‘Not fair to say there is a widespread slowdown’
Ajay Bhushan Pandey, a 1984 batch Maharashtra cadre Indian Administrative Service officer, wears multiple hats: revenue secretary, chairman of the Goods and Services Tax Network, and chief executive officer of the Unique Identification Authority of India. Pandey is an alumnus of the Indian Institute of Technology, Kanpur , and a PH.D. in computer science from the University of Minnesota — technical training that comes in handy to effectively manage his three crucial roles. In conversation with Rajeev Jayaswal, Pandey says that the Indian taxation system is using technology to make lives of taxpayers easy. Edited excerpts:
Is it possible to use technology to have completely pre-filled returns to make taxpayers’ life easy... where people should be required to intervene only for modifications?
We will try that for most taxpayers, particularly those who have interest income, salaried income or pension income. This is a distinct possibility. In the current year, in ITR-1 [sahaj, for salaried people], this facility has been achieved to a great extent. Now, we will also do the same thing in the ITR-2 [people having income other than income from business or profession]. So the interest income from the banks, salary income, capital gains from mutual funds, etc ... all these information can be pre-filled in the returns. In pre-filled returns, you are supposed to supply only missing information. So the taxpayers, while filing returns, have to put in only minimal effort. Earlier there was a need for digital signature also. But now, with Aadhaar authentication, even that is not required.
Various institutions such as the Reserve Bank of India (RBI) and the World Bank have revised down the country’s GDP growth rate forecast for 2019-20.
Are you worried?
If I look at our GST collection, the impact is in a few sectors. Therefore, it would not be fair to say that there is a widespread slowdown. On the basis of GST collection figures, I can say that in sectors such as electronics, FMCG (fast moving consumer goods), etc., there is an upward trend. In the services sector, too, there is an upward trend. This is despite the fact that in the last couple of months there were disruptions in major parts of the country because of floods. But, yes, in certain sectors such as automobiles and iron and steel, there is a decline. We have to observe (this) for some more time to reach any definitive conclusion. Meanwhile, the finance minister, through various policy measures, has addressed concerns of several sectors facing lower growth.
Various experts and think tanks have said that like the corporate tax rate cut, there is a need to cut income-tax rates, albeit with no exemptions, to boost consumption. Is this a possibility?
We have recently cut corporate tax rates drastically, which is perhaps unprecedented in the history of independent India. It has revenue implications of ~1.45 lakh crore.
At the same time, the GST collection in the last three months has been moderate. While taking any further decision on taxation, one has to see budgetary requirements for the states as well as the Centre, other expenditure commitments, keep the fiscal deficit under control and strike a balance. Any such decision will be taken after considering all such aspects.
Are you, in principle, in favour of a personal tax rate cut?
Based on the principles of equity and revenue requirements, the government provides relief to the most deserving sections of the society. Like in the interim budget, major tax reductions were made for the deserving sections where those having income up to ~5 lakh were given complete tax break. So, at any point of time, and particularly at the time of budget, the revenue requirement versus the revenue collection, the principles of equity are considered and appropriate decisions are taken.
The GST collection in September was at a 19-month low. Is it because states were lax in
GST administration?
In the GST regime, both the Centre and the states are equal partners. Therefore, it is not fair for anyone to say that the GST system is lax, and therefore, the tax collection fell. It is the same GST system that gave good revenue growth in the first two years. More than 20 states showed annual revenue growth of more than 14%. Therefore, one or two months of dip, which could be due to various cyclical and other reasons like floods, would not wash away the achievements of GST in the last two years. I’m fairly optimistic that in the next few months, the economic cycle and the revenue collection will improve. When we are discussing and evaluating GST, we must remember that GST abolished Octroi, entry tax, check posts, excise gate passes, and inspector raj. Now there is free inter-state movement of goods across the country. The process of filing returns has been simplified so that more than 1 crore returns are being filed online every month which gives about ~1 lakh crore of monthly revenue.
How is the direct tax revenue collection thus far this year?
It also depends on the state of the economy. We have seen 10% growth in personal tax collection. Corporate tax collection is lower; hence, the total growth in collection of direct taxes is around 5% for the first six months. I’m optimistic that collection will improve in the second half.
Will the government achieve fiscal deficit target of 3.3% of GDP in the current financial year?
A review will be done at the time of preparing the revised estimates in late November-december 2019. We will see the numbers and consider how best we can reconcile them.
What makes the Nobel Prize to Abhijit Banerjee, Esther Duflo and Michael Kremer unique?
Economics is considered to be a part of the social sciences, where, unlike in the physical sciences, theories and concepts cannot be tested for validity. Banerjee and his co-awardees winning the Nobel changes that because their work has argued that it is possible to design policies after having tested different versions of them in controlled conditions. They conduct something called Randomised Controlled Trials (RCTS), a technique commonly used in testing medicines on patients, to test whether tweaking an existing policy can deliver significantly better results. If the RCTS show positive results, Banerjee et al argue that they should be implemented on a wider level. They also argue that all policies to fight poverty should be decided on the basis of RCTS. Given the fact that their approach has received the highest recognition available in the
What exactly is an RCT?
An example which Duflo used in her press conference at MIT after the Nobel Prize announcement on Monday can make this clear. They conducted an RCT to find out why immunisation rates were poor in Rajasthan. The perceived reason was that irregular functioning of immunisation centres. The RCT checked this by randomly picking two sets of villages and ensuring regular functioning of the centre in one set and giving a small quantity of lentils at the beginning of the programme and set of steels utensils at the end of the programme to the parents in another set. Their one year long experiment showed that the increase in immunisation was significantly greater in the second set of villages compared to the first. They use these to argue that it is
Does everybody agree with their approach?
Many economists are extremely critical of the virtue Banerjee and his co-awardees make of RCTS in fighting poverty. This includes Angus Deaton, who was awarded the Nobel Prize in Economics in 2015. In a co-authored 2016 paper, Deaton had very strong views on the usefulness of RCTS in economics. “We suspect that a large fraction of the published results of RCTS in development and health economics are unreliable,” the paper said. The paper listed two main problems with relying on the results from RCTS for policy making: their inability to capture all the differences