Sunday, April 04, 2021

Depends on whether you are collecting or paying.

"The Indian economy was on the path of high growth in March, a year since the government imposed a nationwide lockdown to contain Covid-19, according to the State Bank of India (SBI) Research's yearly Composite Index. The index touched a 70-month high of 55.9, in the range indicating high growth, after recording 55.2 for the previous month," reported Economic Times. A delighted Revenue Secretary Tarun Bajaj said in an interview with the Times of India (TOI), "Data for February and March have been a very pleasant surprise for us." "Gross collection of direct taxes would be lower by about 2-3% as compared to the last year (2019-20)." "On indirect taxes, we have created a record on GST collection." "I admire the resilience of the corporate sector. They have been able to tighten their belts, have had good revenues." He is happy that companies have paid higher taxes on increased profits due to a reduction in employees. India's middle class shrank by 32 million and number of poor, with an income of $2 per day or less, rose by 75 million. "The aggregate profit growth of BSE 500 companies has accelerated to nearly 46% year-on-year in the fiscal third quarter (October-December 2020), hinting at broad-based recovery and not just in select few big names," reported Financial Express (FE). "Wage costs, despite profit growth, have barely grown from the previous quarter." In 2018-19, number of income tax returns filed by individuals was 55 million, of which 33 million earned enough to pay any tax. Except agriculture, every sector showed a reduction in the number of workers, inflation is increasing and unemployment is still high, wrote Roshan Kishore. "The output of eight core infrastructure sectors contracted by 4.6 percent in February, data released by government showed," reported TOI. "The demand for work under the rural employment scheme (MG-NREGS) continues to be at elevated levels compared with the pre-Covid period," reported FE. This is a kind of unemployment benefit for the rural poor. "Generation of person days under MG-NREGS this year has already surpassed the highest tally in any year of 267.96 crore (2.68 billion) recorded in 2018-19 to touch 357.66 crore (3.58 billion) as on March 6." "GST collections rose 27% to hit a record high of nearly Rs 1.24 lakh crore (Rs 1.24 trillion) in March, helping to narrow the deficit for the full financial year to around 7%," said TOI. As a consequence, "Households across the country are facing the onslaught of rising prices and are witnessing a sharp dent in their monthly spend capabilities as prices of vegetables, groceries and transport mount steadily," TOI. "Price pressures have added to the burden of households dealing with job cuts, salary reductions and loss of income as the effect of the pandemic-induced lockdown still plays out across some sectors, despite a strong economic recovery." Since the goods and services tax (GST) is collected as a percentage of the price of any goods or service, it accentuates the effect of any rise in price. "Trade numbers between 2014-15 and 2019-20 show that export of low-value raw materials and import of high-value manufactured goods has characterised India's trade relationship with China, akin the ties the country had with its colonial ruler Britain in the years before Independence, said trade experts," wrote The Print. Tax collections mean good growth for the government. Very bad for us.       

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