Sunday, February 4, 2018

Cooperatives under the local bodies and more

Cooperatives under the local bodies

The government has started handing over cooperatives to local bodies. The new constitution allows all three tiers of government to register, monitor, promote and regulate cooperatives, which do not fall within the mandate of the central bank despite substantial deposit mobilization and credit disbursement. 
  • Total number of cooperatives: 34,512 (13,886 savings and credit cooperatives)
    • Under state government’s jurisdiction:  1,000
    • Under local government’s jurisdiction: 33,363
    • Under federal government’s jurisdiction: 150
  • Total direct employment generated: 57,000
  • Total credit mobilization: NRs400 billion
  • Share capital: NRs94 billion
  • Share members: 6,754,273

The Law Ministry has resolved the long-standing dispute between the Energy Ministry and the Investment Board Nepal (IBN) over authority to issue licence to large hydropower projects with an installed capacity of 500MW or more. In its letter to the Energy Ministry on Friday, the Law Ministry has said the former has the sole authority to issue survey licences for hydropower projects and that issuing such licences will not encroach IBN’s jurisdiction nor violate the provision of Investment Board Act.

“Section 9 of the Investment Board Act does not give the IBN authority to issue survey licence of any kind of hydropower project, while Section 4 of the Electricity Act clearly allows the Energy Ministry to issue such licence,” reads the letter by the Law Ministry. “The IBN’s role in implementing the hydropower projects comes only after the survey is completed when the investment is required for the project development.” The letter further said the project’s exact installed capacity is determined only after the survey is completed. The Law Ministry’s explanation has limited the IBN’s role to arranging the fund for development of hydropower projects, while endorsing the Energy Ministry’s recent decision to award a survey licence of the Betan Karnali and Bheri-1 projects to Betan Karnali Sanchayakarta Hydropower Company and Vidhyut Utpadan Company respectively.

Excerpts from an interview with Indian FM Arun Jaitley:

GST: In India we started in the first few months itself. Today we are already thinning the 28% bracket. The mood in the GST Council is that as collections rise, this should be thinned to the extent that only non-merit and luxury items remain in it. But that will be contingent on an increase in the revenues itself. And I think this is already work in progress. There is hardly a GST Council meeting where rationalisation of taxes on a few dozen items does not take place. It is only at a later stage that you can think of converging the 12% and 18% slabs into the standard rate. […]I believe that non-compliance is a curse on the compliant taxpayer because he not only pays his share but also pays the larger share of those who do not comply.

Spending: In any area, whether it is the social sector, or infrastructure, or defence, we increase expenditure every year. We would have loved to increase more. Having been defence minister I know the requirements are more. But the fact is—it’s the size of the cake which has to be shared. Unless the cake enlarges, the only other option is to enlarge the fiscal deficit.

Formalization: Demonetisation had three impacts—it helped us reduce the quantum of cash; it increased the tax base and ended the anonymity of cash transactions; and it encouraged digitisation. GST is more of a voluntary compliance. […]Input Tax Credit is the best anti-evasion measure you have. Now with other anti-evasion measures that will slowly come into place, I think GST will start formalising the sector faster.

Agricultural output: There is a storage challenge, and the problem of market prices falling below the Minimum Support Prices because of a glut. We have overcome the shortage era. We also have to ensure more non-farm income income. What is the capacity of the rest of the system to get people out of agriculture to other areas of the economy?

Populist budget: It is not a populist budget. It may be popular because it blends both economy and politics.