Nirmala Sitharaman says covid-19 an 'act of god’, may result in contraction of economy

News Network
August 27, 2020
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Nirmala Sitharaman

New Delhi, Aug 27: Amid a chorus by non-NDA ruled states for compensation of GST revenue shortfall, the Centre on Thursday presented two options to states under which they can borrow from the market to make up for the estimated deficit of Rs 2.35 lakh crore this fiscal.

At the end of a five-hour long meeting of the GST Council, Finance Minister Nirmala Sitharaman said there was no proposal to raise tax rates to make up for the shortfall that has been compounded by the COVID-19 pandemic.

Citing a legal opinion from the Attorney General, she ruled out the Centre making good the shortfall from either its coffers or borrowing against its balance sheet.

The deficit can be made good by states borrowing using a special window, she said, adding this loan can be repaid after five years from the collection of GST cess.

If states agree to either of the options, it would effectively mean that cess would continue beyond five years of the GST rollout.

In 2017, all states agreed to subsume their local taxes such as VAT into the new, nationwide Goods and Services Tax (GST) in return for the Centre promising to make good any loss of revenue in the first five years.

But with the economy slowing down, Rs 70,000 crore shortfall was seen in the last fiscal and this year it is estimated to widen to Rs 2.35 lakh crore.

Revenue Secretary Ajay Bhushan Pandey said out of this amount, only about Rs 97,000 crore is attributable to the implementation of GST, while the rest in on account of the coronavirus pandemic hitting the economy.

Pandey, who is also the finance secretary, said while GST collections have been impacted by the pandemic this year, there was a shortfall of Rs 70,000 crore in 2019-20 (April 2019 to March 2020) which was made good from the surplus of previous two years.

When GST was implemented in 2017, the Centre had promised to compensate states for any revenue loss for five years from a pool created by levying cess over and above the GST on luxury and sin goods.

This cess pool generated a surplus in the first two years but witnessed a deficit in FY20 as well as the current fiscal.

Detailing the options presented to the states, Sitharaman said the Centre, in consultation with the RBI, will provide a special window to states to borrow Rs 97,000 crore at a reasonable rate of interest. This money can be repaid after five years from the collection of cess.

The other option is that the states borrow the entire GST compensation gap of Rs 2,35,000 crore through the special window.

The states have seven working days to decide which option they want, she added.

Sitharaman said “the interest from borrowing would be repaid from the cess collected in the years beyond the first five years of GST implementation.”

“There will be no additional burden on the states,” she said, adding the states have been asked to borrow through the RBI to ensure they do not rush for the borrowing and there is no hardening of bond yields.

The minister said the GST Council decided that the borrowing arrangement would be for the current fiscal and a review would be done at the beginning of the next financial year.

“We very clearly said in both the options... that we shall facilitate talking to the Reserve Bank and getting it at a G-Sec proportionate number of years linked rate for all the states so that each state does not have to go running for the loan and face different situations and in the process the bond yields (turn) higher.

“So we said we will facilitate it, but the borrowing can be done in the name of the states and all states roughly can get the same rate of interest,” Sitharaman said.

A detailed note on the two options would be shared with the states and they would give their views on it in seven working days.

The minister said as soon as an arrangement is agreed upon by the GST Council, the Centre will clear the pending bi-monthly compensation. The compensation amount due for April-July period stands at Rs 1.50 lakh crore.

“This year we are facing an extraordinary situation... we are facing an act of God which might even result in a contraction of the economy, to what percent I am not getting into that.

“Therefore, we said that portion (of compensation) which strictly is hardwired in the (GST) Act, we will arrange, give it to you...,” Sitharaman said.

She said both the options hinge upon the fact that borrowing will be done by the states.

“We explained why it would be preferable for the states to borrow and not the Centre and also we said if states are going to borrow, instead of crowding out people, we will facilitate the process through central bank,” she said.

The Centre had released over Rs 1.65 lakh crore in 2019-20 as GST compensation. However, the amount of cess collected during 2019-20 was Rs 95,444 crore. The balance of about Rs 70,000 crore was paid from the excess cess collected in 2017-18 and 2018-19.

The compensation payout amount was Rs 69,275 crore in 2018-19 and Rs 41,146 crore in 2017-18.

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News Network
November 15,2024

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Iran’s Islamic Revolution Guards Corps (IRGC) has killed or captured 69 terrorists linked to the Israeli spy agency Mossad during a major counterterrorism drill in the country's southeast, its spokesman says.  

General Ahmad Shafaei, the spokesman for the “Martyrs of Security” drill, said Friday that a total of 23 terrorists have been killed and another 46 arrested in various clean-up operations ever since the IRGC Ground Force launched it in the Sistan and Baluchestan province on November 1.

Seven terrorists have also turned themselves in during the period.

“The undeniable fact about terrorists is that they rely on arrogant powers, particularly the intelligence service of the wicked and vicious Zionist regime," Shafaei said.

“Unfortunately, weapons and munitions at terrorists’ disposal are among the most sophisticated ones in the world. This accounts for their heavy dependence.” 

The official stated that several members of the disbanded terror teams were non-Iranian nationals, who had been hired by foreign intelligence agencies to carry out acts of sabotage and terror inside Iran.

In a most recent operation, six terrorists were arrested and four others were eliminated, three of whom were non-Iranians, he added. 

On October 26, ten members of Iran's law enforcement forces were killed in a terrorist attack in the Gohar Kuh district of Taftan in the Sistan and Baluchestan province.

The so-called Jaish al-Adl terrorist group claimed responsibility for the assault, which was one of the deadliest in the province in recent months.

The group has carried out numerous terrorist attacks in Iran, primarily in Sistan and Baluchestan.

Its tactics include the abduction of border guards as well as targeting civilians and police stations within the province to incite chaos and disorder.

In January, Iran launched a military operation during which the headquarters of the Pakistan-based terrorist group was targeted in missile strikes, destroying its infrastructure.

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News Network
November 26,2024

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Islamabad: Four paramilitary personnel and two policemen have been killed and over 100 security personnel injured as the protest by supporters of jailed former prime minister Imran Khan turned violent prompting the federal government to deploy the army in the national capital along with shoot at sight orders on Tuesday, state-run media said.

Pakistan deployed the army amid a tense stand-off with Khan's supporters from his Pakistan Tehreek-e-Insaf (PTI) pushing forward by removing hurdles on their way to Islamabad's D-Chowk venue as the government vowed to foil their attempt “even if a curfew needs to be imposed.”

Radio Pakistan said a vehicle rammed into Pakistan Rangers personnel killing four Rangers officials on the Srinagar Highway in Islamabad late on Monday night. Five other Rangers personnel and several police officials too sustained severe injuries.

About five kilometres from this spot, a bunch of miscreants, equipped with weapons and ammunition, pelted stones on the Rangers personnel and carried out indiscriminate firing on the security personnel at Chungi No 26 in Rawalpindi, Radio Pakistan said.

It also reported that two policemen were killed but didn't provide any details.

According to Punjab police, one policeman was killed at Hakla interchange on Islamabad outskirts during clashes with the PTI protestors on Monday but it also did not give details about the second policeman.

Separately, Interior Minister Mohsin Naqvi said, at a late night media interaction, that more than one hundred security personnel, mostly from police, were injured and added: “One senior police officer (SP) was critically injured – he suffered a severe head injury -- due to stone-pelting by protesters.”

Radio Pakistan further reported that the Pakistan Army was called in “to deal with the miscreants with an iron hand” and “clear orders have also been issued to shoot miscreants and troublemakers on sight.”

Strongly condemning the attack on Rangers and police personnel by protesters, Prime Minister Shehbaz Sharif, in a statement, directed to immediately identify those involved in the incident and ensure they are brought to justice.

“Attacks on police and Rangers, under the guise of a so-called peaceful protest, are condemnable,” he said, adding, the anarchist group seeks bloodshed and “Pakistan cannot afford any form of chaos or bloodshed. Bloodshed for nefarious political agenda is unacceptable and highly condemnable.”

He also instructed to provide the best possible medical facilities to those injured.

Interior Minister Naqvi said the government had offered an alternative venue to the protestors to stage their activity at Sangjani in the suburbs of the capital and apparently Khan has also agreed to it.

Despite permission given by Khan, “maybe there is a leadership above Imran Khan who has refused to accept this,” he claimed and confirmed that talks were going on with the PTI to resolve the issue and that the PTI leaders were allowed to meet Khan twice on Monday to get his input.

The government is waiting for a formal response to its offer of an alternative venue for protest and “we are now waiting for PTI’s response before taking further steps,” Naqvi added.

Naqvi also warned that “come what may, the PTI would not be allowed to stage a protest at D Chowk and even hinted of imposing a curfew if needed.”

Security sources also said that all necessary measures are being taken to counter terrorist activities by disruptive and extremist elements. “All the miscreants are also being identified to bring them to justice,” the sources added.

Meanwhile, the PTI accused the authorities of using violence in which several of its supporters have been injured. A PTI spokesman told BBC Urdu that at least two supporters have also been killed but it was not confirmed from other sources so far.

Khan, 72, the PTI founder, has been in jail since August 5, 2023, and had given the ‘final call’ for the protest to force the authorities to release all prisoners, including himself, and also restore the alleged stolen mandate or victory of his party in February 8 elections as well as rescind the last month's 26th constitutional amendment allowing the government more powers over judiciary.

Earlier on Sunday, led by Khyber-Pakhtunkhwa Chief Minister Ali Amin Gandapur and Khan's wife, Bushra Bibi, the PTI supporters began their journey from the militancy-hit province with a mission to make it to D-Chowk in the national capital but faced obstacles on the roads.

The D-Chowk, close to several important government buildings: the Presidency, the PM Office, the Parliament, and the Supreme Court, is a prime location in the national capital.

The authorities had blocked the highways by placing shipping containers but the protestors accompanied by lifting equipment and other heavy machines worked their way by removing hurdles, but the hurdles did skittle their speed and plans.

The convoy entered Islamabad from Sangjani toll plaza. The party also shared footage of the KP convoy in Islamabad’s limits.

The government already banned rallies by imposing Section 144, a colonial era law used to outlaw political activities, as a high level delegation from Belarus was visiting Pakistan.

At least one policeman was killed and dozen others injured in clashes on Monday as thousands of the PTI protestors entered the territorial jurisdiction of the national capital. In one of the clashes, a policeman was killed at the Hakla interchange on Islamabad outskirts.

Another constable of the Sargodha police was injured due to “firing by miscreants” and was being treated, local media said, adding, dozens of other policemen too were injured in the clashes, but exact details were not available.

As the convoy entered the capital territory in the evening, Bushra Bibi said in a video message: “My brothers, as long as Imran is not with us, we will not end this march.”

Meanwhile, as announced on Monday, all public and private educational institutions would remain closed in view of the law and order situation both at Islamabad and Rawalpindi on Tuesday.

Khan has been implicated in dozens of cases since his government was dismissed through a no-confidence motion in 2022. He has been in Adiala Jail at Rawalpindi since last year facing over 200 cases.

His party won the largest number of seats in the February general elections despite contesting as independents as the party was denied an election symbol.

The party founder has alleged that the ruling Pakistan Muslim League-Nawaz (PML-N) and its coalition partners, including the Pakistan Peoples Party (PPP), had “stolen the mandate” to grab power at the federal level.

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News Network
November 27,2024

Mangaluru: A five-year-long pursuit of justice continues for several youths from Dakshina Kannada who fell victim to a fraudulent food delivery job scam in Kuwait. The victims, lured by promises of lucrative overseas employment, now find themselves entangled in legal battles and financial ruin.

In a recent development, the Enforcement Directorate (ED) summoned the victims to its Mangaluru office as part of the ongoing investigation. The case, which dates back to May 28, 2019, was initially registered at the Mangaluru North police station based on a complaint filed by Usman, a resident of Jalligudde. His brother, Aboobakkar Siddique, was among the 34 victims duped by Manikya Associates, a recruitment agency operated by Prasad Shetty.

According to the complaint, the victims were promised jobs as food delivery executives in Kuwait with a salary of ₹40,000 per month. “I paid ₹80,000 to the agent and ended up spending seven harrowing months in Kuwait without any salary,” shared a victim who now works in construction. Another victim, now employed as a driver, said, “I dreamt of working abroad to support my family. I even pledged jewelry to pay the fees, but it took me years to recover financially.”

The victims allege that they were left stranded in Kuwait in January 2019 after completing all formalities. With no jobs and mounting expenses, their ordeal lasted seven months. They were eventually repatriated with the help of Indian expats and the Embassy of India in Kuwait, just two months after the complaint was filed.

The ED investigation is reportedly progressing, and victims said they were assured that their payments to the agent would be refunded soon. An ED official confirmed that efforts to ensure justice are ongoing.

For these youths, the pain of shattered dreams and financial losses has lingered for years, with many still struggling to rebuild their lives. As they await justice, their plight serves as a cautionary tale about the perils of fraudulent recruitment schemes.

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