Arvind Subramanian On The Rupee, GST, NCLT And Tax Threshold
Arvind Subramanian, who took over as the chief economic adviser to the government of India in October 2014 for three years, is returning to academics.
“I’ll be back to the old life of researching, writing, teaching and reflecting above all,” Subramanian had said at a press conference last month.
During his tenure Subramanian has been praised for his early recognition of India’s twin balance sheet problem, his expansive annual economic surveys and conceptualising the JAM (Jan Dhan, Aadhar, Mobile) scheme. He played the common thread when the goods and services tax was being formalised by the state finance ministers. He is known to have attended every meeting of the Goods and Service Tax Council.
“GST is one of the things I’ve had the privilege of being closely associated with. It’s wonderful to see this major policy reform hopefully turning out to be very positive as we go forward,” Subramanian said.
Here’s what the outgoing CEA had to say on key reforms during this tenure:
The Goods And Services Tax
The nationwide sales tax, though marred by teething problems and rate revisions, has surpassed Subramanian’s wildest expectations, the Mint report said.
We have got about 11.9 percent revenue growth and a tax buoyancy of 1.2 despite these headwinds. At the end of nine months, the compensation requirement has been very small. This means that the five-year compensation guarantee given to states is probably not necessary at all because we almost got there in the first year of implementation itself.Arvind Subramanian
He said there has been an expansion in the tax base of revenue in poorer states. “Poorer states have gained, but not at the expense of anyone.”
Rupee depreciation is “not that undesirable” as long as it’s gradual, Mint reported quoting Subramanian. “India is well-placed to absorb the crude oil rally and depreciating rupee shocks.”
Since January 2014, India’s real exchange rate, until the recent episode, had appreciated by 20 percent. So, what has happened in the last few months is a desirable correction in the exchange rate.Arvind Subramanian
Bad Bank And National Company Law Tribunal
Subramanian is happy with the stressed assets resolution framework as an alternative to his idea of a bad bank, according to a report by Business Standard.
The IBC is a far better process and “we should not take our eyes off it”, he said. The economist, however, cautioned that the IBC should perhaps not be saddled with resolving large stressed assets, and the government should find ways of relieving it a little.
My view is that the IBC is a landmark achievement because for the first time we have established a legal framework that can make the exit process smooth. When I proposed the bad bank idea, I did not recognise how serious the issue of stigmatised capitalism was, so the judicial process seems to be the only game in town.Arvind Subramanian
An easy way to get more taxpayers is ‘inaction’ and not to raise any tax slabs, Subramanian told Business Standard.
I will die in a ditch for this. That threshold should never be raised. As natural incomes grow, by doing nothing, people come under tax slabsArvind Subramanian