NEW DELHI: The Union Government expects the entire Insolvency and Bankruptcy Law to become operational by end-December 2016, Economic Affairs Secretary, Shaktikanta Das said at an ASSOCHAM event.
“We have a definite roadmap to implement the Bankruptcy Law, the Ministry of Corporate Affairs is working on it, the Law Ministry, the Legislative Department have played a very significant role in finalising the legislation and they will continue to have a very significant role in also finalising the regulations,” said Das while inaugurating an ASSOCHAM national conference on ‘Insolvency and Bankruptcy Code 2016: A game changer.’
Highlighting how a clear roadmap has been drawn up, he informed that Ministry of Corporate Affairs has already published certain draft regulations and have invited comments, other regulations and rules are under preparation and they will be put in the public domain for public consultation.
“Now it is the responsibility of both government and industry bodies and every category of professionals to develop information utilities, to develop insolvency professionals and take the implementation of this law forward and see that it is fully implemented and the economy and country is able to get its full benefits,” said Das.
The DEA (Department of Economic Affairs) secretary also said that Insolvency and Bankruptcy Law creates massive opportunities for new service sector professionals who can manage information utilities and it also opens up lot of opportunities for a new category of professionals, mainly the resolution professionals who have to play a very important role.
“I think the most critical thing for success of Bankruptcy code will be our ability to create good quality insolvency professionals. This opens up opportunities for professionals from the field of banking, legal professionals, chartered accountants, other finance professionals, people who have experience in management of companies,” said Das.
Talking about the Centre’s determination to implement goods and services tax (GST) from April 1, 2017, he said “Administratively and whatever preparedness is required, all that is in place and the government is absolutely determined to introduce it (GST) from 1.4.2017, the state governments are also equally committed to introducing it from that date,” he said.
“The GST will happen, Bankruptcy Law has happened and both these pieces of legislation together with amendments to the Arbitration Law, SARFESAI, DRT related laws and the Company Law, these have the potential of creating a very vibrant and dynamic economy in India,” he added.
“Our expectation is that the Bankruptcy Law together with the GST will really bring in a lot of dynamism and efficiency in to the Indian economy,” he said further.
On the issues pertaining to GST rate structure on which there is lot of discussion going on at the moment, within the GST Council and also in the public domain, Mr Das said, “We hope and we are quite confident that they will get resolved in the next meeting of GST Council in the 1st week of November. I think in may be one or two more sittings, it should come to a conclusion,” he added.
“The rate structure has been prepared based on a very practical basis, the rate has to be necessarily revenue neutral, we cannot have a rate structure where the governments run into huge deficits and consequently both state and Central governments will have to go and borrow the money from market,” he elaborated.
“With higher fiscal deficit if the governments borrow higher amounts from the market and suck out all the liquidity, there is nothing left for the private sector investment in the economy to take place,” added DEA secy.
He said therefore, the GST rate structure has been worked out in such a manner that the bulk of commodities are under the standard rate which is 18 per cent and the items which are very important and are used by large section of people i.e. common man have been kept at six per cent.
“It is a very practically worked out formulation, there are couple of issues that are still under deliberation in the GST Council and I am sure it will be resolved,” said Das.
Highlighting how GST will contribute in bringing down the rates, he said “This whole discussion which some people tend to make that GST will lead to increase in prices is a completely misplaced discussion,” he said.
He elaborated that currently central excise is at 12.5 per cent, state VAT (value added tax) is about 14-14.5 per cent and together they are about 26-27 per cent and in certain goods it is at 30 per cent.
“In GST the peak rate is much lower than the current rate and the peak rate is only for demerit goods and for certain luxury items, while bulk of items/goods are in the 18 per cent bracket,” said the DEA secretary.
“So the GST will bring down the prices, we are trying to make India a low-cost economy through the instrumentality of GST, it will facilitate logistics cost also to go down because the waiting time in the various check-posts by trucks on an average is as much as 48 hours, which makes costs of logistics higher,” he added
“With the GST coming in, check-posts going, our logistics cost will come down, o we are looking at more moderate level of taxes,” further said Mr Das.
He also expressed hope of agriculture growth definitely going up to 4.5 per cent on back of good monsoon which will contribute substantially to this year’s overall economic growth.
“So we are therefore looking at a growth which will be upwards of 7.6 per cent and hopefully, close to eight per cent, but that we will only know when the year ends,” he added.