QBiz: Fuel in J&K Under GST; Minimum Wages for Domestic Workers
Here’s the Quint’s roundup of the top business news of the day.
1. J&K Set to Bring Petrol, Electricity, Liquor Under GST
Jammu and Kashmir (J&K) is poised to be the first state to bring petrol, electricity, liquor and real estate under the state goods and services tax (GST). A formal decision is likely to be part of the state’s budget for 2017-18, scheduled for presentation in the first week of January.
Not only will the state’s decision revive the debate over extending the purview of GST to all sectors, including petroleum, alcohol and real estate, it may also serve as a template for other states. Since these items are not part of the GST framework, the state will not have to share the revenues even while it avails of the efficiency associated with this piece of indirect tax reform.
2. Domestic Workers to Enjoy Minimum Wages, Social Security Benefits: NDA
The Union government on Monday signalled its intent to bring domestic workers within the purview of a formal policy, entitling them to a minimum wage and social security benefits normally extended to formal workers. Not only will it accelerate formalization of the Indian economy, it could potentially benefit the Bharatiya Janata Party-led National Democratic Alliance, especially in urban areas which have large pools of domestic workers.
The labour ministry put out the broad contours of the policy for public discussion. The four key takeaways are recognition of these people as “workers”; guaranteeing them a minimum wage; permitting unionisation; and devising a dispute resolution mechanism.
3. Bid To Game GST May Be Behind September Exports Surge
Indian exports rose at their fastest pace in six months in September. It was the fourteenth straight month of rise and the growth was close to a six-year high. Still, it may be a bit early to celebrate yet.
It’s “encouraging” but may have featured over-invoicing by exporters looking to claim tax credit under the Goods and Services Tax regime, according to a research note by Credit Suisse. “If you can show exports, you can claim tax credit, making exports a tempting mode of avoiding GST,” said Neelkanth Mishra, the India equity strategist at Credit Suisse, in an emailed statement accompanying the research note. “The gist is that we shouldn’t get excited by the strength in exports yet,” Mishra wrote.
4. Five Bidders In Fray For 30% Stake In Jaiprakash Power
Jaiprakash Power Ventures Ltd has received interest from five large investors for a planned 30 percent stake sale as the heavily indebted group looks to shed some of its assets.
The bidders include Canada’s Brookfield Asset Management, Srei Group’s India Power Ltd, Resurgent Power Ltd, Edelweiss Asset Reconstruction Co Ltd and JSW Group, two people directly involved in the sale process told BloombergQuint on condition of anonymity. The bids were submitted after presentations were made by the investors on Monday.
5. Centre to Come up With Rs 1.2-Lakh Crore Universal Social Security Plan for Poorest
The government has drafted an ambitious Rs 1.2 lakh crore plan to provide universal social security coverage for the poorest fifth of the country as part of a bigger scheme that’s being planned for all individuals. This broader programme envisages three categories — the poorest 20 percent, who will get a government payout; those who subscribe on their own and formal sector workers who will need to set aside a fixed proportion of income toward the scheme.
The labour ministry, which has drawn up the proposal, will soon send it to the finance ministry for vetting and funding with the intent of rolling it out next year as a compulsory scheme that could well form a key welfare platform ahead of the next general election.
6. Centre Looking at 16,000-Crore Export Package
The Centre is considering an incentive package of over Rs 16,000 crore to boost exports in view of “sluggish domestic demand and competition in export markets’’.
Commerce Minister Suresh Prabhu, in a letter to Finance Minister Arun Jaitley, has made a case for early decisions on key issues affecting exports — such as inadequate incentives and lack of credit — to formulate a meaningful mid-term review of the foreign trade policy (FTP). A number of critical export promotion measures, which would involve an additional outgo of over Rs 16,000 crore, have been placed by Prabhu before Jaitley for consideration and early decision-making, a government official told BusinessLine.
(Source: The Hindu BusinessLine)
7. After Stents and Knee Implants, Government Now Plans to Put a Cap on Non-Essential Drugs
A proposed amendment to the four-year-old Drug Price Control Order (DPCO) aims to bring non-scheduled drugs under price control by changing the price setting method, a move that pharmaceutical companies say will be detrimental to the industry's growth and kill competition. Non-scheduled drugs are those that are outside the price-control regime. About 370 drugs are currently under price control.
The proposal by the National Pharmaceutical Pricing Authority (NPPA) and the Department of Pharmaceuticals (DoP) suggests scrapping the current method of fixing the ceiling price of drugs on the National List of Essential Medicines (NLEM) by adopting the simple average of brands having market share of over 1 per cent and instead taking the simple average of all brands and generics.
8. OPEC's Output Curbs Squeeze World's Biggest Oil Refining Complex
Being sophisticated in the age of OPEC output curbs can prove a disadvantage, as the operator of the world’s biggest oil-refining complex is discovering. Reliance Industries Ltd.’s 1.24 million barrel-a-day facility in western India features highly advanced units designed to process the globe’s heaviest types of crude, which have historically been cheaper than lighter varieties because they are more difficult to break down into fuels. Now, a drive by the Organization of Petroleum Exporting Countries to stabilize the oil market is squeezing supplies of such grades and making them relatively costlier.
The result: Billionaire Mukesh Ambani’s company posted quarterly profit that lagged behind estimates for the first time in more than two years. Reliance earned $12 for every barrel of crude it turned into fuel in the second quarter ended September 30, compared with a prediction by CLSA India Pvt for as much as $12.80 a barrel.
9. Amazon Makes Its Presence Felt in India's Offline Retail Market
Amazon.com Inc, the world’s largest e-commerce firm, is making its presence felt in India’s $60 billion organized retail market, much like it has been doing in the US. Through a series of acquisitions and tie-ups, Amazon has started making inroads into well-known consumer goods and retail brands in India to bring its brands to people who are not yet part of the e-commerce market. At present e-commerce penetration is at 2 percent of all retail sales, according to Morgan Stanley.
In September, Amazon.com Inc. announced it was buying a 5 percent stake in departmental store chain Shoppers Stop Ltd for Rs 179.25 crore, Mint reported on 23 September. Amazon plans to use this partnership to set up “Amazon Experience Centres” where it can showcase its brands—mostly in fashion and accessories.
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