the BJP and took oath as Chief Minister on Thursday with BJP's Sushil Modi as his Deputy.

Congress says BJP is using cops to woo away their MLAs in Gujarat
  • The Congress today levelled a very serious charge against the BJP. It said the BJP is wooing away their legislators in Gujarat ahead of the upcoming Rajya Sabha elections.
    The matter was raised in the Rajya Sabha by Deputy Leader of Opposition, Congress' Anand Sharma. He charged the BJP with using the police to woo away Congress' legislators in Gujarat.
    "If you are in government, you'll rob MLAs?" Sharma questioned.
    Yesterday, three Congress MLAs, including the party's chief whip, Balwantsinh Rajput, quit the party. Rajput was immediately offered a ticket by the BJP to contest the Rajya Sabha elections from the state. This, the Congress cited as a clear example of the BJP orchestrating "defections".
    "One MLA, PI Patel, after a CLP meeting went to another MLA's residence for tea. There a District Superintendent of Police came, and told him he won't get a ticket from the Congress. Now your Gujarat police will decide who the Congress will give a ticket to?" asked a visibly angry Ghulam Nabi Azad. Patel resigned from the Congress yesterday.
    Azad alleged that the concerned District Superintendent of Police has been to jail on encounter charges and is currently out on bail.
    Reacting to this, Parshottam Rupala, Union Minister from Gujarat, thundered, "This is Congress' internal matter. Their LoP in Gujarat leaves party, their MLAs leave. They cross-vote in Presidential elections. Why is he complaining here? Why is he defaming Gujarat?"
    Congress demanded the Chair, Rajya Sabha to direct Election Commission to conduct free and fair elections. Deputy Chairman PV Kurien said he could not do that and the Congress should approach the Election Commission if they have a complaint.
    Minister of state for Parliamentary Affairs Mukhtar Abbas Naqvi quipped, "Their (Congress) problem is their house is crumbling. They can't manage their house and are rather screaming around in the neighbourhood about it."
    Rajya Sabha kept getting adjourned over disruptions by the Congress on this issue. So far, five Congress legislators have abandoned the party in Gujarat since yesterday. More are anticipated to join the bandwagon.

Ajit Doval in Beijing calls for BRICS to play a more prominent role in fighting terror
  • National Security Adviser Ajit Doval in Beijing called on the BRICS grouping to "take a leadership role" in combating global terrorism, as he held key meetings with the Chinese leadership and BRICS national security advisers.
    Doval on Thursday held bilateral talks with his Chinese counterpart Yang Jiechi, taking place amid the ongoing border standoff at Doklam near the India-China-Bhutan trijunction.
    On Friday, Doval attended a BRICS NSA's meeting - the main purpose of his trip to China - and will also call on Chinese President Xi Jinping.
    At the summit, the NSA called for the BRICS grouping to play a more prominent role in fighting terror.
    He said BRICS "needs to show leadership in countering terrorism" as well as "take a leadership role" on "strategic issues of regional and global importance" and "in areas where we have consensus".
    Doval also thanked China for hosting the meeting of high-level security representatives and said he "is very happy to be here in Beijing".
    The NSA said the BRICS grouping had "grown in global significance over the years" and that the BRICS NSA's forum should become a platform for the countries "to discuss security issues that impact global peace and stability."
    India is keen for the grouping to issue a strong statement on terror at its September summit in Xiamen on September 3, which will be attended by Prime Minister Narendra Modi.
    The fight against global terror has, however, become somewhat of a sticking point in India-China relations, considering China's close relations with Pakistan.
    Minister of State for External Affairs Gen (retd) VK Singh said last month at the BRICS foreign ministers' meet in Beijing that "terrorists cannot be differentiated by calling them good or bad."
    While not mentioning Pakistan specifically, the message is also aimed at China which has extended diplomatic support to Pakistan by preventing the sanctioning of Pakistani terrorists at the UN Security Council sanctions committee. For instance, Beijing has stymied attempts by India as well as other countries to list the terrorist Masood Azhar.
    "They are terrorists and they are criminals and we need to have a concerted action both in the region and internationally to curb their activities," Gen. VK Singh said then.

To check Assam floods, 800-mile highway embankment on Brahmaputra planned
  • Government officials said they plan to build a 1,300 km (800 mile) highway along the Brahmaputra River in Assam to limit damage from annual floods, even as environmentalists said it would be ineffective.
    The proposed six-lane highway will cost about 400 billion rupees ($620 million), making it among the most expensive infrastructure projects in the state.
    "The Brahmaputra Highway will serve the twin purpose of taming the annual floods and drastically improving connectivity in the region," said Assam Chief Minister Sarbananda Sonowal.

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    "This is a long-term effort to tame the Brahmaputra as it will be a road-cum-embankment aimed at checking the perennial floods in Assam," he told the Thomson Reuters Foundation.
    The state has done a preliminary survey and will submit a report to the transport ministry shortly, he said.
    Transport Minister Nitin Gadkari said in New Delhi Wednesday that the project would be fast-tracked.
    The 2,900 km Brahmaputra is one of Asia's largest rivers. It runs through Tibet, India and Bangladesh before draining into the Bay of Bengal.
    An overflowing Brahmaputra River inundates hundreds of villages and displaces tens of thousands of people every year, while also damaging property and killing livestock and wildlife. Last year more than 20 rare one-horned rhinos drowned in a national park.
    70 KILLED IN FLOODS
    More than 70 people have been killed so far this year, as the state bears the brunt of heavy monsoon rains.
    India has the world's highest exposure of gross domestic product to river flooding, with more than $14 billion exposed every year, according to the World Resources Institute.
    That could increase more than 10-fold to $154 billion by 2030, WRI estimates.
    Embankments are widely used in Assam and elsewhere in the country as a way to contain river flooding.
    But breaches are common, causing widespread damage.
    "We are yet to build an embankment that does not breach. They are a flawed way to manage floods, as they interfere with the natural flow of rivers," said Dinesh Mishra of Barh Mukti Abhiyaan, a campaign that works with communities in flood-prone areas to manage flooding.
    "They restrain the river and therefore increase its intensity, so a breach is inevitable and causes even more devastation, as we have seen any number of times," he said.
    The annual flooding of the river is a natural feature that is essential for cultivation when the waters recede. Embankments also interfere with this process, he said.
    Mishra and other activists also oppose a planned $50 billion project to interlink rivers to divert water from surplus areas to those that suffer from drought. The environmental impact of the project would be huge, they say.

Business Affairs 

    Larsen & Toubro Q1 net profit zooms 46% to Rs 893 crore
    • Engineering and construction conglomerate Larsen & Toubro (L&T) today registered a 46 per cent jump in consolidated net profit to Rs 893 crore for the first quarter ended June 30, 2017.
      The company, which said first quarter of FY18 witnessed lower economic growth in the country in the aftermath of demonetisation, had clocked a consolidated net profit of Rs 610 crore in the corresponding quarter of previous fiscal.
      "Consolidated Profit After Tax (PAT) for the quarter ended June 30, 2017 at Rs 893 crore was higher by 46 per cent vis- -vis PAT of Rs 610 crore for the corresponding quarter of the previous year," the company said in a statement.
      Larsen & Toubro recorded Consolidated Gross Revenue of Rs 23,990 crore for the quarter under review, registering an increase of 10 per cent on an year-on-year basis. The International revenue during the quarter at Rs 8,233 crore constituted 34 per cent of the total revenue.
      "The company won new orders worth Rs 26,352 crore at consolidated level during the quarter ended June 30, 2017 in a challenging business environment. International orders at Rs 7,885 crore constituted 30 per cent of the total order inflow.
      Major orders during the quarter were secured by infrastructure segment," it said.
      Consolidated Order Book of the group stood at Rs 262,860 crore as on June 30, 2017, marginally higher by 2 per cent on an year-on-year basis. International Order Book constituted 26 per cent of the total Order Book.
      The engineering giant said the first quarter of FY18 witnessed lower economic growth in the country in the aftermath of demonetisation.
      "Bank credit to industry remained muted and investment momentum was largely driven by public sector spends.
      Transition to GST, implementation of RERA and the Insolvency and Bankruptcy Code demonstrate the Government's will to carry out structural reforms to boost growth and bring in financial prudency and propriety," it said.
      Prospects of a good monsoon, rural wage growth, pay hike for state government employees, lower lending rates and a modest pick-up in external demand are expected to catalyse GDP growth, the company said.
      It said global markets continue to witness a low growth trajectory and lower investment outlay is a natural consequence of fiscal pressures faced by regulatory authorities in different countries.
      "The company's focus continues to be on selective order intake, working capital reduction, cost optimisation through strengthening execution & operational efficiencies and productivity enhancement through digitalisation and other initiatives. The company is optimistic of its growth aspirations in the medium term as the economic outlook improves," L&T said.
      The company said its infrastructure segment achieved customer revenue of Rs 10,539 crore for the quarter ended June 30, 2017, registering an increase of 16 per cent driven by better project execution.
      Power segment recorded customer revenue of Rs 1,763 crore during the quarter ended June 30, 2017, registering a marginal growth of 2 per cent over the corresponding quarter of the previous year.
      Heavy Engineering segment achieved customer revenue of Rs 625 crore registering a decline of 5 per cent over the corresponding quarter of the previous year. Electrical & Automation (E&A) segment recorded customer revenue of Rs 1,206 crore during the quarter ended June 30, 2017, registering an year-on-year increase of 21 per cent.
      While hydrocarbon segment recorded customer revenue of Rs 2,546 crore, IT & Technology Services Segment achieved customer revenue of Rs 2,536 crore during the quarter and financial services segment recorded customer revenue of Rs 2,294 crore.
      Larsen & Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with USD 17 billion in revenue.

    Yes, Rs 200 notes may be issued next month. No, Rs 2000 notes will not be banned
    • Minister of State for Finance Santosh Kumar Gangwar has stated that Rs 200 notes will be in circulation soon. The Reserve Bank of India, as reports suggest, has already begun printing the new notes.
      The Rs 200 note is meant to sort out difficulties in transactions while using the new Rs 2000 notes and due to lack of sufficient Rs 500 and Rs 100 notes
      Even the largest commercial bank of the nation, State Bank of India , has praised the move to release new Rs 200 notes calling it the 'missing middle'.
      The note could be released in the month of August, news agency IANS reported while quoting anonymous government sources.
      "The paper for Rs 200 notes was ready in the Mysuru paper mill in June. It should be in circulation next month," IANS reported.
      The Mysuru paper mill is jointly run by Bharatiya Reserve Bank Note Mudran, a RBI subsidiary which prints currency notes, and Security Printing and Minting Corp of India Ltd (SMPCIL), which is a public sector unit.
      Along with this, Gangwar established that there is no news yet stating that the Rs 2000 will be taken out of circulation. The central bank recently stopped printing new Rs 2000 notes, as per reports.
      "No news that Rs 2,000 will be scrapped," IANS reported Gangwar saying.
      Gangwar further added, "The reduction in printing of new Rs 2,000 notes is a separate issue. But that needs to be confirmed by the Reserve Bank of India (RBI). RBI will give information on Rs 2,000 notes."
      Opposition had questioned Finance Minister Arun Jaitley in Parliament earlier this week, asking him to confirm if the government was going to "demonetise Rs 2,000 notes" and whether it would not be printed in future, which Jaitley did not answer.
      It has been speculated that government has no intention to demonetise Rs 2000 notes. Printing Rs 2000 notes has been discontinued to limit their circulation but they will remain legal tender.
      This had been the plan even when they were brought into circulation at the time of demonetisation of Rs 500 and Rs 1000 notes back in November last year. The Rs 2000 were meant to expedite the remonetisation process and their circulation was to be restricted after this purpose was fulfilled.
      According to a SBI Ecowrap report, the economy is nearing complete remonetisation as circulation of new currency notes reached 84 per cent of the devalued ones on July 7. The total value of old high denomination notes of Rs 500 and Rs 1000 was Rs 15.44 lakh crores on November 8, the day Narendra Modi government announced their demonetisation.
      The gap created by limited circulation of Rs 2000 notes is likely to be filled by smaller denomination currency notes of Rs 200.

    Amazon Q2 net profit down 77%; remains committed to India
    • E-tailing giant Amazon's net profits tanked 77 per cent to $197 million (Rs 1,264 crore) in the June quarter hurt by wider losses in international operations, but said it remains committed to investing in India.
      Amazon's operating losses in its international business widened to USD 724 million (Rs 4,646 crore) in June 2017 quarter against a loss of USD 135 million in the year-ago period.
      Its revenues, on the other hand, jumped close to 25 per cent to USD 37.5 billion. Operating income of Amazon's North America business fell 38 per cent, while that from Amazon Web Services (AWS) rose 27 per cent.
      Despite widening losses, Amazon remains committed to making further investments in India.
      "...we continue to invest in India. We are very hopeful with the progress we have made with sellers and customers alike in India and we see great momentum and success there, so we continue to invest and we have some of our best people in that business," Amazon Chief Financial Officer Brian T Olsavsky said in an investor call.
      Explaining the company's strategy, he said: "... we continue to invest in, as I said, fulfilment capacity and logistics services, digital video... India, the buildup at the AWS infrastructure, all the things I mentioned not to mention Prime Now and Amazon Fresh and Prime benefits."
      The Seattle-based company, which is locked in an intense battle with Flipkart in India, has been aggressively pumping in money across its units here, including e-commerce and payments.
      Since January this year, it has pumped in USD 600 million (Rs 3,800 crore). It had committed investments worth USD 5 billion to the Indian market last year.
      Amazon India, which has recently completed four years of operations, has been directing its investments towards building warehouses, strengthening logistics and increasing product assortment.
      Besides, money is also being invested in marketing and promotions as the company looks to bring more consumers into shopping online on its platform.
      In April, Flipkart had raised USD 1.4 billion in funding from Tencent, eBay and Microsoft. It is also believed to be in discussions to buy smaller rival, Snapdeal that is expected to further intensify the battle.

    CAG doubts public sector banks' ability to meet recapitalisation targets
    • The Comptroller and Auditor General of India (CAG) has expressed doubts over the public sector banks' ability to raise Rs 1,10,000 crore from markets by 2018/19 as part of their recapitalisation exercise.
      The CAG audit report on recapitalisation of public sector banks (PSB), tabled in the Parliament today, said that the banks were able to raise only Rs 7,726 crore during January 2015 and March 2017. It has led to the doubt on the possibility of raising the balance, amounting to over Rs 100,000 crore, from the market by 2019.
      The report pointed out that the basis for working out the parameters for capital infusion changed between actual and estimated values from year to year and often within different tranches of the same year (2010/11, 2015/16 and 2016/17). It also stated that the rationale for distributing the central government's capital among different PSBs was not found on record in all cases. Some banks, which did not qualify for additional capital as per the decided norms, were infused with capital; a bank was infused with more capital than required while others did not receive the requisite capital to meet their capital adequacy requirements.
      Over 2008-16, the advances of PSBs had more than doubled, from Rs 22,59,212 crore to Rs 55,93,577 crore, although the rate of growth in advances decreased from 19.56 per cent in 2009/10 to 2.14 per cent in 2015/16, the report noted.
      It also pointed out that the PSBs' return on assets (ROA) - a measure of their profitability - has been consistently lower than that of the scheduled commercial banks or SCBs (2011-16). "PSBs account for nearly 88 per cent of the gross non-performing assets (GNPAs) of the banking sector in 2015/16. There is a significant gap between the book value and the market value of the PSB shares, with most PSBs having a lower market value, which may come in the way of the PSBs approaching the market for additional capital funds," the report said.
      The central government, as the majority shareholder, has infused Rs 1,18,724 crore between 2008/09 and 2016/17 in the PSBs to meet their capital adequacy requirements or based on their performances.
      The CAG report stated that in many cases, the parameters mentioned in the Statement of Intent (SOI), which set targets for a set of parameters to monitor the performance of PSBs, was not adhered to. "Out of the nine years reviewed, in only one year, conditions were stipulated in the sanctions that were issued to five PSBs for infusion of capital," it said.
      The CAG noticed these conditions were significantly different from the targets set for the same parameters in SOIs for the same period.
      The CAG has recommended that the criteria for fund infusion, once finalised, should be consistently applied across all PSBs. However, in case of variations, reasons should be well documented. It also wanted that the purpose of fund infusion, for which the Cabinet Committee on Economic Affairs' (CCEA) approval is taken, may be adhered to by the government. Changes, if necessary, in the purpose of fund infusion may be approved by the CCEA before being implemented, it suggests. It has also called for an effective monitoring system to ensure fulfilment of the intended objectives of fund infusion.
      The banking system in India comprises commercial and co-operative banks with commercial banks accounting for the bulk of the banking assets. PSBs account for over 70 per cent of the deposits received in and advances made by the SCBs. The capital requirement of PSBs is driven by credit growth in the economy and prudential regulatory requirements. The regulatory framework for banks is globally developed by the Basel Committee on Banking Supervision, which is adopted by the Reserve Bank of India for the Indian banks.

    Teething troubles: Confusion, fear among traders as they face problems in migrating to GST
    • The Goods and Services Tax Network (GSTN), the IT infrastructure provider for GST, was supposed to take invoice uploading services live from July 16. It has deferred the plan to July 24. GSTN Chairman Navin Kumar says they were not very confident about the preparedness of GST Suvidha Providers, or GSPs, facilitators for uploading invoices/returns on the GSTN website.
      GSPs, however, say that GSTN has neither provided them updated APIs (Application Programme Interfaces) nor MPLS (Multiprotocol Label Switching), a technique to carry data from one network to another. While they admit that initial hiccups were expected due to the complexity and enormity of the job, they also say that GSTN does not have sufficient staff for such a big task. An executive of a GSP said on condition of anonymity - he even says that GSPs have been asked to not talk about their problems - that GSTN is not only short-staffed, it also lacks quality personnel. He says the GSTN leadership has been unable to get bureaucracy to do things. The managing director of another GSP also said, requesting anonymity, that they have not been provided the latest APIs.
      The prevailing view is that the GST rollout has been more or less smooth so far. But a close interaction with users and intermediaries involved in the implementation reveals that this is not completely true. Even as the new system is about to complete one month, the problems, say users, have just started pouring in - be it technical glitches, understanding of the new laws/procedures, or taxpayers' reluctance/apprehension. And all this when some of the biggest milestones for shifting to the new system - start of invoice/return uploading, tax payments, refunds, etc - are yet to come.
      The Troubles
      GSTN has set up a 300-people helpdesk that is getting as many as 20,000 calls a day. Kumar says they will add another 100 people within a week. So, what are the most common issues faced by complainants? "Many people are having a problem in logging in. Some say they have forgotten their password, some say they have forgotten their security password, some say their advocate has taken their security password." While forgetting the password is a small issue, the security password is serious business. "The person has to approach the tax department, which verifies that he or she is the right person. Resolving the issue could take four-five days," he says.
      Getting digital signature approved is also a cumbersome task. Kumar, too, admits that it is a bit tricky. "You have to download a software. Then you have to register your digital signature certificate on the portal. We have given these procedures in detail. We have also put up a video on our website showing how to do it. You will not be able to do it if you don't follow the detailed instructions," he says.
      An executive of a GSP says GSTN has not done the testing of the procedure and that is why these problems are cropping up. Digital signature is mandatory for companies and limited liability partnerships or LLPs. Others can use the electronic verification code generated with the help of a one-time password sent on the verified mobile number.
      Other Blues
      Some taxpayers are facing a problem in migrating to GSTN because of non-validation of PAN (Permanent Account Number). "The registration is PAN-based, and PAN is based on the nature of the business. Many times, one gets registered as a proprietor but later opts for the LLP structure without changing the PAN. We sent whatever data we had to GSTN based on which we got user ID and password for applicants. However, in many cases, the quoted PAN did not match the company's name, delaying the migration," says H. Rajesh Prasad, Commissioner, VAT, Delhi. He says in Delhi, 3.32 lakh traders and businesses have migrated to GSTN but around 70,000 are yet to do so. He says many businesses had registered themselves under VAT despite being below the `20 lakh threshold. Many of them are reluctant to come into the GST fold due to stricter laws.
      But the biggest problem that traders and small businesses are facing is determining the HSN code and, hence, the tax rates of commodities. HSN, or Harmonised System of Nomenclature, are globally accepted codes for different goods. These are crucial for levying the correct tax on a product and have to be mentioned in invoices. While manufacturers (paying central taxes such as excise and customs duties) were using HSN codes earlier also, for traders (paying taxes to states), it is a new concept.
      "People are confused about the rates. The rate schedule is very detailed. Traders were out of excise duty and so are not conversant with it. For a common person, it can be a little difficult in the early days," says Dhanjay Akhade, Joint Comm-issioner, Sales Tax Department, Maharashtra.
      To make things easier, the government has made the HSN code simple for most traders. Rajeev Yadav, Commissioner, Central Board of Excise and Customs, explains: "These are eight-digit codes but those with annual turnover of up to Rs 1.5 crore need not quote them. Those with annual turnover of Rs 1.5-5 crore have to quote only two-digit HSN codes while those above Rs 5 crore have to quote only four-digit codes." He says despite this, the traders are facing a problem in determining codes for their products. "There is also confusion and fear among traders due to change in jurisdiction. Under GST, central tax officials have jurisdiction over traders who were paying VAT and state tax officials can now administer excise and service tax payers," he says. He says traders, mostly used to dealing with state officials, are reluctant to meet central officers to clarify doubts.
      The format (or lack of it) of invoices is another area of concern. Shyam Kedia, CEO, GST Suvidha, says traders are confused as the government has not given a format for invoices. It has only mentioned nine mandatory fields - invoice number, date, HSN Code, tax rate, etc. Traders are retailers are protesting that this will make the process of raising invoices cumbersome. The Retailers Association of India has written to the finance minister on this. "The format is not only increasing the size of the invoice but also confusing people. There is a lot of information that is not relevant to end customers as they will not be claiming input credit on the GST paid," it said in the letter.
      Well Begun
      Some initial hiccups were always expected during such a huge changeover. The government, on its part, has been proactive in ensuring that the rollout of GST is smooth and does not lead to speculation, panic or profiteering. It has put all its energy and might in checking rumour mongering, clarifying ambiguities/confusions, and resolving taxpayers' issues. It has set up facilitation centres in all sales tax and excise offices, organised interactive sessions with industry and traders and come out with timely FAQs to clear confusion.
      "We have undertaken a large number of awareness campaigns which have been widely attended and well received by taxpayers. The CBEC has issued FAQs and formed sector groups, some of whom have come out with their reports. We expect our officers to be not only well conversant in GST law and rules but also be ready to handhold industry in registration and filing procedures," Vanaja N. Sarna, Chairperson, Central Board of Excise & Customs, said at a recent GST session organised by the CII.
      All state sales tax departments have conducted training and outreach programmes, sometimes on their own and sometimes with the CBEC. Akhade says they have conducted 500 training sessions for trade associations in Maharashtra. "We have set up facilitation centres and helpdesks. We are receiving calls from across the state. We have developed a mail on Google Drive where stakeholders can put questions. We have formed eight committees that pick up their subject and respond accordingly, The Delhi VAT Commissioner says they get 40-50 people in the facilitation centre every day. He says he himself attends two-three events/meetings daily in his office and outside to keep abreast of taxpayers' issues. He says the sales tax department has conducted more than 50 outreach programme with traders' associations.
      However, these efforts are running into unexpected challenges. After reports of unscrupulous elements trying to fleece shopkeepers and customers, the finance ministry has barred tax officials from paying unauthorised visit to any business premises. Yadav of CBEC says they do not want such issues and, therefore, don't want officials to visit traders or businesses even to help. "So, we conduct these events with traders bodies," he says.
      Let's hope all these niggling problems are sorted out soon so that the country can celebrate the success of the GST rollout.

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