THE HINDU EDITORIAL –  June 5, 2017

a) GST countdown

The Goods and Services Tax Council has finalised the rates at which tax will be levied for almost all products and services under the tax regime, just four weeks before the July 1 deadline for rollout. The decisions amount to a balancing act between competing demands. The Council has set the tax rate on gold, silver, diamonds and other jewellery at 3%, while uncut diamonds will attract a ‘notional’ duty of 0.25%; a credit can be claimed for exports of such diamonds after they are polished and cut in India’s gem clusters. Footwear and readymade textiles will have differential tax slabs based on sale price (with a concessional 5% for footwear below Rs. 500 and clothes below Rs. 1,000). But oddly, no such distinction has been made for mass consumption items such as glucose biscuits. Textiles, leather, diamonds and food processing already are, or have the potential to be, India’s biggest employment engines, and repercussions of tax structure anomalies can be felt hard and fast in a competitive global market. Though the low rates on gold and diamond can dampen smuggling opportunities, they introduce two more rates to an already complex GST structure of five rate slabs plus a variable cess on ‘sin’ goods. Taken together, with the exemptions for critical sectors such as real estate, electricity, petroleum and alcohol, GST in its current form is far from the ‘One Nation, One Tax’ it purports to be. Not surprisingly, fresh demands for differential tax treatment have begun already, including for bidis. States and sections of industry want a review of rates finalised earlier for products ranging from biogas, fertilizers and tractors to agarbathis, human hair and cashew. Actor Kamal Haasan has threatened to quit cinema as it has been included in the 28% ‘sin’ category, and States have backed the demand that regional cinema be treated differently. The Council is slated to meet again on June 11 to discuss these demands while taking a call on a few pending items such as lotteries, and finalise rules pertaining to accounting and e-way bills (to be generated to transport goods). An assurance of input credit on existing stocks with dealers and simpler rules for filing returns should help industry gear up for the transition. But in the absence of final accounting rules or clarity on the anti-profiteering framework, there is concern whether all the loose ends can be tied up this month. The government is sticking to the July 1 deadline despite reservations about the readiness of the administration and the GST Network that would have to manage billions of invoices. The Council must take a realistic and honest stock of ground realities at its next meeting. A sub-optimal GST design can be corrected over time, but a hasty beginning could prove costly.

b) European variation

Prime Minister Narendra Modi’s visit to Germany, Spain, Russia and France brings into sharp focus the shared dilemma India and Europe face with America’s shifting policies, and the resultant flux on the world stage. Mr. Modi’s first stop in Germany came a day after Chancellor Angela Merkel’s strong comments aimed at President Donald Trump, that Europe could no longer ‘depend’ on traditional partners. Europe’s disappointment with Mr. Trump at the G-7 and NATO summits was three-fold: his refusal to reaffirm NATO’s Article 5 on ‘collective defence’; his warning on the trade deficit with Europe; and his expected decision to pull America out of commitments in the Paris Agreement on climate change. For the past few months India has faced a similar disappointment as the U.S. has forged closer ties with China, indicating what Mr. Modi called a loosening of the world order, while the U.S. has targeted Indian professionals and businesses to protect American jobs. Another blow came from Mr. Trump’s comments on the Paris Accord when he blamed India and China for what he called an unfair deal. Mr. Modi’s meetings with Ms. Merkel and subsequently Spanish Prime Minister Mariano Rajoy and French President Emmanuel Macron saw those issues raised one way or another, as they tried to explore new ways to cooperate on multilateral issues, including terror, trade and climate change. In particular, Mr. Modi’s assurance in Berlin that the suspended India-EU free trade talks for the Broadbased Trade and Investment Agreement would resume soon has raised the hope that progress will be made before the EU-India summit in Delhi this year. However, while the EU and India have a clear convergence in many areas, a dependable alliance can only come from a concurrent worldview. It cannot be ignored, for example, that Chinese Premier Li Keqiang’s visit to Berlin and Brussels, also last week, saw the EU repose much more faith in Beijing than New Delhi would be comfortable with, given the current Sino-Indian tensions. European leaders praised President Xi Jinping’s leadership on connectivity and climate change. Europe perceives its single largest threat to be from Moscow, not Beijing. Mr. Modi’s attendance at the St. Petersburg International Economic Forum to unveil a new India-Russia vision statement for the 21st century along with President Vladimir Putin could cause similar discomfort in European capitals. This divergent worldview may be further highlighted this week as Mr. Modi travels to Kazakhstan to formalise India’s membership of the Shanghai Cooperation Organisation, seen as a counter-NATO coalition of Russia, China and Central Asian states. Standing at a crossroads few had expected at this stage, India will have to consider its options carefully as it decides which coalitions to forge as the U.S. overturns traditional ties in favour of transactionalism. The Centre must undertake a full review of India’s priorities and interests before Mr. Modi heads to Washington for a meeting with Mr. Trump at the end of June.

WORDS/ VOCABULARY

1) Levied

Meaning: An amount of money, such as a tax, that you have to pay to a government or organization.

Example: They imposed a five percent levy on alcohol.

Synonyms: Imposition, Tax, Conscripts

2) Regime

Meaning: A particular government or a system or method of government.

Example: The old corrupt, totalitarian regime was overthrown.

Synonyms: Government, Authorities

3) Notional

Meaning: Existing only as an idea, not as something real.

Example: Almost everyone will have to pay a higher tax bill than the notional amount suggested by the Treasury Secretary.

4) Slabs

Meaning: A large, thick, flat piece of stone or concrete, typically square or rectangular in shape.

Example: Stone slabs were removed and the footpaths were cemented.

Synonyms: Piece, Block, Portion, Cake

5) Repercussions

Meaning: The effect that an action, event, or decision has on something, especially a bad effect.

Example: Any decrease in tourism could have serious repercussions for the local economy.

Synonyms: Consequence, Reverberations, aftermath

6) Anomalies

Meaning: A person or thing that is different from what is usual, or not in agreement with something else and therefore not satisfactory.

Example: Statistical anomalies can make it difficult to compare economic data from one year to the next.

Synonyms: Oddity, Rarity, Eccentricity

7) Dampen

Meaning: To make something slightly wet.

Example: Rain had dampened the tent so we left it to dry in the afternoon sun.

Synonyms: Moisten, Bedew, Sparge

Antonyms: Dry, Drench

8) Exemption

Meaning: The fact of not having to obey a rule or do something that other people have to do.

Example: He was granted exemption from military service during World War II.

Synonyms: Immunity, Impunity

Antonyms: Liability

9) Bidis

Meaning: A type of cheap cigarette made of unprocessed tobacco wrapped in leaves.

Example: Two new types of tobacco products that are increasingly being used by teenagers and young adults are cigars and small flavored cigarettes called bidis.

10) Pertaining

Meaning: To relate to or have a connection with something.

Example: The standing committees are basically two groups of members consulting on various matters pertaining to the city council.

Synonyms: Concern, Belong To, Exist

11) Threatened

Meaning: To tell someone that you will kill or hurt them or cause problems if they do not do what you want.

Example: They threatened the shopkeeper with a gun.

Synonyms: Menace, Endanger, Foretell

12) Flux

Meaning: Continuous change.

Example: Our plans are in a state of flux at the moment.

Synonyms: Flow, Fluctuation

Antonyms: Stability

13) Reaffirm

Meaning: To give your support to a person, plan, idea, etc. for a second time; to state something as true again.

Example: The government yesterday reaffirmed its commitment to the current peace process.

Synonyms: Affirm, Assert, Reassert

14) Forged

Meaning: To make an illegal copy of something in order to deceive.

Example: A number of forged works of art have been sold as genuine.

Synonyms: Fake, Sham, Phoney

Antonyms: Genuine

15) Assurance

Meaning: A positive declaration intended to give confidence; A promise.

Example: Even after assurances that the crash was an accident, many still believe the worst.

Synonyms: Self Confidence, Coolness

Antonyms: Self-Doubt, Nevousness

16) Convergence

Meaning: The fact that two or more things, ideas, etc. become similar or come together.

Example: The convergence of pop-cultural trends and technological progress gave us camera phones and the “selfie”.

Synonyms: Meet, Join, Approach

Antonyms: Separate, Diverge, Leave

17) Perceives

Meaning: To come to an opinion about something, or have a belief about something.

Example: Women’s magazines are often perceived to be superficial.

Synonyms: Discern, Adjudge, Recognize

18) Unveil

Meaning: To remove a covering like a curtain from a new structure at a formal ceremony in order to show the opening or finishing of a new building or work of art.

Example: The memorial to those who had died in the war was unveiled by the Queen.

Synonyms: Reveal, Display, Release

19) Divergent

Meaning: Tending to be different or develop in different directions.

Example: The virtues sought in a deputy are sometimes quite divergent from those sought in a leader.

Synonyms: Differing, Opposed, Separating

Antonyms: Similar

20) Coalition

Meaning: A temporary alliance for combined action, especially of political parties forming a government.

Example: His party failed to win an overall majority and a coalition government was formed.

Synonyms: Alliance, Federation, Amalgamation, Conjunction