Citing the robust Goods and Services Tax (GST) collections for two months in a row, finance secretary Ajay Bhushan Pandey stressed that the Indian economy is on the rapid recovery path. The finance secretary stressed that the government is quite open and as and when any intervention or stimulus is needed, it will be done.
Secretary Pandey further said that economic recovery in many areas has crossed the pre-Covid level, and is expected to see further growth.
Below are the edited excerpts of Ajay Bhushan Pandey’s interview with HT’s Rajeev Jayaswal.
Q) The US economy has seen a sharp 33.1% jump in Q3. Do we expect a similar kind of recovery in India?
So far as India is concerned, we have seen certain credible signs of recovery, particularly in the last two months. In many areas we have not only reached the pre-Covid level, but also crossed that and are seeing further growth. I will tell you about some figures. First is that of e-way bills, which indicates production, movement of goods and also consumption. In order to get e-way bills generated you have to produce things, you need to transport them, and then businesses have to receive and sell them. So it gives you an indication of business activity. This September, the growth in e-way bill was 10% compared to last year and this October the growth is about 21% year-on-year (y-o-y).
The other statistics is of electronic invoice [e-invoice], for which we don’t have a y-o-y comparison as it started from October 1, 2020 only. However, on the first day it was about 8 lakh a day. Now, it has gone up and on October 30 it was more than 29 lakh a day. Similarly, if you see the GST collection figures, we had a positive 4% [annualised] growth in September 2020 at Rs 95,480 crore. The collections saw more than 10% growth in October this year at Rs 1 lakh 5 thousand crore compared to the same month last year, which definitely shows a pick-up in the economic activities. So, as far as the indirect tax is concerned, we have not only reached the last years’ level, but we have also gone beyond.
Q) What is the position of direct taxes? So far, what are the direct tax collection figures?
The total gross tax collection is down by 22%. It consists of corporate tax and also the personal income-tax. When we make comparison in corporate tax, we have to keep in mind that last year for the first six months, the corporate tax [rate] was at 30%. This year it is at 22%. There was also significant impact due to pandemic and lockdown for the first four-five months [of the current financial year]. Now, over the next few months, the situation will improve further. Eventually, if the indirect tax is doing well, we will see some positive impact of that on direct tax also. The gross direct tax collection [both corporate and personal income tax] in current financial year [till October] is Rs 5,05,000 crore. Last year [till October] it was Rs 6,41,000 crore. The gross corporate tax collection this financial year so far is Rs 2,65,000 crore compared to Rs 3,60,000 crore in the same period last year. Going forward, direct tax collection will also improve along with indirect taxes.
Q) What are your plans to check tax evasion?
We have taken necessary measures to update the system and follow data sharing consistently and use data analytics and artificial intelligence. This has helped us in augmenting revenue even in this difficult time of Covid-19. Today, the data of income-tax, customs and GST – all are being shared among themselves in real time on a continuous basis. Any asymmetry in data is red flagged by the system and evasion is caught. If anyone shows different turnover in GST and files different numbers in income-tax and different figures of customs, then they are automatically checked and caught.
Q) Do you think another stimulus is required for faster growth recovery?
The government has taken a series of measures since March this year. Various packages have been announced by the Union finance minister. Each time, we stepped in and intervened with relief or stimulus packages as per the need of the hour and the needs of the targeted group of populace, etc. And such packages need to be different to address the different requirements. We were constantly monitoring the ground situation and responded accordingly – as to which section of the society or which sector of the economy required support and in it what form. We acted accordingly.
In the month of April, because of the lockdown, what was needed was cash in the hands of the vulnerable section of the society such as farmers and the Jan-Dhan account holders. We put the money in their hands, directly in their bank accounts. About 80 crore people were given free food grains per month, per family. Similarly, for MSMEs [micro, small and medium enterprises], Rs 3 lakh crore fund was provided for their working capital for which the government gave the guarantee and of which about Rs 2 lakh crore was already sanctioned. We also gave relief in taxation, by extending timelines, by deferred payments, by giving them TDS [tax deducted at source] relief. So measures were taken.
Therefore, stimulus can’t be one size fits all or one size will fit at all times. So what we have to do is to continuously monitor and assess the situation and then come out with the response to address the needs of the hour appropriately as per the requirement of the segment of the economy. Our finance minister has already said that we are quite open and as and when any intervention or stimulus is needed we will not be left wanting.
Q) So, will the stimulus be focused on demand generation this time?
As we have done in the past few months, whichever sector of the economy or section of population needs stimulus or relief, we will do that.