Contemporary Issues in Economy and Society

CONTEMPORARY ISSUES IN ECONOMY AND SOCIETY
Contemporary Issues in Economy and Society
Edited by
Sr.Sindhu.P.J(Sr.Sharin CTC)
Assistant Professor
Department of Economics
St. Xavier’s College for Women, Aluva - 683 101
E-mail: srsharin@stxaviersaluva.com
Ph: 0484-2623240, Fax: 0484-2628840
Published by
Pranatha Books
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Published in September 2018
All rights reserved. This work may not be translated or copied in

whole or in parts without the written permission of the Publisher,
except for brief excerpts in connection with reviews or scholarly
analysis
ISBN: 978-93-83255-85-6
MESSAGE
I am extremely happy and proud to know that the output of Indian

Council of Social Science Research Sponsored National Symposium on
‘Contemporary Issues in Economy and Society’ organised by the Department of
Economics of this College in association with Jain University, Bangalore is
publishing as a book by Pranatha Books, Kochi. May I take this opportunity to
congratulate all the Contributors of the book and the Editor,
Sr.Sindhu.P.J(Sr.Sharin CTC), Assistant Professor of the Department of
Economics for bringing out such a theme oriented book. Commendable job has
been done by the Editor of the book in planning for and producing the book. I
am very glad to acknowledge her sincere effort in preparing the book based on
the theme. I wish her and her department blessings of God Almighty and all
success in their future endeavours.
Principal
Dr.Sr.Geege Joanamma Xavier (Sr Shalini CTC)
St. Xavier’s College for Women, Aluva

ACKNOWLEDGEMENT
‘For the Mighty One has done great things for me and holy is his name’ (LK:
1:49). I humbly bow my head before God Almighty for the stead fast love,
constant inspiration and flowing graces in each and every step of this book to
make it a reality.
With profound gratitude, deepest admiration and respect , I express my heartfelt

indebtedness to Rev. Sr. Dr. Geege Joanamma Xavier, Principal, Rev.Sr. Stella,
Vice-Principal and the Management of St. Xavier’s College for Women, Aluva
for their encouragement and support for the publication of the book. I render
my sincere thanks to my contributors of various esteemed institutions and
organisations. I would like to express my sincere thanks to Publisher of the
book, Mr.Shaji George and Pranatha Books, Kochi.
I express my whole hearted gratitude and obligation to Ms. Vandana

Aravindan, Assistant Professor, Department of Economics, Ms.Minimole.K
Assistant Professor, Department of Political Science and all other Staff
members and Students of St. Xavier’s College for Women, Aluva for their
cooperation and help in publishing the book on the topic, ‘Contemporary issues
in Economy and Society’. I thank for sincere help, encouragement and unstinted
cooperation from various quarters. I place on record my indebtedness and
gratitude to you all dear ones who were all the time behind me in accomplishing
this task.
Date: 20-09-18
Place: Aluva
PREFACE
More than at any other time in history, the future of humankind is being shaped
by issues that are beyond any one nation’s ability to solve. Climate change,
financial instability, terrorism, waves of migrants and refugees, water scarcities,
disappearing fisheries, stark and seemingly intractable poverty—all of these are
examples of issues whose solution requires cooperation among nations. Each
issue seems at first to be little connected to the next; the problems appear to
come in all shapes and from all directions. In the modern world, which changes
daily, we are faced with many challenges that impose the necessity of reshaping
the economy and management strategies, as well as the ways of leading the
organizations and overall economic policy. There is an enormous responsibility
on the social scientists and economists for the development of economy and
society as a whole, and the responsibility for researchers and scholars in this
area is even greater, since they are expected to offer new purposeful and
efficient solutions and guidelines for the development of enterprises and
sustainable economic growth.
The book contains papers regarding issues of economy and society presented in
ICSSR-SRC Sponsored National Symposium on ‘Contemporary Issues in
Economy and Society’ held at Department of Economics of St.Xavier’s
College for Women, Aluva . It is a collection of twelve research papers selected
based on their quality in terms of contemporary topic, newness in the
methodology and themes which are relevant to policy issues. The contributors
bring new insights from empirical research in a range of economies with
chapters.
The first paper related to ‘the theme on ‘Insolvency & Bankruptcy Process and
Non-Performing Assets’. The second paper contains work related to ‘Teacher
Perception towards Inclusion of GST in the Commerce Curriculum’. Third
chapter deals with the Role of Government Institutions in the ‘Make in India
Campaign’. The fourth paper covers topic related to Central Taxes in Indian
Federal Polity: A Study of Tax Sharing with Reference to Kerala before and
after GST. A Study on the Impact of Universal Basic Income in Indian
Economy is the next paper. The sixth paper discusses issue related to Analysis
of GST which is a need of hour. The Seventh paper showing the Investment
Decisions of Rural People which is a study conducted in Kunnukara
Gramapanchayath. The next paper deal with a Panorama of Economic
Development verses Environmental Sustainability. Perspectives on GST in
India and a Review of Cashless India and Economic Growth are the next two
papers followed by People Perception towards GST with Special Reference to
Tiruvankulam Panchayat. Demonetisation: A Surgical Strike on Black Money
and Corruption is the last paper of the book.
Dr. Xavier V. K, Dr. Vineeth. K. M, Ms. Neena Merina, Ms. Sulfiya K S, Mr.
Sreenath U, Ms. Renjini Reji, Ms. Anu Paul, Ms. Merlin Mary Thomas, Ms.
Shamila.V.U, Ms. Ashitha Augustine, Ms. Laya K S, Ms. Aseeja R.V, Dr.
Jennifer Wilson Fernandes, Mr.Ikram Pasha M, Mr. Sumesh PS, Ms. Anju
Krishnan, Chrislin Jose and Rupa R Nair of various esteemed institutions are
the contributors of these twelve research papers. The book would be of interest
to researchers, academicians as a ready reference on current issues in
economics and finance. I expect that these Papers will be useful to the
academic, professional and general public, and will provide a good basis for
further scientific research.
CONTENTS
Message
Acknowledgement
Preface
1. Insolvency & Bankruptcy Process and Non-Performing Assets ................................... 1-15
2. Teacher Perception towards Inclusion of GST in the Commerce Curriculum ............. 16-24
3. Role of Government Institutions in the Make in India Campaign ............................... 25-31
4. Central Taxes in Indian Federal Polity :
A Study of Tax Sharing with Reference to Kerala before and after GST ................ 32-48
5. A Study on the Impact of Universal Basic Income in Indian Economy ...................... 49-68
6. A GST A Need of Hour: An Analysis ......................................................................... 69-77
7. Investment Decisions of Rural People: A Study in Kunnukara Gramapanchayath ..... 78-93
8. Economic Development V/S Environmental Sustainability-A Panorama ................... 94-98
9. Perspectives on GST in India ..................................................................................... 99-105
10. Cashless India and Economic Growth- A Review ................................................... 106-112
11. People Perception towards GST with Special Reference to
Tiruvankulam Panchayat ......................................................................................... 113-121
12. Demonetisation: A Surgical Strike on Black Money and Corruption ...................... 122-123
INSOLVENCY & BANKRUPTCY PROCESS AND

NON-PERFORMING ASSETS
DR. XAVIER V. K
Professor and Head, Department of Economics,
School of Humanities & Social Sciences,
Jain University, Bangalore
ABSTRACT
The non-performing assets (NPAs)accumulated in Indian banking system is one
of the biggest structural hurdles holding back the economic recovery. The
problem has not only hits the profitability of the banks, particularly for public
sector banks, which account for 90 percent of the NPAs, but also robbed the
financial sector‟s ability to lend afresh, jamming the economic growth
enginewith multiplier effect. This paper investigates various attempts initiated
by the Reserve Bank of India (RBI) to resolve the NPAs that were locked up due
to lack of speedy resolution process. The first section of the paper
conceptualizes the NPAs and attempts to identify the causes and map RBI‟s all-
out war against NPAs and finds reasons for earlier policy failures. The second
section identifies the research problem. The third section identifies the NPAs.
The fourth section captures the concept of capital adequacy ratio. The fifth
section reviews the government‟s enactment of Insolvency and Bankruptcy
Code, which became operational in 2016. Section sixth concludes with firm
specific evaluation of the pros and cons of the recent ordinance barring the
promoters from bidding for their own companies.
Keywords: Promoter‟s Bidding; Insolvency and Bankruptcy Code; Non-
performing Assets; capital adequacy ratio; Public Sector Banks
______________________________________________________________
1. INTRODUCTION
Bank‘s financial intermediation between the surplus and deficit units of

the economy (savers and borrowers) through a number of functions like size –
maturity – asset – liability transformation, risk- return trade-off and
diversification of financial portfolios contribute to smooth functioning and
1
development of the economy. India‘s banking system is characterized by

dominances over 80 percent of the market share in banking sector owned by the
State through public sector banks (PSBs). Performance of these banks therefore
reflects the financial sector‘s ability to contribute economic growth,
development and stability of economic system. Financial repression was the
core feature of the sector (directed credit and interest rate) which remained the
pertinent problem in the sector that weakened the strength and ability of the
banking system as a whole. Therefore, Narasimham Committee – I
recommended greater autonomy for public sector banks to operate with
professionalism applying international standards in recruitment procedures,
training and remuneration policies of the PSBs. Besides, the Committee
recommended Government to reduce its ownership in nationalized banks to 33
percent for attaining greater autonomy. Given that government often nominates
members of parliament, politicians, bureaucrats to the board of banks, they can
interfere in the day-to-day operations of banks in the form of behest-lending.
Responsible banking with enhanced shareholder value required formulation of
corporate strategy and reduction of government equity. Bank consolidation
through inorganic growth (mergers) would create size and scale, reduce
operational cost and create stronger banks. The committee recommended to
closure of weaker banks that were unable to revitalize.
Non-performing assets (NPAs) has been the single largest cause of

worry for Indian banking sector. Narasimham – ICommittee observed the main
reason for the reduced profitability of commercial banks in India was the
priority sector lending leading to accumulation of NPAs. Therefore, the
committee recommended phasing it out. The Narasimham – II report (1998)
further blamed poor credit decisions, behest-lending and cyclical economic
factors for mounting NPAs. Creation of Asset Reconstruction Fund or Asset
2
Reconstruction Companies to take over the bad loans would clean up the bank
balance sheets and the Committee ruled out the option of recapitalization
through budgetary route. The Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act was enacted in 2002 to address
the problem of NPAs. Reserve Bank of India‘s (RBI) outright war against
NPAs began explicit in January 2015 when rules for early recognition and
punitive provisioning for stressed assets were enforced. Consequently, RBI
designed Scheme for Sustainable Structuring of Stressed Assets (S4A) was
designed. The government has also contributed its bit by enacting Insolvency
and Bankruptcy Code, which became operational in 2016. The State Ordinance
on 24, Friday, 2017 amended the Insolvency and Bankruptcy Code (IBC)
barring the promoters of the companies, who have either defaulted willfully in
the past or have not been paying up in time from reacquiring their firms.
2. RESEARCH PROBLEM
NPA accumulations in the banking system has been one of the biggest
structural hurdles holding back economic recovery in India. The rising NPAs
(pegged at 10 lakh crore) has not only hits the profitability of the banks -
particularly the public sector banks, which account for 90 percent of the NPAs -
but also robbed financial sector‘s ability to lend afresh, jamming economic
growth engine and multiplier effects. The valuable assets of banks were locked
up due to lack of speedy resolution process of NPAs which could have been
otherwise put into productive use.
3. IDENTIFYING NPAS
An asset becomes non-performing when it ceases to generate income to

the bank. According to RBI‘s technical definition, NPA is a loan or an advance
where interest and /or installment of principal remain overdue for a period of
3
more than 90 days in respect of a term loan and the account remains out of
order in respect of an overdraft/cash credit; the bill remain overdue for a period
of more than 90 days in the case of bills purchased and discounted; the
installment of principal or interest thereupon remains overdue for two crop
seasons for short duration crops and one crop season for long duration crops;
the amount of liquidity facility remains outstanding for more than 90 days, in
respect of a securitization transaction undertaken in terms of guidelines on
securitization dated February 1, 2006; in respect of derivative transactions, the
overdue receivable representing positive mar-to-market value of a derivate
contract, if these remain unpaid for a period of 90 days from the specified due
date for payment.
Based on the period to which a loan has remained as NPA, it can be

classified into three types: substandard assets: an asset which remains as NPAs
for less than or equal to 12 months; doubtful assets: an asset which remained in
the above category for above 12 months; loss assets: an asset where loss has
been identified by the bank or the RBI, however, there may be some value
remaining in it and loan has not been not completely written off.
The growing mountain of NPAs in Indian banking system is one of the

biggest structural hurdles holding back the economy from recovery. Rising
NPAs were pegged at 10 lakh crore at the last count. This not only hits the
profitability of the banks, particularly the public sector banks, which account
for 90 percent of the NPAs, but also robbed them of their ability to lend afresh,
thus jamming the economic growth engine. Valuable corporate assets that could
have been put to productive use were locked up due to lack of speedy resolution
process. According to CARE rating the gross NPA that was at ₹ 292,193 crores
in 2014 increased to ₹ 437, 859 in 2015 and ₹ 697,409 crores in 2016. In
4
percentage NPAs increased from 4.4 percent in 2014 to 6 percentage in 2015

and 9.3 percentage in 2016.
4. CAPITAL ADEQUACY RATIO

The capital adequacy ratio (CAR) is the amount of regulatory capital a
bank has to hold as capital. CAR is put into place to ensure that banks do not
take on excess leverage and become insolvent. CAR is decided on the basis of
risk-weighted assets (loans) of the banks. Basel Committee on Banking
Supervision at Bank of International Settlement has set a framework on how
banks and depository institutions must calculate their capital. In 1988, the
committee decided to introduce a capital measurement system which was
referred as Basel I. in June 2004, the framework was replaced by a significantly
more complex capital adequacy framework known as Basel II. Following the
Financial Crisis of 2007, it was replaced by Basel III. Basel II requires that the
total capital ratio must be no lower than 8 percent. In Basel II accord, bank
capital has been divided into two tiers with some subdivisions. Tier 1 capital
consists of shareholder‘s equity and disclosed reserves. Shareholders equity and
retained earnings are commonly referred to as core Tier 1 capital. In other
words Tier1 capital is nothing but net owned funds which consists of paid up
equity capital, preference shares which are compulsorily convertible into
equity, free reserves, balance in share premium account and capital reserves
representing surplus arising out of sale proceeds of asset, excluding reserves
created by revaluation of asset, as reduced by accumulated loss balance, book
value of intangible assets and deferred revenue expenditure. Tier 2 capital is the
supplementary capital which comprise of undisclosed reserves, revaluation
reserves, general provisions, hybrid instruments and subordinated term debt.
Undisclosed reserves are profits made by banks but has not appeared in normal
retained profits or in general reserves. Revaluation reserve is a reserve created
5
when a company has an asset such as land and building revalued and an
increase in value is brought to account. The increase would be added to a
revaluation reserve. A general provision is created when a company is aware
that a loss has occurred but is not certain of the exact nature of that loss. As
these did not represent incurred losses, regulators tended to allow them to be
counted as capital. Hybrid debt capital instruments combine certain
characteristics of equity as well as debt. They can be included in supplementary
capital if they are able to support losses on an ongoing basis without triggering
liquidation. Subordinated debt is classed as lower Tier 2 debt, usually has a
maturity of a minimum of 10 years and ranks senor to Tier 1debt, but
subordinate to senior debt.
In 2016, RBI has allowed banks struggling with a low capital base to
include property value, foreign exchange while calculating the Tier 1 capital in
order to beef up capital. The property value will be counted only if the bank is
able to sell the property readily at its own will and there are no legal
impediments in selling the property. Apart from this the valuation should be
obtained from two independent valuers at least once in every three years and
only 45 percent of the property value will be considered. In addition, foreign
currency translation reserves arising due to translation of financial statements of
banks‘ foreign operations to the reporting currency may be considered as
common equity tier -1 capital with a discount of 25 percent. The move had
unlocked ₹ 35, 000 crore of capital for PSBs and ₹5, 000 crore for private
banks. The net-worth of the public sector banks (PSBs) in March 2017 was ₹
4,72,2270 million and their gross NPA in June 2017 was ₹ 7,33,1360 million.
The capital requirement of the PSBs till 2019 is between ₹ 14 and17 lakh
million.
6
5. INSOLVENCY AND BANKRUPTCY CODE
The Reserve Bank of India‘s all-out war against NPAs began in January
2015 when the central bank came up with rules for early recognition of stressed
assets and punitive provisioning. Till then banks were happily ever-greening
bad loans of many promoters through last-minute technical adjustment. The
government has also contributed its bit by enacting Insolvency and Bankruptcy
Code, which became operational in 2016. As the process got under way, there
were concerns that the very own promoters who had sometimes willfully
defaulted could wrest back the control of the companies that had run aground.
The worry grew deeper after RBI had selected 12 big defaulters in June 2017
which accounted for almost a quarter of the gross NPAs and referred them to
NCLT. Among 300-odd cases before the NCLT, the original promoters are also
interested in re-bidding for the companies. The Government Ordinance on 24,
Friday, November 2017 wasamended the Insolvency and Bankruptcy Code
(IBC) to ensure that the process of resolving bad loans is not gamed by
promoters, who have either defaulted willfully in the past or have not been
paying up in time. Government knew it could not legally impose a blanket ban
on promoters from participating in the insolvency process. Therefore, it did the
second best option by bringing in caveats that would prevent the errant
promoters from misusing the insolvency law to regain control of the companies
that are being sold. The ordinance promulgates that corporate entities,
promoters, and associate companies undergoing insolvency resolution or
liquidation under the Code will not be eligible for bidding for the stressed
assets. Essentially the Ordinance rules out any promoters with weak credit
history from taking part in the resolution process. The code explicitly states that
willful defaulters and promoters of the company whose borrowings have been
classified as non-performing assets (NPAs) for a year or more and that are
7
unable to pay overdue amounts, including interest and other charges are barred
from repurchasing their assets by bidding for their own companies when they
are auctioned as part of the bankruptcy proceedings. Besides, sister concerns
and corporate guarantors will also will not be eligible to bid for these
companies.
The ordinance was promulgated with a new section 29A to the code: “a
person shall not be eligible to submit a resolution plan if such a person or any
other person who is a promoter or in the management control of such a person,
is an undischarged insolvent‘. This prohibits promoters of sister concerns of
companies with non-performing assets of more than a year from bidding for
these companies. In order to bid, the promoters will have to make the NPAs
standard assets by paying the principal and interest. However, even this is not
allowed once the National Company Law Tribunal (NCLT) has accepted an
insolvency petition. None of the promoters or their associates can buy the
stressed assets of the 12 large debt accounts suggested for insolvency
proceedings by the Reserve Bank of India (RBI). Willful defaulters also have
been banned from buying stressed assets. They are fly-by-night operators and
anyway were unlikely to bid for companies.
Promoters are not debarred from bidding unless a case was admitted in
NCLT, but merely discouraged. If a company paid ₹10,000 crore out of its
total NPAs of ₹50,000 crores to convert into standard asset, the insolvency
process would benefit. The insolvency professionals are divided on the
Ordinance. The main concern is that the amendments will disrupt all pending
insolvency proceedings. Besides, eligibility of all bidders has to be ascertained
before examining the bids. Earlier the resolution plan had to qualify for
consideration, now the bidders also must qualify. In cases where only the
8
promoter had submitted a plan, and such promoter is found to be ineligible,

fresh bids need to be invited.
Companies are allowed 180 days to find a resolution plan after a case is
admitted by the NCLT. This period can be extended by 90 days. If 270 days
elapse or no bidder comes forward, the debtor would be pushed into liquidation.
The identification of willful defaulters is left to the banks which might lead to
arbitrariness to the exercise even though it followed RBI guidelines. The
provision that is punitive or takes away the right must be enshrined in the
statute as a substantive provision and not left to be determined by an interested
party (lender). The risk is that a promoter can challenge such determination by a
lender in court and seek a stay on insolvency proceedings till the challenge is
decided. A court might not stay the insolvency process and the promoter could
lose his company, but later if the bank‘s decisions were found to be illegal by
court, the promoter would become entitled to claim damages. In fact,
promoters of the 12 companies that have been referred to the insolvency court
may move court against the ordinance that bars them from bidding their firms.
Promoters of steel companies have been saying that they ended up in making
losses because of external factors like withdrawal of gas supply and lack of
environmental clearances. Indian steel industry in the last three to four years
has gone through a bad phase. The government has admitted this was a sectoral
problem and came up with three different measures for the steel sector –
safeguard duty, a minimum import price and an antidumping duty for five
years. The action was taken upon realization of the stress in the sector. Only
two companies are healthy (Tata Steel and JSW steel) an all others including
SAIL are affected. The whole sector has gone bad. Therefore it cannot be a
reason for barring the promotors from bidding for their companies. They have
put their lives into these companies. Generations have put their sweat and
9
equity into companies. Promoters should be allowed to bid for their companies.
The concern for the banks should be to ensure maximum gain s to the banks
from the process. If promoters are not allowed to bid for their company
realization value from the process could be 10-15 percent lower.
6. CONCLUDING REMARKS
How did the steel companies land up in such a mess? Steel is a highly
capital intensive sector. All companies had put up green-field plants based on
captive mines. In 2005 the firm received a coal block as a joint allocation. It
had an agreement with the Odisha government for an iron ore mine. After the
allocation in 2006, the company acquired land. In 2010, the company set up the
first phase of 0.2 million tonnes and the second phase started in 2013, taking
capacity to 5.6 million tonnes. The plant was set up 40 km from the coal mine
and 120 km from the iron ore mine. But the coal block was cancelled and the
iron ore block was not allocated. EBITDA per ton is consistent with Tata Steel
or JSW Steel. The company does not require a turn around. Only a restructuring
of balance sheet is required. The company never received a dispensation from
banks in the past 30 years. Even before the Ordinance the evaluation criteria
were not favourable to promoters. There should be a set of standard criteria that
should apply to all NCLT companies not to just 12 companies. The RBI should
work to get maximum gains to the banks. If a company has a debt of ₹40000
crores and the sustainable debt is 25000 crores, it is possible that new bidders
can form a cartel and bid for ₹15000 crores. Why should a bid be based on
liquidation value? The valuation should be done on a going concern basis. The
Scheme for Sustainable Structuring of Stressed Assets (S4A) was nicely
designed by the RBI. The loss to banks in that respect would have been
negligible. When the global crisis hit the American companies, the government
10
took majority stake in some of the major firm and they were restructured.
Today there is anti-dumping duty in place and there is intrinsic strength in
Indian steel sector. The maximum weight in the evaluation criteria should be
given to equity to banks and net present value (NPV) of sustainable debt to be
repaid.
The amendments also place foreign bidders in an advantageous position

as the concept of willful defaulters may not exist in other countries and the
disqualification criteria in corresponding situations may be different. The
insolvency process will reassure new investors about the credibility of the
process. The steps taken to provide clarity and reduction in transaction costs are
associated with resolution would be welcome and will provide for greater
participation by investors and more innovative resolution process. Promoters of
12 companies that have been referred to National Company Law Board will not
be allowed to bid for their companies in the insolvency court after the
ordinance. Union Cabinet approved $ 32.43 billion (21.1 lakh million) plan to
recapitalize banks over the next two years. This is a major attempt to boost
growth of Indian economy which has seen the growth rate plummet to the
lowest in three years, far below the levels needed to create jobs to absorb the
million Indians joining the work force every month. The government has tried
to respond by stepping up public spending, but the slowdown has stressed its
finances, making it imperative for private investment to pick up the slack. The
government has decided to revive private investment because state owned
banks, which provide much of the credit in the economy, are saddled with a
mountain of bad debts that has crimped their ability to offer new credit. The
decision to recapitalize the public sector banks with ₹ 2.11 trillion is meant to
address the bank balance sheet problems and push growth forward.
Recapitalization of banks gives space for bank lending as the banks needs as
much as $ 65 billion additional capital by March 2019 to fill the hole left by bad
debts and meet the regulatory capital requirements.
11
References
1. Basel III: A Global regulatory framework for more resilient banks and
banking system.
2. Basel Leverage ratio: No cover for US Banks, PwC Financial Services
Regulator Practice, January, 2014.
3. Stress Test for Banks Exposes Rift on Wall Street, NY Times.
4. International Convergence of Capital Measurement and capital
Standards: a Revised Framework: Comprehensive Version, pg 14: Basel
Committee on Banking Supervision. 2006.
5. M. Narasimham Committee Report, Narasimham Committee on the
Financial System, 1991.
6. Sudha Sharma, Financial Sector Reforms - An Assessment,
Expressindia.com, 30 December 1997.
7. Reserve Bank of India, Data base on Indian Economy, 2017.
Annexures
Table 1.Consolidated Debts of 12 companies as on 2017
________________________________________
Companies Total Debt
(in crores of ₹)
__________________________________________
Bhushan Steel 49958
LancoInfratech* 44365
Essar Steel* 37284
Bhushan power and Steel* 37248
Alok Industries 25492
Amtech Auto* 14074
Monnet Ispat& Energy 12262
Era Infra Engineering 11569
Elecrosteela 10288
Jaypee Infratech* 9635
ABG Shipyard* 9290
Jyothi Structures* 5165
_________________________________________
*consolidated figures as on 2016.
Source: Capitaline
12
Table 2.Most Stressed Banks in Need of Capital.

Bank name Tier 1 Net Gross Net Net
Capital worth NPA NPA NPA in
Basel III in ₹ in ₹ in ₹ percent
Percentage crore crore crore
IDBI Bank 7.98 17,146 50,173 29,580 15.80
Indian Overseas 8.25 11,579 35,453 20,166 14.97
Bank
Central Bank 7.47 14,746 31,398 17,407 11.00
Uco Bank 7.69 10,428 25,052 12,011 10.63
Oriental Bank of 8.53 12,673 24,409 14,809 9.56
commerce
Corporation 8.54 12049 21713 14,858 11.34
Bank
Table 3. Indian Banking sector at a Glance in 2015-16

________________________________________________________________
Amount Outstanding Percentage in billion
Variation
________________________________________________________________
1.Balance sheet operations

a) Total Liabilities/assets 129589
7.7
b) Deposits 100927
7.0
c) Borrowings 12835 11.6
d) Loans and advances 78965 6.9
e) Investments 31740 6.6
f) Off-balance sheet exposure as a percent of
on-balance sheet liabilities 112.8 -
2. Profitability
13
a) Net profit 341 -61.7

b) Return on Asset (RoA) (percent) 0.3
-
c) Return on Equity (percent) 3.6 -
d) Net interest margin (percent) 2.6 -
3. Capital adequacy
a) Capital to risk weighted assets ratio (CRAR) 13.3 -
b) Tier 1 capital as percentage of total capital 81.2 -
c) CRAR in percentage 10.8 -
4. Asset quality
a) Gross NPAs 6120 89.3
b) Net NPAs 3498 99.4
c) Gross NPA ratio (Gross NPAs as percent of
gross advances) 7.5 -
d) Net NPA ratio (Net NPAs as percentage of net advances) 4.4 -
e) Provision coverage ratio (percent) 41.5 -
f) Slippage ratio (percent) 6.9 -
5. Sectoral Deployment of bank credit
a) Gross bank credit 66500
9.0
b) Agriculture 8829 15.3
c) Industry 27307
2.7
d) Services 15411
9.1
e) Personal loans 13922 19.4
6. Technological development
14
a) Total number of credit cards ( million) 25

19.0
b) Total number of credit cards ( million) 662
19.7
c) Total number of ATMs 212061
12.0
7. Financial inclusion
a) Credit-deposit ratio (percent) 8.2 -
b) Number of bank branches opened 6693 -22.2
c) Number of banking outlets in villages 586307 5.9
Source: RBI, Data base on Indian Economy
15
TEACHER PERCEPTION TOWARDS INCLUSION OF GST IN THE

COMMERCE CURRICULUM
DR. VINEETH. K. M.
Assistant Professor of Commerce
Maharaja‘s College, Ernakulam, Kerala – 682011
Ms. NEENA MERINA
Maharaja‘s College, Ernakulam, Kerala – 682011
Ms. SULFIYA K S
KMM College of Arts and Science, Thrikkakkara
ABSTRACT
Goods & Services Tax Law in India is a comprehensive, multi-stage,
destination-based tax that will be levied on every value addition. The
overture of Goods and Services Tax (GST) would be a very momentous
step in the field of indirect tax. Goods and Services tax (GST) has been
acknowledged as one of most imperative tax reform post-independence. It
is a tax trigger, which will lead to business transformation for the
industry. The sizeable efforts by the Government machinery to introduce
the reforms at the earliest are worth appreciable but at the same time
with stiffer deadlines it seems that government is in haste to implement
this reforms at the earliest which may be paralyzed by lack of information
and orientation of small traders in rural areas who form a sizeable
community of traders. The paper aims to see the perception of teachers
towards inclusion of GST in the Commerce Curriculum.
Key words: GST, Inclusion, Curriculum
________________________________________________________________
16
INTRODUCTION
The concept of Goods and Services Tax (GST) was first introduced by a
French tax official during the 1950‘s. To date, there are 160 countries around
the world which have adopted this taxation system, including the members of
the European Union and ASEAN countries such as Singapore, Indonesia,
Thailand and others. Theoretically, GST is levied on the supply of goods and
services at each stage of the supply chain from the supplier up to the retail level
of the distribution (Goh et.al.,2017). GST is a new buzz in the arena of Indian
Business environment. GST, in a very small time period has become the talk of
town and the matter of discussion for all. Goods and Service tax is one of the
largest tax reforms after the independence of this country. Opposition parties,
though have criticized this step a lot and people (Agarwal, 2017).
Goods and Services Tax (GST) is an indirect tax which was introduced
in India on 1 July 2017 and was applicable throughout India which replaced
multiple cascading taxes levied by the central and state governments. It was
introduced as The Constitution (One Hundred and First Amendment) Act 2017,
following the passage of Constitution 122nd Amendment Bill. The GST is
governed by a GST Council and its Chairman is the Finance Minister of India
(Agarwal, 2017). Goods & Services Tax Law in India is a comprehensive,
multi-stage, destination-based tax that will be levied on every value addition.
The overture of Goods and Services Tax (GST) would be a very momentous
step in the field of indirect tax. Goods and Services tax (GST) has been
acknowledged as one of most imperative tax reform post-independence. It is a
tax trigger, which will lead to business transformation for the industry. The
sizeable efforts by the Government machinery to introduce the reforms at the
earliest are worth appreciable but at the same time with stiffer deadlines it
seems that government is in haste to implement this reforms at the earliest
17
which may be paralyzed by lack of information and orientation of small traders

in rural areas who form a sizeable community of traders (Barhate, 2017).
STATEMENT OF THE PROBLEM

Incorporating GST in the commerce curriculum is the need of the hour
following one of the most important reforms in the finance sector. Universities
have already given directives through respective Board of Studies for such
inclusion. In such a scenario, it is really important to know and discuss the
perception of teachers regarding the inclusion of GST in the Commerce
Curriculum.
OBJECTIVES OF THE STUDY

 To find out the perception of teachers towards the inclusion of GST in
the Commerce Curriculum
 To find out the significant hurdles in the newly structured curriculum
and syllabus.
SCOPE OF THE STUDY

The study is limited to the faculty teaching in Commerce in Arts and
Science Colleges under Mahatma Gandhi University (Kottayam) in Ernakulam
district.
METHODOLOGY
Both primary and secondary data are used in the study. Primary data
has been collected using Structured Interview schedules and secondary data has
been collected from journals and magazines. The sample survey was conducted
by including 65 teachers of different arts and sciences colleges in Ernakulam
18
district covering government / aided colleges and self financing colleges.

Autonomous and non autonomous colleges were also represented in the sample.
REVIEW OF LITERATURE
Agarwal (2017) stated that people also have a strong perception that
GST has increased the tax burden on Businessman and GST has increased the
tax burden on Common Man too. People confirm in their perception that GST
will increase the inflation (prices) in the country though at the same time it is
beneficial in long-term, It will increase the tax collection of the government and
also is going to affect the small business very badly. However, the perception is
strongly opposite about understanding GST. People have not accepted that GST
is very difficult to understand. The government should communicate with the
communities through various online and offline platforms and must conduct an
open talk about GST. Further, government should also make people aware that
GST is not going to affect the small businesses because it is not applicable on
the businesses having a turnover below 20 lakhs. Similarly, those who have
knowledge about GST must also disseminate the same to the community, so
that lot of wrong perceptions can be eliminated.
Ahmad et.al. (2016) concludes that the level of awareness of GST is

still not reached a satisfactory level. This is because the study involved only
general questions that should be know by the respondents as end users. This
causes the respondents to give high negative perception of the impact of
implementation of GST. Most of the respondents were unclear whether the
goods and services are not subject to GST. The government must convince that
the GST will not have a lasting impact on public as particularly convincing end
users that no increase in process of goods and services.
19
Ishak et.al. (2015) concludes that in order to ensure efficient

implementation of the GST, the government should come out with a proper
guideline to the society on the procedures for the implementation of GST. The
government may also revise the 6% rate to a lower rate, which may not burden
the people. Gradual stages may be employed for the implementation like the
agricultural sector, then industrial and then the service sector.
Barhate (2017) The respondents have no doubt whatsoever regarding

the proposed benefits of GST irrespective of their business type, legal status of
business for the reason being they feel irritated by the present system which
appears to be cumbersome. Most respondents believe that GST will bring
monetary gains to their business and do not anticipate any significant boost in
tax compliance costs. Interestingly, respondents expect the spending on tax
compliance to go down after GST is implemented. The lack of information
coupled with the apathy towards reforms may paralyze the speedy
implementation of this system especially in small towns where still not a single
orientation programs have been planned and executed till date by competent
authorities. The association of business turnover with the apprehensions can be
issue worth considering when designing training programs and modules. In lien
of this it is suggested associations, NGO‘s should come forward to organize
such programs at town level to orient small traders so that nobody is left out of
this biggest tax reform in the country.
RESULTS
Reliability Analysis: The Cronbach‘s Alpha showed a value of 0.746 found to
be acceptable (Nunally, 1978).
20
Normality: One Sample KS test for normality produced a p value of 0.484,

which shows that there is normality in the distribution of data with respect to
perception of teachers.
Table. 1 Level of Total Teacher Perception

P value
Frequency Percent
Low 29 44.60
Moderate 22 33.80
0.074
High 14 21.50
Total 65 100.0
Source: Survey Data

#3 Items reverse coded to make index
Inference: The level of perception is distributed evenly across the teachers and
it found that there is no significant difference in the level of teacher perception
towards inclusion of GST in commerce curriculum.
Table .2 Teacher Perception – One Sample t test

P value
N Mean Std. Deviation Std. Error Mean

PERCEP 0.486
TION 51 24.4706 5.39019 0.75478
Source: Compiled from Survey Data

#3 Items reverse coded to make index
21
Inference: The One Sample t test also affirms that there is no significant
difference in the teacher perception towards inclusion of GST in commerce
curriculum. The mean score lying around the assumed mean of 25 shows a
relatively moderate perception.
Table. 3 Specific Observations towards Teacher Perception
Mean Std
Statement P value#
Score Deviation
It is a wise decision that GST shall be
incorporated at the earliest in the 6.98 2.589 < 0.001**
curriculum
Incorporating GST in the curriculum will
7.11 1.946 < 0.001**
equip the students to be industry ready
be pose a challenge for teachers when 6.45 2.675 < 0.001**
specific training opportunity is absent
5.37 2.913 0.311
pose a challenge for the students to learn
There exist complexity and confusion in
7.48 1.929 < 0.001**
the implementation of GST
Source: Survey Data
# One Sample t test
** Significant @ 1% Level of Significance
Inference: The complexity and confusion in implementation of GST is

relatively perceived high by the teachers though all are having a relatively high
perception that the inclusion of GST in the curriculum will equip the students to
be industry friendly. Many perceive that inclusion of GST in curriculum will
not be a challenge for the students, though it is perceived to be a challenge for
teachers.
22
Table 4 Socio Economic Profile and Teacher Perception

Variable P value# Inference
Gender 0.827 Not Significant
Age 0.115 Not Significant
Designation 0.459 Not Significant
Employment Category 0.883 Not Significant
Whether Autonomous or Not 0.594 Not Significant
Region of Employed Institution 0.522 Not Significant
Region of Residence 0.202 Not Significant
Highest Educational Qualification 0.455 Not Significant
Whether teaching / taught taxation 0.848 Not Significant
# Independent Sample t test and One Way ANOVA
The teacher perception has no significant influence from socio economic

variables as all the variables show p values greater than 0.05.
Table 5 Hurdles in Teaching GST – Friedman Test
Hurdles Mean Rank P value
Absence of Sufficient Reading Material 2.00
Lack of Practical Knowledge 2.00

<
Complexity and Confusion in the Existing 0.001**
2.20
Implementation
Lack of interest from the part of students 3.80
** Significant @ 1% Level of Significance
23
Absence of sufficient reading material and lack of practical knowledge

are the most perceived hurdles in the proposed inclusion of GST in commerce
curriculum. The most important hurdles are perceived almost evenly across
different socio economic variables.
DISCUSSIONS
It has been a commendable initiative from the Mahatma Gandhi
University, Kottayam to include GST in the commerce curriculum. The teacher
perceive moderately to the initiative with their own diverting questions.
Absence of sufficient reading material and lack of practical knowledge are
perceived to be posing hurdles in front of teachers handling the subject.
Although, a relatively high perception is found towards the student capacity
building in this aspect.
REFERENCES
 Agarwal, M. (2017). People's perception about GST: An empirical
study. KAAV International Journal Of Economics, Commerce And
Business Management, 4(3), 1-6.
 Ahmad, M., Ismail, Z., & Halim, H. (2016). Awareness and perception
of tax payers towards GST implementation. International Journal Of
Academic Research In Business And Social Sciences, 6(11), 75-93.
 Barhate, G. (2017). An analytical study of awareness and perception
towards GST among traders in rural areas. International Research
Journal Of Engineering And Technology, 4(5), 1133-1144.
 Goh, P., Huei, C., & Tay, A. (2017). Consumers perception towards
implementation of GST in Malaysia: A Review paper. Journal Of
Global Business And Social Entrepreneurship, 1(4), 17-23.
 Ishak, N., Othman, M., & Omar, M. (2015). Students perception
towards the newly implemented GST in Malaysia. International Journal
Of Contemporary Applied Sciences, 2(6), 80-99.
24
ROLE OF GOVERNMENT INSTITUTIONS IN THE MAKE IN INDIA

CAMPAIGN
MR. SREENATH U
Assistant Professor in Economics
National Defence Academy, Pune
ABSTRACT
There has been much discussion on demonetization, goods and services tax,
unemployment etc in the recent times, but one policy initiative which escaped
the public view was the „Make in India‟ campaign launched by the government
in 2014. It was one of the first policy programme or campaign taken up the
present government with the objective of making India a hub of manufacturing
activities in the world. Overall, this was received favorably by the public
because it talked about increasing manufacturing growth, bringing more
foreign direct investment (FDI), creating jobs etc. This paper is an attempt at
critically looking into this government initiative „Make in India‟. It has two
parts, one which looks into why government institutions are not given much
importance in this and second, which looks into the policy gap.
Keywords: Make in India, FDI
________________________________________________________________
INTRODUCTION
The Make in India campaign was officially launched on 25th September

2017 by the Prime Minister Narendra Modi, just ahead of his maiden visit to the
United States of America (USA). But, the first mention of such an initiative was
there in the Independence Day speech given by him almost a month back. What
exactly is this ‗Make in India‘ campaign? It is basically an initiative by the
25
government to invite both local and foreign companies to India for establishing
their production base in India. In terms of empirical targets, the Make in India
seeks to increase the manufacturing share in India‘s GDP to 25 percent by 2022
and create 100 million jobs in the country. This campaign was launched in an
event which was attended by the leading industrialists from India and across the
world. The PM while launching the initiative said that the focus would be dual
with emphasis on physical infrastructure as well as digital network. The
government claims that it is nothing but a shift of the government role from an
authority to that of a business partner or what the PM keeps emphasizing,
‗Minimum Government and Maximum Governance‘.1
Sanjaya Baru traces the roots of this initiative to the ‗National Strategy
for Manufacturing‘ prepared by the National Manufacturing Competitiveness
Council (NMCC) set up the United Progressive Alliance in 2006.2 But, if we
look deeper there are some connections between the ‗import-substitution
policy‘ and the present strategy which we would delve further in this paper.
The logo and publicity of this campaign was done by Wieden and
Kennedy (Wieden + Kennedy), the Oregon-based advertising agency famous
for ad campaigns of major MNCs such as Nike, Facebook, Coca-Cola, ESPN,
Microsoft, Honda, Old Spice etc.3
The Make in India website claims that legal restrictions of the past
which are obstructive in nature would be replaced with a transparent system
which is user-friendly. This would lead to increase in investment, innovations,
skill development, protection of intellectual property rights and infrastructure
development in manufacturing sector. A workshop titled ―Make in India –
1
http://www.makeinindia.com/home
2
https://thewire.in/6208/a-closer-look-at-make-in-india/
3
https://en.wikipedia.org/wiki/Wieden%2BKennedy
26
Sectorial perspective & initiatives‖ was conducted on 29th December, 2014

under which an action plan for 1 year and 3 years have been prepared to boost
investments in 25 sectors. The 25 sectors which have been identified are:
automobile, automobile components, aviation, biotechnology, chemicals,
construction, defence manufacturing, electrical machinery, electronic systems,
food processing, IT and BPM, leather, media entertainment, mining, oil and
gas, pharmaceuticals, ports and shipping, railways, renewable energy, roads and
highways, space, textile and garments, thermal power, tourism and hospitality,
and finally wellness. All the above sectors have previously been opened for
foreign investments and no doubt all these are emerging sectors.
IS THE MAKE IN INDIA LION ROARING?
If one looks into the Reserve Bank of India data, the total FDI flow to
manufacturing sector was $6,381 million in 2013-14 which show a spectacular
rise in 2014-15 to $9,613 million.4 Strangely, this showed a decline in 2015-16
to $8,439 million. While, the RBI has predicted an increase in FDI flow to
manufacturing sector to $ 11,972 million in 2016-17, but one needs to wait and
watch till the actual data comes. If one sees the data till 2015-16, it‘s mainly
mining, business services and education (including research) which saw a
substantial increase in FDI. Also, with other manufacturing countries such as
China facing issues such as pollution, rural-urban migration, increased
urbanization etc, the government should also be prepared to face such issues.
The waste management and environmental degradation are two major things
associated with industries or production units. Otherwise, at one time the
government would be talking about liberalization of policies and ease of doing
business but then other bodies such as the National Green Tribunal or the
4
https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1221
27
Ministry of Environment and Forests would come up with counter polices.

Thus, there is a need for a holistic approach on issues related to environment.
Table 1: FDI flow into India
2013- 2014- 2015- 2016-

Particulars 2012-13 14 15 16 17 (P)
Manufacturing 6,528 6,381 9,613 8,439 11,972
Communication Services 92 1,256 1,075 2,638 5,876
Financial Services 2,760 1,026 3,075 3,547 3,732
Retail & Wholesale Trade 551 1,139 2,551 3,998 2,771
Business Services 643 521 680 3,031 2,684
Computer Services 247 934 2,154 4,319 1,937
Miscellaneous Services 552 941 586 1,022 1,816
Electricity and other Energy
Generation, Distribution &
Transmission 1,653 1,284 1,284 1,364 1,722
Construction 1,319 1,276 1,640 4,141 1,564
Transport 213 311 482 1,363 891
Restaurants and Hotels 3,129 361 686 889 430
Education, Research &
Development 150 107 131 394 205
Mining 69 24 129 596 141
Real Estate Activities 197 201 202 112 105
Trading 140 0 228 0 0
Others 43 292 232 215 470
P: Provisional.
Source: RBI
(https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1221)
The BJP-led National Democratic Alliance came to power riding on a

promise to generate more jobs which Congress-led UPA couldn‘t deliver in
their last regime. The unemployment rate according to the Economic Survey
(2015-16) has seen an increase to 5 percent from 3.8 percent in 2011-12. Only
1.35 lakh jobs were created in eight labour intensive sectors during 2015 while
9.3 lakh jobs were created in 2011 (The Hindu, May 19, 2017). From July 2014
28
to December 2016, in the eight major sectors – manufacturing, trade,

construction, education, health, information technology, transport, and
accommodation and restaurant – only 6,41,000 jobs were created. In
comparison, these same sectors had added a total of 1.28 million jobs from July
2011 to December 2013. Specifically, jobs created by the Prime Minister‘s
Employment Generation Programme (PMEGP), which generates employment
in rural and urban areas by initiating new micro enterprises and small projects,
has fallen by 24.4% from 428,000 in 2012-13 to 323,362 in 2015-16 (The Wire,
06/2017).
At the inception of the programme, getting an international ad agency to

do this policy somewhere led to the whole exercise being looked upon like a
branding one. It sounded or at least looked like a branding programme and any
MoU now signed with any foreign MNCs are claimed as the success of the
Make in India programme. Even though the role of the Department of Industrial
Promotion and Policy is not sidelined in this entire scheme but somewhere this
industrial policy of the government gave an overall look as an advertising
event.
ROLE OF GOVERNMENT INSTITUTIONS AND PUBLIC SECTOR

UNITS (PSUS)
At a time when the Government is pushing for revival of manufacturing

sector in the country by promoting FDI with liberalized policies, the logic
behind privatization of government-owned production units and PSUs is
beyond comprehension. There is a general understanding that public sector
units (PSUs) are overly staffed, inefficient management and financially
unstable. The Official Public Enterprises Survey 2013-14 mentions that out of
234 enterprises covered under the survey, 163 were profit making which is an
29
increase from 143 in 2004-05. The total profits from PSUs were Rs: 1,49,164
crore while total losses was pegged at Rs:20,055 crore. With the advent of
globalisation, the PSUs were considered as a relic from the past pro-socialist
pattern of economic system followed by India. But, opening up of the Indian
economy saw the emergence of PSUs has a force of reckon with in the market.
Consider the case of the capital market, PSUs like Engineers India, Bharat
Electronics Ltd (BEL), NMDC, Coal India, ONGC etc have become major
players with investors lining up to purchase their shares. The Competition
Commission of India views that sectors like cement, pharmaceutical etc, where
there is no government companies there is a high element of cartelisation by the
private players. The effect of redistribution of wealth, as a model employer and
also as an agent which doesn't just function on market principles, PSUs have a
major role in the coming years. One can see the presence of PSUs as well as
directly government-owned production set up like Ordnance Factories or Rail
Factories in almost all the 25 sectors focused by the Make in India campaign.
The NITI Aayog has suggested closure of 26 sick PSUs and strategic
sale of nearly 40. The NITI Aayog CEO Amitabh Kant had even suggested
handing over schools, colleges and prisons to the private sector. These
institutions can be effectively used by the government to implement the policies
directly to the economy. With privatization or even with disinvestment, the
government is losing out a weapon in its armory.
CONCLUSION
This entire programme of Make in India looks more like a branding

exercise which tries to advertise India as a global destination for FDI similar to
the tourism campaign, ‗Incredible India‘. If government is serious about making
India a global manufacturing hub, then it would have to do much more than
30
branding. One of the initial steps would be to revive the PSUs which nearly
contributes 20 percent of the country‘s GDP and employs nearly 10 lakh
workers. The Micro Small and Medium Enterprises (MSMEs) would be the
next sector which should be given the focus. The demonetization as well the
hasty implementation of the Goods and Services Tax (GST) has no doubt
affected the MSMEs the most. Many studies point to the fact that many
MSMEs have even shut down. In the era of outsourcing, the relevance of
MSMEs is very crucial and any strategy without their involvement would lead
to fruitless effort.
REFERENCES
1. http://www.hindustantimes.com/business/look-east-link-west-says-pm-
modi-at-make-in-india-launch/story-mGj6f6mlUmos0BAi27Rl1O.html
2. https://thewire.in/62808/a-closer-look-at-make-in-india/
3. https://thewire.in/154384/fact-check-modi-governments-reforms-really-
transformed-india/
4. https://thewire.in/21057/unless-urgent-steps-are-taken-make-in-india-
will-remain-a-non-starter/
5. https://thewire.in/20724/make-in-india-is-all-about-pie-policy-
infrastructure-enterprise/
6. https://thewire.in/62808/a-closer-look-at-make-in-india/
7. https://economictimes.indiatimes.com/news/economy/pm-modis-make-
in-india-campaign/newslist/3877788.cms
8. https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1221
31
CENTRAL TAXES IN INDIAN FEDERAL POLITY : A STUDY OF

TAX SHARING WITH REFERANCE TO KERALA
BEFORE AND AFTER GST
Ms. TREESA SCARIA
ABSTRACT
The Goods and Service Tax (GST) will pose the biggest challenge in the
Centre- state fiscal relations. In Goods and Services Tax, the major new
challenge is that so far Centre used to levy its tax, the state used to levy its tax,
the jurisdiction was clear, after the enactment of amendment, the tax powers
virtually cross each other. Till the time being, the scheme of sharing of central
taxes were as per the finance commission recommendations. With the help of
secondary data, this study examines the sharing of central taxes with state of
Kerala. The study is particularly important in the light of newly introduced
Goods and Services Tax (GST).The GST will subsume most of the indirect taxes
of the centre and the states including excise duty, service tax, value-added tax,
entertainment tax, luxury tax and octroi. The share of Kerala remained more or
the same during the period 2006-14 time periods. Direct tax contribute the
major share in divisible pool accrued to Kerala. Direct tax growth during the
time period is positive whereas indirect tax growth has turned negative during
the time period. A tremendous increase or decrease hasn‟t witnessed in the
share of Kerala in divisible pool. Under the GST regime concurrent jurisdiction
is followed that‟s both the centre and state governments can levy the tax. Thus
with the proposed GST implemented states have to share their states‟ own taxes
with the centre. In the particular case of Kerala, indirect taxes constitute the
major share of Kerala‟s own tax revenue. i.e. with the GST regime Kerala have
to share its sound finance source with the centre. In case of union government,
direct taxes constitute the major share in the total tax revenue of the
government. Thus, with the GST regime Kerala has to share more than it gets.
Thus, GST, touted as the biggest tax reform, is likely to affect the federal
structure of India as it talks about a Uniform taxation system.
Keywords: GST, Tax, Tax sharing
32
________________________________________________________________
INTRODUCTION
Article 1 of the Constitution states, ―India, that is Bharat, shall be a

Union of States‖. While the Constitution doesn‘t mention the term ―federal‖, it
does provide for a governance structure primarily federal in nature. It provides
for separate governments at the Union and in the states. Tax relations that come
under the remit of financial relations constitute an important theme in Centre-
State relations. No system of federation can be successful unless both the Union
and the States have at their disposal adequate financial resources to enable them
to discharge their respective responsibilities under the Constitution. To achieve
this objective, Indian Constitution has made elaborate provisions, relating to the
distribution of the taxes as well as non-tax revenues and the power of
borrowing, supplemented by provisions for grants-in-aid by the Union to the
States. It is to be noted that Indian Constitution makes a distinction between the
legislative power to levy a tax and power to appropriate the proceeds of a tax so
levied. The legislative power to make a law for imposing a tax is divided as
between the Union and States by means of specific Entries in the Union and
State Legislative Lists in Schedule VIII.
The Constitution provides for constitution of a Finance Commission to

advice the President on distribution of financial resources between the Union
and the States. The Finance Commission assess what percentage of the taxes
should be retained by the centre, and decide what principles should be adopted
to distribute the divisible pool of the income tax among the states. Till now
sharing between the centre and states is on the basis of recommendations of
finance commission. This study examines the sharing of central taxes with state
of Kerala.
33
The study seeks to achieve the following objectives:
1. To study the relationship between Centre and State through divisible

pool sharing
2. To make an analysis of Centre State financial relation on context of

GST implementation.
The study is particularly important in the light of newly introduced

Goods And Services Tax( GST).The GST will subsume most of the indirect
taxes of the centre and the states including excise duty, service tax, value-added
tax, entertainment tax, luxury tax and octroi. The introduction of Goods and
Services Tax (GST) would be a very significant step in the field of indirect tax
reforms in India.
CENTRE STATE RELATIONS IN INDIA
The Union and the State Governments derive their authority from the
Constitution. The Indian Constitution has, under Article 246 and Seventh
Schedule, distributed powers and allotted subjects to the Union and the states
with a threefold classification of subjects: (i) List I invests the Union with all
functions of national importance such as defence, external affairs,
communications, constitution, organization of the supreme court and the High
courts, elections etc. (ii) List II invests the states with a number of important
functions touching on the life and welfare of the people such as public order,
police, local government, public health, agriculture, water land etc. (iii) List III
is the Concurrent list, which includes administration of justice (excluding
Supreme Court and High Courts), economic and social planning, trade and
commerce, etc. The Union and State lists include the powers of taxation as well
34
The relations between the centre and the States have been mentioned
in Parts XI and XII of the Constitution under the heads,
legislative, administrative and financial relations. In administrative, legislative
and financial matters, as compared with the centre, the position of the states is
very weak. The states are always to look forward to the centre and such a
situation continues no matter whether same political party is in power both at
the centre and the states, or there are different political parties in position and
authority at these two levels of Indian federation. Since there are always
financial limitations, therefore, the states which are deliberately made to starve
of the finances, can hardly initiate or execute plans of far-reaching magnitude to
satisfy the electorates, who had returned them to power on certain promises.
Through my study I intend to study the sharing of central taxes, from the
divisible pool to the state of Kerala. GST, touted as the biggest tax reform, is
likely to affect the federal structure of India as it talks about a Uniform taxation
system. One of the biggest concern has been about the autonomy of states
which is likely to be affected by GST. My study is about how GST will bring
changes in sharing of taxes and in centre state financial relations with state of
Kerala.
DIVISIBLE POOL
The divisible pool is that portion of gross tax revenue which is

distributed between the Centre and the States. The divisible pool consists of all
taxes, except surcharges and cess levied for specific purpose, net of collection
charges. The finance commission makes recommendation regarding the
distribution between the Union and the States of the net proceeds of taxes,
which are to be, or may be, divided between them as well as the allocation
between the States of the respective shares of such proceeds. The Fourteenth
finance commission has recommended by majority decision that the States‘
35
share in the net proceeds of the Union tax revenues be 42%. The
recommendation of tax devolution at 42% is a huge jump from the 32%
recommended by the 13th Finance Commission.
CENTRAL TAXES SHARING WITH KERALA (2006-2014): AN

EMPIRICAL ANALYSIS
Kerala historically known as Keralam, is an Indian state in South

India on the Malabar Coast. It was formed on 1 November 1956 following
the States Reorganisation Act by combining Malayalam-speaking regions.
Kerala‘s low GDP and productivity figures juxtaposed with higher development
figures than in most Indian states is often referred to as the Kerala model of
development by economists, political scientists, and sociologists. It‘s argued
that Kerala being a consumer state. It will benefit from the destination based tax
system. Thus, Kerala is taken as the case study .At present sharing of central
taxes‘ proceeds are as per the recommendation of finance commission. Major
taxes taken for the study are corporation tax, income tax, customs duties, union
excise duties and service tax. With the implementation of GST service tax,
union excise duty and parts of customs duties like CAD and SAD will be
subsumed under the GST. States has to share its own tax revenue with the
centre since under GST regime concurrent jurisdiction is followed. To
understand the impact of GST on Kerala‘s share in central taxes, total tax
revenue of union government, share of Kerala in central taxes and Kerala state‘s
own tax revenue is analysed with the projected data of the same for the next
five years. GST will impact the sharing of central taxes in the divisible pool, the
present total tax revenue, share of direct taxes and indirect taxes in central taxes
and state‘s own revenue is analysed with the projected data of the same.
36
- Chart:1 Total Tax Revenue(in crores)
1400000
1200000
1000000
800000
600000
400000
200000
DIRECT TAXES INDIRECT TAXES
It‘s clear from chart that the indirect tax proceeds contributes largest to the total
tax revenue of the union government. Total tax revenue is increasing at a steady
rate.
Chart 2: Revenue from Central Taxes
600000
500000
400000
300000
200000
100000
0
37
The above chart shows the revenue from central taxes of union
government. It‘s observed that the share direct taxes of central taxes are
increasing than the share in indirect taxes. Initially indirect taxes were greater
than the direct taxes but from 2007-08 direct tax became the major contributor
in central taxes. In 2012-13 direct tax was 554063 crores whereas indirect tax
was only 482172 crores. Total revenue from central taxes during 2012-13 was
1036234 crores.
The chart below shows the share of states‘ in central tax. Share of states
are increasing over the period. With direct tax contributing more to the divisible
pool.
Chart 3: Share of states’ in central taxes

180000
160000
140000
120000
100000
80000
60000
40000
20000
0
Share of states‘ in central taxes has increased over the time period. In
2005-06 total share of states‘ in central taxes 95887 crores .By 2013-14 it has
increased to 294357 crores. Initially, indirect tax was the main component in
states‘ share of central taxes with 51376 crores rupees whereas direct tax was
only 44511 crores rupees. This pattern has changed from the period 2007-08,
38
direct tax‘s share started increasing and from then it‘s the largest component of
states‘ share in central taxes.
Chart 4: States’ Own Tax Revenue
700000
600000
500000
400000
300000
200000
100000
0
It‘s clear from chart that the share of direct tax is very little in states‘
own tax revenue. Indirect tax revenue constitutes the largest share in states‘
own tax revenue. During 2012-13 period direct tax collection was only 14655
crores , whereas indirect tax proceeds was 665228 crores and total states own
tax revenue was 679882 crores. In the period 2012-13, indirect taxes accounted
for 97.84% of states‘ own tax revenue.
Chart 5: State’s Own Tax Revenue of Kerala
40000
30000
20000
10000
0
Direct tax Indirect tax
39
From the chart it‘s clear that own tax revenue of Kerala state is
increasing over the periods. Indirect tax is the major component of Kerala‘s
own tax revenue. During the period 2013-14 indirect tax of Kerala accounts
91.5% total state‘s own revenue of Kerala. Over the periods indirect taxes
remain the major contributor to Kerala state‘s own tax revenue. State‘s own tax
revenue as per cent of Gross State Domestic Product is also increasing, it was
7.8 per cent in 2006-07 it increased to 8.6 per cent in 2012-13.
Table 1: Projection of Union Government Tax Proceeds (in crores)
Tax item 2016-17 2017-18 2018-19 2019-20
Corporation tax 618912 725024 849330 994947
Income tax 387549 452510 528359 616921
Customs duties 254833 286353 321772 361572
Union excise
232970 247087 262059 277938
duties
Service tax 303721 360174 427119 506508
Source: Fourteenth Finance Commission Report
40
Chart 6: Projection of Union Government Tax Proceeds
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
Corporation tax Income tax Customs duties Union excise Service tax
duties
2015-16 2016-17 2017-18 2018-19
Table 2: Projection of Union Government Tax Proceeds As Per

Cent of GDP (in crores)
Tax item 2016-17 2017-18 2018-19 2019-20
Corporation tax 3.73 3.85 3.97 4.10
Income tax 2.34 2.40 2.47 2.54
Customs duties 1.54 1.52 1.51 1.49
Union excise
1.40 1.31 1.23 1.15
duties
Service tax 1.83 1.91 2.0 2.09
Source: Fourteenth Finance Commission Report
41
The Above table shows the projected tax revenue collection of

corporation tax, income tax, customs duties, union excise duties and service
tax. Among which corporation tax and income tax are the direct taxes and they
grew at increasing rate as per the projected data. Even though indirect taxes
grew, their increase is less than that of the increase of direct taxes of central
taxes. As per the projected central tax revenue proceeds, corporation tax
accounts for the 4.10 percent of GDP. Corporation tax accounts for the largest
share in GDP among the central taxes, it is followed by income tax account for
2.54 per cent of GDP. Both are direct taxes of central taxes. Then comes
service tax with 2.09 per cent of GDP. Customs duties and union excise duties
account for 1.51 and 1.23 per cent of GDP respectively.
Table 3: Assessed Own Tax Revenue of Kerala(in crores)
year Assessed own tax revenue
2016-17 54399
2017-18 61568
2018-19 69682
2019-20 78865
2015-20 312578
Source : Fourteenth Finance Commission Report
42
Assessed own tax revenue

350000
300000
250000
200000
150000
100000
50000
0
2015-16 2016-17 2017-18 2018-19 2019-20 2015-20
The above table and chat shows the assessed data of Kerala‘s own tax
revenue. As per the assessed data, state‘s own tax revenue is increasing at a
steady rate.
FINDINGS AND CONCLUSION
From the union budget documents and RBI state finance budget
documents it is found that the growth pattern of corporate tax revenue has
remained positive all throughout the study period. The average growth rate of
corporation tax is 13.67%. Share of Kerala in corporation tax is remaining more
or the same throughout the years from 2006-14. The average growth of Kerala‘s
share in corporation tax is 12.64% but for the last two periods 2012-13 and
2013-14 there was only very minute increase. Per cent share of Kerala in net
proceeds of corporation tax is 0.68% i.e. Kerala receives only about 0.68% of
corporate tax received by the union government. Corporate tax contributes the
largest share to Kerala among the central taxes. But in absolute terms the share
of Kerala in corporation tax is very small. The growth pattern of Kerala‘s share
43
in income tax has remained positive throughout the study period. The average
growth rate of income tax proceeds to the union government is 14.48%. From
the2009-10 period the income tax proceeds is increasing at a steady rate. But a
similar increase in share of Kerala in income tax proceeds isn‘t observed. The
average growth rate of share of Kerala is 13.95%.
Kerala‘s per cent share in income tax is around 0.71%. Which is very
negligible when compared to high buoyancy of income tax. When compared to
cooperation tax, the growth of share of Kerala in income tax is more. The
average percent of Kerala‘s share in income tax is also greater than the average
per cent of Kerala‘s share in cooperation tax. Service tax is the largest source of
revenue to centre among the indirect taxes of the union. Share of Kerala in
service tax proceeds is at an average of 0.76%. Share of Kerala in service tax
proceeds remain static over the period of the study.in the year 2009-10 service
tax recorded a negative growth of 3.77. Kerala‘s share in service tax is
increasing more than that of increase in direct taxes of central taxes. The per
cent share of Kerala in service taxis higher than of direct taxes. Customs duties
constitute another major indirect in central taxes. It‘s clear from the table that
growth rate of customs duties‘ shows negative patterns in 2008-09 and 2009-10.
Increase in custom duties isn‘t a continuous increase there has been
discontinuity in the growth of revenue from custom duties. Share of Kerala in
net proceeds of customs duties is at average of 0.71%. Growth of state‘s share
of customs duties is not that much affected but share of state in customs duty in
absolute terms is in slow pace. In money terms, customs duties contributes
highest share to Kerala among indirect taxes of central taxes. Union excise
duties is one of the major indirect taxes of union government. Union excise tax
proceeds are increasing over the period. The share of Kerala in net proceeds of
union excise duty is an average of 0.51% only. Share of Kerala in union excise
44
duties is very small.it has the lowest share among central taxes to Kerala. The
increase in union excise duty proceeds has not reached to Kerala.
Thus we can say that growth of Kerala‘s share in central taxes has not
shown a tremendous increase or decrease in the time period 2006-2014.Direct
taxes (corporation tax and income tax) has shown positive growth in the study
period. Whereas, Indirect taxes has shown negative growth rate in the study
period.Direct tax collection nearly doubled from 3.7 lakh crore rupees in 2009-
10 to around 7 lakhs core rupees in 2013-14.In case of union government‘s tax
revenue collection, collection from direct taxes are more when compared to the
indirect tax collection of central taxes.In case of state government‘s tax revenue
collection, collection from indirect taxes are more when compared to the direct
tax collection of the state.In particular case of state of Kerala, it‘s found that
indirect taxes contribute the major share in state‘s own tax revenue. Indirect tax
collection of state of Kerala during 2013-14 accounted for 91.5 per cent of total
state‘s own tax revenue.
With implementation of GST, state have to share its own tax revenue
with the centre due to the concurrent jurisdiction. This will adversely affect the
state economy. Since what the state has to give is more than what it gets under
the GST regime.Post GST period is likely to witness an upper hand of centre
over the state governments, over tax revenues. As per the projected data for the
period 2015-2020, Kerala‘s own tax revenue is increasing .Under the GST
regime of concurrent jurisdiction Kerala has to share 50 per cent of these
proceeds with the centre.
Till the time being, the scheme of sharing of central taxes were as per
the finance commission recommendations. The share of Kerala remained more
or the same during the period 2006-14 time period. Direct tax contribute the
45
major share in divisible pool accrued to Kerala. Direct tax growth during the
time period is positive whereas indirect tax growth has turned negative during
the time period. A tremendous increase or decrease hasn‘t witnessed in the
share of Kerala in divisible pool. Thus with the implemented GST states have to
share their states‘ own taxes with the centre. In the particular case of Kerala,
indirect taxes constitute the major share of Kerala‘s own tax revenue. That‘s
with the GST regime Kerala have to share its sound finance source with the
centre. In case of union government, direct taxes constitute the major share in
the total tax revenue of the government. Thus, with the GST regime Kerala has
to share more than it gets. Thus, GST, touted as the biggest tax reform, is likely
to affect the federal structure of India as it talks about a Uniform taxation
system
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48
A STUDY ON THE IMPACT OF UNIVERSAL BASIC INCOME

IN INDIAN ECONOMY
Ms. RENJINI REJI

Guest Faculty, St. Thomas College, Ranni
Ms. ANU PAUL

Christ University, Bangalore
Ms. MERLIN MARY THOMAS

Madras Christian College, Chennai
ABSTRACT
Universal Basic Income (UBI) is one of the policy option where there is a
monthly flow of cash payment from the state budget to every citizen. This
transfer is for an entire lifetime and there are no prerequisites to be fulfilled by
the beneficiary. Hence, this study aims to understand the feasibility of the
Universal basic income foregrounding on the variables like fiscal cost, poverty
rate. A policy check is also undertaken in this paper by comparing the
efficiency of the established schemes (PMAY, SSA, MDM, PMGSY, MGNREGA
and SBM) with the idea of universal basic income. Secondary data is used to do
the regression analysis with the help of sources like Economic survey, reports
of OECD and NSSO with the time period taken from 2016-2017. The paper
highlights on the fact that ,UBI when compared to various schemes alleviates
poverty at a higher rate and also scales down the complexities for improving
the welfare of the nation. Therefore, stating that UBI is a better policy option
for the Indian economy.
Keywords: PMAY, SSA, MDM, PMGSY, MGNREGA, SBM, Universal basic
income, Gini Coefficient, fiscal cost.
______________________________________________________________
1. INTRODUCTION
Universal Basic Income is premised on the idea that a just society needs
to guarantee to each individual a minimum income which they can count on,
and which provides the necessary material foundation for a life with access to
49
basic goods and a life of dignity. The Economic Survey(2016-2017) states the
following notion, ―Wiping every tear from every eye‖ based on the principles
of universality, unconditionality, and agency—the hallmarks of a Universal
Basic Income (UBI)—is a conceptually appealing idea. A universal basic
income is, like many rights, unconditional and universal: it requires that every
person should have a right to a basic income to cover their needs, just by virtue
of being citizens. A number of implementation challenges lie ahead, especially
the risk that UBI would become an add-on to, rather than a replacement of,
current anti-poverty and social programs, which would make it fiscally
unaffordable. But given their multiplicity, costs, and questionable effectiveness,
and the real opportunities afforded by the rapidly improving ―JAM‖
infrastructure, UBI holds the prospects of improving upon the status quo. Given
the present social, political and economic scenario in the country the present
research is an attempt to throw some light on the impact of Universal Basic
Income in India. The study goes in line with the data provided by The
Economic Survey of India which highlights some illustrative costs for a UBI
(varying between 4 percent and 5 percent of GDP), and outlines a number of
ideas to take UBI forward.
Universal Basic Income is a form of social security guaranteed to

citizens and transferred directly to their bank accounts and is being debated
globally. If indeed the government does go ahead and accepts the proposal, it
will be equipping itself with a potent political tool ahead of 2019 LokSabha
elections. In India, apart from its anti-poverty potential, it can also be a
substantial measure to improve autonomy (say, of adult women, three-quarters
of whom do not earn income) and dignity by giving workers an escape ladder
from socially despised occupations (scavenging, waste-carrying, prostitution,
etc.)
50
2. CONCEPT OF UBI
The proposal has come under a variety of names: universal basic income;
demo grant; citizen dividend. In India, many subsidy schemes are being
implemented to improve the living conditions of the vulnerable segments of the
population. However, these schemes are plagued by various problems like
leakages in the delivery system, misidentification of beneficiaries – exclusion
of deserving households – as well as inadequate and untimely assistance to the
beneficiaries. This is where the importance of UBI comes into picture. While
the details may vary, the basic idea is quite simple: Every citizen receives a
monthly living stipend sufficient to live at a culturally defined respectable
standard of living. The grant is unconditional on the performance of any labor
or other form of contribution, and it is universal which means everyone receives
the grant as a matter of citizenship right. Grants go to individuals, not families.
There is no stigmatization, since everyone gets the grant. Thus, it is less likely
that stable majority coalitions against redistribution will form once basic
income has been in place for some length of time. There are also no "poverty
traps" caused by threshold effects for eligibility for transfers. Everyone gets the
transfers unconditionally. If you work and earn wages, the additional income is
taxed, of course; but the tax rate is progressive, so there is no disincentive for a
person to enter the labor market to acquire discretionary income.
In effect, universal basic income could be considered an indirect mechanism

for achieving the "wages for housework" proposals by some feminists:
recognizing that care-giving work is socially valuable and productive and
deserving of financial support. Unlike stakeholder grants, universal basic
income grants raise significant questions about practical feasibility.
51
2.1 VIEWS ON THE UBI SCHEME
As with any new idea, the UBI has also received its fair share of
remarks in favor and against the concept. Those in favour view it as giving the
individual freedom to spend with dignity, independent of his/her capability to
earn in the absence of employment. They believe it would also reduce poverty
and inequalities. As individuals would be paid as per the UBI scheme (not
households) it could enable women empowerment and possibly contribute to
effective spending on children (nutrition and education) and their businesses.
UBI could also relieve a part of the credit constraints for self-employed small
producers amongst the poor.
Two sides of the debate on UBI
Positive Negative
Poverty and vulnerability reduction Conspicuous spending -spending on
wasteful activities
Choice -Individual could spend as Moral hazard (reduction in labour
per his/her choice
supply)
Better targeting of poor Gender disparity induced by cash
Insurance against shocks Implementation-stress on the
banking system
Improvement in financial inclusion Fiscal cost given political economy
of exit
Psychological benefits -reduce Political economy of universality
pressure of finding a basic living ideas for self-exclusion
Administrative efficiency Exposure to market risks (cash vs.
food)
52
2.2 UBI IN INDIA
According to the country's 2016-2017 Economic Survey, UBI is a

"powerful idea" and would be more effective at combating poverty than
existing state benefits. However if it were implemented now political
challenges could "derail" UBI before it got off the ground, the survey found,
suggesting the country is not yet ready for the scheme. The introduction of UBI
is not expected to be announced in the Union Budget, which will be delivered
in Parliament by Finance Minister Arun Jaitley but it could be tabled for
discussion in the near future. If implemented, India would join Finland in
providing free money to citizens. Under a universal income system, citizens
would receive a set amount of money from the state, forfeiting other benefits.
India, which has an estimated population of 1.3 billion people, has a growing
economy, but around 29.5 per cent of people live in poverty, according to a
2014 government report – particularly in rural areas. Professor Guy Standing, a
founding member of the Basic Income Earth Network, told Business Insider
UBI trials in India had been "remarkably positive", giving people a sense of
control over their money, reducing debt and empowering women. The Survey
praised Universal Basic Income as "a radical and compelling paradigm shift in
thinking about both social justice and a productive economy", saying it could be
to the twenty-first century "what civil and political rights were to the twentieth"
that they cannot take economic decisions relevant to their lives. An
unconditional cash transfer treats them as agents, not subjects‖. The concept of
UBI received a boost recently when the government of Finland announced the
introduction of a trial involving 2,000 unemployed people. The recipients will
be given €560 (£480) every month for two years unconditionally, even if they
find work.
53
India at present has many different welfare programs administered by

the government that are targeted at the poor; currently there are around 950
central sector and centrally sponsored sub-schemes in the country accounting
for 5.2% of the GDP by budget allocation (Budget 2016-17). In addition, there
are more schemes at the state level and most of them have been in force for a
long period of time. Implementation of these schemes is riddled with various
problems including misallocation, targeting–inclusion and exclusion errors;
leakages- wastage and inefficiencies (corruption) in the delivery system; no
uniformity in implementation across states as richer and better administered
districts are able to implement more effectively; higher administrative costs;
some of these schemes involve subsidies which distort resource allocation
(water, electricity subsidies) - non-poor benefit relatively more from the
subsidies; amongst others. The Economic Survey 2016–17 suggests that the
implementation UBI requires the dismantling of the most socially necessary
welfare schemes, namely, the Public Distribution System (PDS), the Mahatma
Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and the
Mid-day Meal Scheme. The Figure 1-6 in the appendix clearly highlights that
the existing schemes have many leakages which is why the dismantling is
proposed. The envisioned UBI turns out to be no more than a small
compensatory transfer (or income top-up) to a part of the population, and that
too, one that will require the government to prune or do away with in-kind
transfers of food, guaranteed minimum days of wage work, and other public
social security measures.
54
2.3. COST OF IMPLEMENTING UBI
The cost for implementing the UBI, which will replace all other welfare
schemes could be around 4.9% of GDP, according to the estimates provided by
the Economic Survey. This would be lower than the current cost of welfare
programme, which, as mentioned earlier, is about 5.2% of GDP. The cost has
been arrived at by considering certain assumptions. Considering that
eliminating poverty completely could be a costly affair, the survey has selected
a target poverty level of 0.45% and has computed the 2011-12 consumption
level of people at this threshold level. Based on this level of consumption, the
amount of fixed income or stipend required to bring an individual above the
poverty line of Rs. 893 per month (Tendulkar Poverty Line for 2011-12) has
been calculated, which has worked out to be Rs. 5400 per year. After taking
into consideration the effect of inflation, the minimum income amount for the
year 2016-17 has been estimated to be Rs. 7620 per individual per year. The
survey however has assumed a quasi-universality rate of 75% while arriving at
the total cost of implementation of the scheme. The survey has further
suggested that the UBI amount would have to be revised from time to time as
its real value would depend and vary according to the prevailing inflation in the
economy. The survey therefore proposes indexing it to prices so that the
amount gets revised periodically.
2.4 UBI – POTENTIAL ISSUES

While advantages of the UBI scheme are quite apparent, the critics of
the scheme have also raised some valid points against it. The survey proposes
that UBI replaces the welfare schemes such as MNREGA, Pradhan Mantri
Gram Sadak Yojana, Pradhan MantriAwas Yojana, National Health Mission,
Swachh Bharat Abhiyan, SarwaSikshaAbhiyan, Mid-Day Meal Scheme, LPG
55
Subsidy, Food Subsidy, Fertilizer Subsidy and every other centrally sponsored
scheme and sub schemes in operation in the country. One major advantage of
having numerous welfare schemes in place is that in case a scheme fails to
deliver, the other schemes can compensate for that loss. Moreover, all welfare
schemes are not aimed at poverty reduction and hence pro-poor. For instance,
subsidies on food and fertilizers benefit incomes of farmers and also aid in
providing food at reasonable rates to people. In the event of situations like
drought, famine, crop loss, natural and man-made disasters, in-kind benefits
like food subsidy (PDS) are more effective than cash transfers. Similarly,
MGNREGA provides employment to people and at the same time leads to
creation of capital assets; the mid-day meal scheme provides children with food
leading to improvement in nutrition levels. Objective of some other schemes
involving provision of subsidies and tax exemptions is to stimulate growth or
exports and be instrumental in bringing about a structural change.
In the event of the subsidies being removed, the government would have
to ensure education and health to all citizens at nominal prices. The country
could also witness increase in rail fares and water and electricity bills as well as
fuel prices. Rise in fuel prices could make them expensive/unaffordable for the
poor, who may then revert back to traditional fuels for cooking. Discontinuation
of welfare programmes could lead to higher prices of essential commodities
including food, thus effectively reducing the real income for the individuals.
One other major argument against basic income is that the poor may spend it on
alcohol, drugs and other unwanted activities; though this argument has been
refuted by the findings of the pilot study conducted in rural Madhya Pradesh
through the Self Employed Women‘s Association in 2011 - ‗Madhya Pradesh
Unconditional Cash Transfer Project‘. Under this project, over 6,000
individuals were provided with the ‗basic income‘ for duration of 12 to 18
56
months. Experiences across the world on the use of unconditional cash transfers
have also shown that expenditure has been made on worthwhile goods and
services.
3. REVIEW OF LITERATURE
Erik Olin and Wright1 presented a paper titled “Basic Income as a

Socialist Project” 2005 advocated a form of basic income as a means for
distributing the economic profits of publicly owned enterprises to benefit the
entire population (also referred to as a social dividend),where the basic income
payment represents the return to each citizen on the capital owned by society.
These systems would be directly financed out of returns on publicly owned
assets, characterizes basic income as a project for reforming capitalism into a
socialist system by empowering labor in relation to capital, granting labor
greater bargaining power with employers in labor markets, which can gradually
de-commodify labor by decoupling work from income. This would allow for an
expansion in scope of the "social economy", by granting citizens greater means
to pursue activities (such as the pursuit of the arts) that do not yield strong
financial returns.
According to History Of Basic Income2 published by BIEN on 2008,

basic income or Universal basic income is a form of social security in which all
citizens or residents of a country regularly receive an unconditional sum of
money from a govt. or public institution in addition to any income received
from elsewhere. Ghosh and Jayanti3 in their article titled UBI In
India,2017, emphasized the concept of a Universal basic income where UBI is
seen as a non- targeted provision in addition to the existing services in health,
nutrition, education and so on. But in India much of the talk around it is also
directed at attacking ―wasteful subsidies‘ and even the food security programme
57
and the employment guaranteed programme. Universal basic income is

financed by the profits of publicly owned enterprises (often called social
dividend or citizen‘s dividend) are major proposed models of ―market
socialism‖ Basic income schemes have also been promoted within the context
of capitalist schemes, where they would be financed through various form of
taxation.
James Meade4, Bertrand Russell, Frances Fox Piven and Harry
Shutt5 (1995) are other theorists leaning towards different kinds of socialism
have advocated basic income include Meade states that a return to full
employment can only beachieved if, among other things, workers offer their
services at a low enough price that the required wage for unskilled labor would
be too low to generate a socially desirable distribution of income. He therefore
concludes that a citizen's income is necessary to achieve full employment
without suffering stagnant or negative growth in wages. James Meade
advocated for a social dividend scheme to be funded by publicly owned
productive assets. Russell argued for a basic income alongside public
ownership as a means to decrease the average length of the working day and to
achieve full employment. Fox Piven holds the view that an income guarantee
would benefit all workers by liberating them from the anxiety that results from
the "tyranny of wage slavery" and provide opportunities for people to pursue
different occupations and develop untapped potentials for creativity. Gorz saw
basic income as a necessary adaptation to the increasing automation of work,
but also a way to overcome the alienation in work and life and to increase the
amount of leisure time available to each individual. Harry Shutt proposed basic
income along with reforms to make all or most of the enterprises collective in
nature, rather than private. Together, he argued, these measures would
constitute the make-up of a post-capitalist economic system.
58
Economic Survey6 (vol 1) published in 2017, ascertains that A

Universal Basic Income promotes many of the basic values of a society which
respects all individuals as free and equal. It promotes liberty because it is anti-
paternalistic, opens up the possibility of flexibility in labour markets. It
promotes equality by reducing poverty. It promotes efficiency by reducing
waste in government transfers. And it could, under some circumstances, even
promote greater productivity. It is not an accident that Universal Basic Income
has been embraced both by thinkers of the Left and of the Right
4. OBJECTIVES
The present research paper focuses on following areas:

 To study the feasibility and the impact of UBI in the Indian Economy
 To analyse the comparative study between the existing schemes and the
UBI.
5. METHODOLOGY
The present research is based on secondary data which has been used to
analyse the feasibility and to examine UBI by comparing with the various
established schemes. The data for analysis is taken from Economic Survey, and
reports of OECD, NSSO, and CSO. Regression was done to check the impact of
UBI in the Economy. Hence, using E-Views UBI was regressed with the
dependent variables poverty population and GDP.
59
6. FINDINGS
Objective 1: To study the feasibility and the impact of UBI in the Indian
Economy
TABLE. 1: Regression analysis between UBI and Poverty population
The above result shows us the regression analysis between the

independent variable UBI and the dependent variable Poverty population. C is
the constant and its value is 0.180379. This result says that if the value of
independent variable (UBI) is 0, then the value of the dependent variable
(poverty population) would be 0.180379. 0.026801 is the standard error of
0.180379. This value is very small showcasing a higher reliability of the
coefficient 0.180379.0.0011 is the P-value of the t- statistic 6.730195. If P-
value is 0.01 or smaller than 0.01 then, coefficient is significant at 1% level,
meaning that the estimated coefficient is very strongly significant. Here, the
result obtained is 0.0011 meaning the estimated coefficient is very strongly
significant.
60
The coefficient for the independent variable (UBI) tells us how much
the dependent variable (Poverty Population)changes if the independent
variable changes by 1 unit. The estimated value (-2.44) means that if UBI
increase by 1 unit the poverty population decreases by (-2.44) unit. The
negative value means that UBI and poverty population has a negative relation.
The R-squared value found is 0.830185. This implies that 83% of

changes in dependent variable is explained by the independent variable. This
also signifies that the model is at its best fit.Also, looking at the Durbin –
Watson statistic, whose value is 1.001 which is closer to the value 2 indicating
that there is no serial correlation problem in this model. The overall
significance of the model is analysed by using F-test. The F- statistic value
24.44377 is greater than the F-critical value 5.55039 stating that all variables
are significant.
TABLE 2: Regression analysis between UBI and GDP
61
Looking at the independent variable (UBI) the P-value of the F-statistic

is 0.0000. This is smaller than 0.01. It implies that the coefficient 6.89 is
strongly significant (at 1% significant level). Hence it can be said that
UBI significantly affects GDP. The coefficient is positive here showing that
UBI and GDP portray a positive relation.
The R-squared value is 0.971698.This implies that 97% of changes in

dependent variable is explained by the independent variable. This also signifies
that the model is at its best fit. The F-statistic value 206.9989 is greater than the
f –critical value 3.742957414 meaning that all variables are significant. The
Durbin –Watson value here is 2.510526 which is closer to the value 2 indicating
that there is no serial correlation problem in this Regression model
Objective 2: To analyse the comparative study between the existing

schemes and the UBI.
FIGURE 1: Centrally sponsored schemes by Budget Allocation
62
FIGURE 2: Relation of UBI with Poverty and GDP
Figure 1 above states the constitution of the top welfare schemes.

Though the top welfare schemes are coined for the upliftment of the poor
section of the economy, these schemes were not provided with the sufficient
budget allocation. This misallocation led to a wide range of inequality in
various schemes resulting for its failure in several ways. The top welfare
scheme constitutes only 20% of the budget allocation. Moreover, all the
schemes cost 5.2% of the GDP. This percentage institutes a lot to the GDP
when compared with the UBI which costs only 2% of the GDP as seen above in
Figure 2.
Moreover, many loopholes were observed in the schemes which

weakened its performance. Mid-Day Meal is one of the prominent schemes
where free food is provided to children. However, it is observed that 42.5%
children of under 5 years of age is still underweight. Also, simple health
measures like using iodized salt and vaccination is still uncommon in India. A
major criticism of another prominent scheme MGNREGA is that a lot of money
63
disbursed by the government gets siphoned off by middlemen of all religion,

thus leaving a lot of MGNREGA workers either with unpaid wages or with less
standard wages.
This paper focuses on the impact of UBI on the Indian Economy.

Regression Analysis was used to understand the same. The results obtained
from the above study indicate a strong impact of the implementation of
Universal Basic Income on the growth of GDP and for poverty alleviation.
7. SUGGESTIONS
For the successful implementation of The Universal Basic Income in the

country the present research paper attempts to propose a Utopian Model. The
pre requisites of the model are as follows:
 Effective Financial Inclusion is crucial for the very success of UBI.

Penetration of banks in reaching to the grass root area should be
ensured.
 In the face of the monstrous economic inequality that plagues the
country, surely a proper UBI can be financed from income and wealth
taxation of the very rich, as also, from indirect taxation of socially less
desirable economic activities. Given that India has one of the lowest tax
to gross domestic product ratios in the world, more so with respect to
direct taxes (that include wealth and corporate taxes), it is always better
for the policy makers to envisage a UBI built on higher tax revenue to
expand the fiscal space.
 Strong functional trinity of Jan-Dhan, Aadhaar and Mobile (JAM)
network would be a game changer as it would enable direct benefit
transfer to the citizens and would ensure absence of leakages.
64
 Transparency should be ensured so that leakages are minimal. The

financial architecture should be in a way accessible to all.
 Initially, a minimum UBI could be funded wholly by the Centre and
gradually the Centre could adopt a matching grant system wherein the
Centre matches the State for every rupee it spends in providing a UBI.
8. CONCLUSION
The UBI scheme would also be easier to administer compared to the

myriad of welfare programs currently being administered by the government. It
is seen as potential solution to the problem of misallocation, leakages and
corruption that plague the country‘s current social welfare programmes and
streamline distribution of aid to the poor. As India adopts rapidly evolving
technologies, UBI would also aid in addressing expected unemployment arising
from obsolescence of workforce.
The Economic Survey has presented UBI as a single scheme which could
replace this myriad of welfare programs with a simple unconditional cash
transfer to every citizen paid at regular intervals. It states that as the transfer
would be done directly to the accounts of the beneficiaries there would be
reduction in system leakages and reduce misallocation (deal with exclusion
errors) to districts with less poor and given the universal nature of the scheme it
would reduce the administrative burden and costs associated with it.
65
REFERENCES
1. Wright, Erik Olin. ―Basic Income as a Socialist Project‖. Paper
presented at the annual US-BIG Congress, 4-6 – March 2005,
(University of Wisconsin).
2. ―History of Basic Income‖. Basic Income earth Network (BIEN). 21

June, 2008.
3. Ghosh, Jayati, A Universal basic income in India. Frontline, Feb. 17,
2017 P.45.
4. Mcade, James Edward. Full employment regained? Cambridge
University Press, 1995, ISBN 0-521- 55697.
5. Shutt, Harry, Beyond the profits system. Possibilities post capitalist era
Zed Books P-124. ISBN 978-1- 84813-1. – 15 March 2010.
6. Kant, Amitabh, Frontline feb -17, 2017, p46.
7. Marangos, John (2003), ―Social Dividend Versus Basic Income
Guarantee in Market Socialists ― International Jounral of Political
economy 34 (3)
66
APPENDIX:
Figure 1 Figure 2
Source: Economic Survey 2016-17

Figure 3 Figure 4
67
Figure 5 Figure 6
Source Economic Survey 2016-17

Table 1
UBI GDP Population under
Poverty
0 0.00 0.23
2000 0.01 0.12
3800 0.02 0.07
4000 0.03 0.03
6000 0.04 0.02
8000 0.05 0.01
8500 0.06 0.00

68
A GST A NEED OF HOUR: AN ANALYSIS

Ms. SHAMILA.V.U.
Assistant Professor,
PG Dept of Economics, MES Ponnani College
ABSTRACT
Goods and Services Tax is the biggest tax reform ever introduced in India. It
is an indirect tax; France was the first country to adopt GST and now it is
existing in almost 160 countries. India adopted dual system of GST.GST is
levied on the supply of goods and services at each stage of the supply chain
from supplier up to the retail stage of distribution.GST would be beneficial for
the consumers as it reduces the final burden of taxation. Task Force(on GST)
recommended the introduction of a destination based VAT type dual Goods and
Services Tax. With the introduction of GST all indirect taxes will come under
one umbrella. The tax has four slab rates of 5,12,18 and 28 per cent. The
Centre will levy and administer CGST and IGST and State will levy and
administer SGST. No registration is required for entities with annual turnover
of less than 10 lakh for the north east, and Himachal Pradesh and Uttarakhand
and Rs 20 lakh for rest of India.GST will have to be paid online through GSTN
platform. The laudable goals of GST like add 2% to GDP and also improve the
ease of doing business will only be achieved by urgent addressing of the
anomalies and measures hurting small business.
Keywords: Goods and Services Tax, India, Tax, Centre, State

________________________________________________________________
INTRODUCTION
GST was introduced in India on 1st July 2017.Centre and State have
cooperated for implementation of GST.GST is the only tax that affects directly
69
all sectors and sections of the economy. In 2004 Vijay Kalka Task Force(on
GST Thirteen Finance Commission) strongly recommended the integration of
indirect taxes into the form of GST in India. In 2017 four GST related bills (122
Amendment)became Act. As Canada India adopted dual system of GST. Assam
was the first state to introduce GST. The second state was the Bihar to
introduce GST. Goods and services Tax would be levied and collected at each
stage of sale or purchase of goods or services based on the input tax credit
method .It is a tax on economic activities like manufacturing, services or
trading. The Centre will levy and administer CGST and IGST and State will
levy and administer SGST. No registration is required for entities with annual
turnover of less than 10 lakh for the north east, and Himachal Pradesh and
Uttarakhand and Rs 20 lakh for rest of India. Government shown concession in
the initial months for late filing of returns . The frequent flip flop on tax rates
and tax rules will result confusion among tax payers and officials and tax
consultants. There is a GST Council, which is the supreme decision making
authority on the GST, headed by the Union finance minister and comprising
finance ministers of all state- it has met 21 times so far and made changes to tax
rates and other rules and regulations relates to the new tax. It has set up a
ministerial panel led by Bihar Chief Minister Sushil Kumar Modi to look into
the prickly issues of new tax regime.
1. To make an analysis of GST
2. Study the effect of GST
METHODOLOGY: This study is based on Secondary Data. Journals,

Magazines, and internet is used for data collection.
70
LIMITATIONS
Available details of GST is not adequate for study purpose. We have to

wait for the correct result of its implementation.
DEFINITION
Clause 366(12A) of the Constitution Bill defines GST as ―Goods and

Services Tax‖, means any tax on supply of goods, or services or both except
taxes on the supply of the alcoholic liquor for human consumption.‖
GST:” Goods and Services Tax is a tax on goods and services with value
addition at each stage having comprehensive and continuous chain of set of
benefits from the producer‘s /service provider‘s point up to retailer‘s level
where only the final consumer bear the tax‖.
CGST: Central Goods and Services Tax: Central Taxes to be included under
GST are: Central Excise Duty, Additional Excise Duties, the Excise Duty
levied under the Medicinal and Toiletries, Service Tax and Additional Duty
commonly known as Countervailing Duty.
SGST: State Goods and Services Tax: It is for intra state transaction. The state
taxes and levies to be included under GST are VAT/Sales Tax, Entertainment
Tax(unless it is levied by local bodies),Luxury Tax, Taxes on lottery, betting
and gambling and State Cesses and Surcharges as they relate to supply of goods
and services
IGST: Integrated Goods and Service Tax: For interstate transaction the levy of
tax is IGST. Its rate is expected to be a combination of CGST &SGST.
71
The tax has four slab rates of 5,12,18 and 28 per cent.
Tax exempted items: Rice, wheat, wheat flour, maida, atta, meat, fish, chicken,
milk, egg, salt, vegetables, fruits, bread, pappad, curd, khadi, hearing aids.
5% GST for: Solar lamp, tea, coffee, pepper, ginger, clove, turmeric, nutmeg,
normal rubber stent some medicines come under excise list (12/2012).
12% GST for Cheese , butter,other medicines (including ayurvedic),sanitary

napkins, comb,pen,pencil,coir products except mattresses, spex, bicycles,
electric vehicles, tractor, telephone, umbrella ,packing cases,boxes, agarbathi,
fertilizers, aluminum utensils
18% GST for: compound rubber, valkasided rubber, tooth paste, soap, iron
oxide,iron and steel products, clock, hair oil.
28% GST for light motor vehicle, heavy goods vehicle, crane, bulldozer,
excavator fork lift.
FEATURES
 Goods and Services Tax is a buoyant tax as it yield greater revenue with
growth of tax base
 In Goods and Service Tax the concept of one tax, one nation, and one
market has been followed
 Dual GST, Centre and State concurrently levy GST across the value
chain.
 It is an indirect tax
 Goods and Services Tax has four slab rates of 5,12,18 and 28 per cent.
 Interstate transactions and the IGST Mechanisms: Interstate sellers
would pay IGST on the sale of their merchandise to the Central
72
Government after adjusting credit of IGST, CGST, and SGST on their

purchase.
 Goods and Services Tax reduce tax evasion and corruption
 It reducing economic distortions (GST lead to a substantial reduction in
the tax on capital investments and production inputs)
 GST will have to be paid online through GSTN platform
REVIEW OF LITERATURE
1. V. Simi, Indhu N and Abbas. B (Impact of Goods and Service Tax on
Indian Economy, Third Concept August 2017) opined in the long run Goods
and Service Tax lower tax burden and translate into lower prices on goods for
consumers.
2. S Rajaram(Empowering Indian Economy Through Goods and Service Tax

in India, Economic Challenger Oct-Dec 2017) said that Goods and Service Tax
will tone down the cascading effect and pave the way for growth
3. Shobana Kamineni President CII said that it may take about a year for the
GST to function smoothly as it depend on IT backend and integration between
vendors and buyers.(India Business Journal October 2017)
4. Alok Kumar Prasanna(Economic & Political Weekly Vol LII No 34

August 2016)said Goods Services Tax Council, far from promoting cooperative
federalism also seems to create the institutional basis for further control of State
governments by the Union, especially in matters relating to state‘s fiscal
policies.
 Currently, there are 160 countries in the world that have implement
VAT/GST.
 Number of countries based on region are as follows:-
73
No. Region No. of Country
1 ASEAN 7
2 Asia 19
3 Europe 53
4 Oceania 7
5 Africa 44
6 South America 11
7 Caribbean, Central & North America 19

Source: Malaysian official website of GST
74
MERITS
GST will ensure competitive pricing, GST will boost consumption and
export. GST as a simple tax structure can bring greater compliance, and thus
increasing tax payers and tax revenue. It robust IT network, as it ensure
technology support for its registration, tax payment and IGST settlement etc.
Higher exclusion to new organizations to up to 10 lakh turnover. GST ensure
consistency in process and process of enlistment will make new business ease.
75
DEMERITS
GST will create differential tax regimes for similar products and
services across states. As it is a destination based tax system ultimately inflating
the cumulative tax impact .With the exclusion of alcohol, real estate and
electricity and possibly petroleum and natural gas at least in the initial years the
cascading effects remain more or less the same. The GST is an indirect tax by
its definition, it has more pronounced effect on lower income earners and
finally widen the income inequalities. A spate of technical glitches on the
portal of GST. Indian GST hurting small businesses. Small businesses
finding GST tough due to online driven system.37 tax returns and 12 TDS
returns for a company operating in just one state, adding to cost. Frequent flip-
flops over tax rates and norms. Tax refunds blocked due to postponement of
return filing dates. The cost of operating various business related activities is
expected to be increased (Its filing requires professional services)
SUGGESTIONS
Training must begin for personnel of revenue department for Goods and
Service Tax implementation. Improve the operational aspect of GST.A better
system to drastically slash number of returns to be filed. Quick release of tax
refunds. Strengthening and streamlining of GST portal. Comprehensive
outreach by authorities to educate tax payers, Realising the fact that raising
turnover threshold will result in greater number of exemption of small entities
from GST. Popularizing the benefits of composition scheme.
76
CONCLUSION
At the end it is a milestone in indirect tax reforms of India, which is

reducing unemployment and increasing economic welfare for the Indian
citizens. Goods and Services Tax will improve fiscal health of government; tax
collection system would become more transparent, making tax evasion difficult.
Indeed GST is a good and simple tax, as it lubricates the fiscal gear of the
country. The laudable goals of GST like add 2% to GDP and also improve the
ease of doing business will only be achieved by urgent addressing of the
anomalies and measures hurting small business. In short the replacing of earlier
multiple tax system by a single tax that could make it easy to do business. In
conclusion we may say that it is unrealistic to expect a flawless GST but it is a
process and its bane is only a matter of time and ensure it does not compromise
the fundamental structure of a tax. Despite several unclear aspects of GST, it is
to be a chargeable duty in India.
REFERENCES
1 Economic Challenger No 20 Vol 77 Oct-Dec 2017
2 Third Concept No 366 Vol 31 August 2017
3 Third Concept No 356 Vol 30 October 2016
4 Indian Business Journal Volume XIII No:4 October 2017
5 Malaysian official website of GST
6 GST guideline of EARNEST AND YOUNG Company
7 Indian Journal of Finance Volume:11 No:7 July 2017
8 Economic & Political Weekly Vol LII No 38 September 2017
9 Economic & Political Weekly Vol LII No 34 August 2016
77
INVESTMENT DECISIONS OF RURAL PEOPLE: A STUDY IN

KUNNUKARA GRAMAPANCHAYATH
Ms. ASHITHA AUGUSTINE & Ms. LAYA K S,
Assistant Professor on Contract,
P G Dept. of Commerce and Research Centre,
St. Xavier‘s College for Women, Aluva
ABSTRACT
Investment means the commitment of funds made in the expectation of some

positive rate of return. Investment is an activity that is engaged in by people
who have savings. This paper focuses on the investment decisions of rural
people with special reference to Kunnukara Gramapanchayath. The study aims
to identify the most preferred investment avenue by rural people and the factors
influencing their investment decision. The study is mainly based on primary
data collected with the help of structured questionnaires. Sample consists of 50
respondents selected using purposive sampling technique. Data is analysed
using percentages and statistical tool of coefficient of correlation is used in the
study.
Keywords: Investment, Decisions, Rural people,

________________________________________________________________
INTRODUCTION
Investment is one of the important terms in the day to day life of every
people. Mainly, people with saving enter into the world of investment. People
save money by sacrificing the current consumption and invest them for the
purpose of future consumption. Bodie, Kane and Marcus defined the term
investment as the current commitment of money and other resources in the
expectation of gathering future benefits. The investment decision relates to the
78
decision made by the investors with respect to the amount of funds to be

deployed in the investment opportunities. To invest is to allocate money in the
expectation of some benefit in the future. Investment involves the utilization of
funds at with the hope of better return in future.
The two main classes of investments are fixed income investment such
as bonds, fixed deposits, preference shares and variable income investment such
as business ownership or property ownership. On the basis of tenure, the
investments are classified as short-term investment and long-term investment.
Investments made for a period of one to three years are termed as short-term
investments and that are invested for more than three years are termed as long-
term investments. Almost everyone holding some portfolio of investment in the
form of financial assets like bank deposits, bonds, stocks and so on; and real
assets like motorcycle, house, gold etc.
With reference to individuals, investment decisions should be made very

wisely and with proper research and analysis. Investment is always attached
with the element of risk of losing the invested money and this loss is not under
the control of the investor. Hence, it is always advisable to measure and analyze
all risks involved before making investments. Plenty of investment avenues
available for the investors make their decision making process more critical and
complex. There are a number of factors which influence the people to make
their investment decisions.
1. To identify the most preferred investment avenues by rural people.

2. To identify the factors influencing investment decision of rural people.
79
3. To study the relation between awareness on investment avenues and

preference of investment avenues.
METHODOLOGY
The study is mainly based on primary data. Primary data was collected
through field survey in Kunnukara Gramapanchayath. A sample of 50
respondents was selected using purposive sampling method and data is
collected through structured questionnaires. Secondary data were obtained from
newspapers, books, journals and websites. Analysis of data is made using
percentage and statistical tool of coefficient of correlation is used in the study
HYPOTHESIS
H0: There is positive correlation between awareness on investment avenues and

80
DATA ANALYSIS AND INTERPRETATIONS
Table 1
SOCIO- ECONOMIC CHARACTERISTICS OF RESPONDENTS
VARIABLE CATEGORIES FREQUENCY PERCENTAGE
(NO.) (%)
18-30 7 14
31-40 9 18
Age 41-50 19 38
Above 50 15 30
Total 50 100
Male 29 58
Gender Female 21 42
Total 50 100
Primary school 9 18
S.S.L.C 16 32
Plus Two 12 24
Education Graduation 8 16
Post Graduation 2 4
Others 3 6
Total 50 100
Private job 8 16
Govt. job 3 6
Self- employment 5 10
Daily wage worker 12 24
Economic Activity Farming 14 28
Others 8 16
Total 50 100
Less than 10000 14 28

10001-25000 25 50
Monthly income 25001-100000 11 22
Above 100000 - -
Total 50 100
Source: Primary data
81
The table shows the socio- economic characteristics of respondents.

Thirty eight per cent of the respondents belong to the age group 41-50. Thirty
per cent respondents are above 50 years. Eighteen per cent respondents belong
to age group 31-40 and the rest 14% belongs to age group 18-30. Fifty eight per
cent of the respondents are male and 42% are female. The educational status of
respondents shows that 32% of the respondents qualified S.S.L.C and 24% have
passed plus two. Eighteen per cent have primary education. Sixteen per cent of
the respondents are graduates while, 4% are post graduates. The economic
activity of the respondents shows that 28% are farmers and 24% are daily wage
workers. Sixteen per cent of the respondents have private job and 6% hold
government job. Ten per cent of the respondents are engaged in self-
employment activities and the rest 16% are doing other kind of activities. The
monthly income of 50% of the respondents is between 10,000 and 25,000.
Twenty eight per cent of the respondents have an income less than 10,000 and
the monthly income of 22% of the respondents is between 25,000 and 1,00,000.
None of the respondents have an income more than 1 lakh.
82
Table 2
AWARENESS OF INVESTMENT AVENUES
PARTICULARS FREQUENCY PERCENTAGE

(NO.) (%)
Shares 28 56
Govt. Securities 17 34
Debentures and Bonds 27 54
Money market Instruments 25 50
Mutual Funds 31 62
Bank Fixed Deposits 50 100
Post Office Deposits 50 100
Life Insurance Policies 50 100
Land and Properties 50 100
Gold 50 100
The table shows the awareness of investment avenues by the rural

people. All of the respondents are aware of the traditional ways of investments
like bank fixed deposits, post office deposits, life insurance policies, land and
properties and gold investments. Sixty two per cent respondents are aware of
mutual funds. Fifty six per cent are aware of shares, while, 54% are aware of
debentures and bonds. Fifty per cent of the respondents are aware of money
market instruments and 34% are aware of government securities.
83
Table 3
SOURCE OF INFORMATION
PARTICULARS FREQUENCY (NO.) PERCENTAGE (%)
Relatives and Friends 18 36
Brokers and Agents 16 32
Govt. Authorities 4 8
Advertisements 9 18
Others 3 6
TOTAL 50 100
The table shows the source of information about the investment avenues
to the rural investors. Thirty six per cent investors came to know about the
investment avenues from their relatives and friends. Brokers and agents inform
32% respondents about the investment avenues. Eighteen per cent respondents
become aware of the investment opportunities from advertisements. Eight per
cent came to know about investment avenues from government authorities and
the rest 6% from other sources.
84
Table 4
PURPOSE OF MAKING INVESTMENT
FREQUENCY PERCENTAGE
PARTICULARS
(NO.) (%)
Return 8 16
Capital Appreciation 9 18
Safety of funds 5 10
Meeting Future Needs 11 22
Savings for next generation 17 34
TOTAL 50 100
The table shows the purpose of making investment by rural people.

Thirty four per cent respondents are making investments as savings for next
generation. Twenty two per cent are making investment for meeting their future
needs. Eighteen per cent respondents are making investment with a motive of
capital appreciation. The purpose of making investment by 16% respondents is
for return and the aim of 10% respondents is to make their funds safe.
85
Table 5
TYPE OF INVESTMENT
FREQUENCY PERCENTAGE
PARTICULARS
(NO.) (%)
Short Term 20 40
Long Term 30 60
TOTAL 50 100
The table shows the type of investment made by the respondents. Sixty
per cent respondents are making long term investments and the rest 40% are
making short term investments.
Table 6
PREFERENCE OF INVESTMENT AVENUES

Shares 2 4
Govt. Securities - -
Debentures and Bonds 1 2

Money market - -
Instruments
Mutual Funds - -
Bank Fixed Deposits 7 14
Post Office Deposits 2 4
Life Insurance Policies 6 12
Land and Properties 20 40

Gold 12 24
TOTAL 50 100
86
The table shows the most preferred investment avenues by the

respondents. Fourty per cent respondents prefer to invest in land and
properties. Twenty four per cent prefer gold investment. Fourteen per cent
prefer bank fixed deposits and 12% are opting life insurance policies. Four per
cent each of the respondents are opting shares and post office deposits and the
rest 2% prefer to invest in debentures and bonds. None of the respondents
prefer government securities, money market instruments and mutual funds.
This is due to the reason that they are not much aware of these types of
investments.
Table 7
FACTORS INFLUENCING INVESTMENT DECISIONS
Return 10 20
Safety 7 14
Liquidity 9 18
Low level of risk 6 12
Capital Appreciation 14 28
Tax Benefits 4 8
TOTAL 50 100
Source: primary data
The table shows the factors influencing investment decisions of rural

people. Capital appreciation is the important factor influencing 28% of the
respondents to make investment. Twenty per cent are influenced by return and
18% are influenced by liquidity of investments. Safety is the factor influencing
14% respondents and 12% are attracted by the low level of risk in the
investments. The factor attracting 8% respondents is the tax benefits in the
investment.
87
Table 8
CORRELATION BETWEEN AWARENESS ON INVESTMENT
AVENUES AND PREFERENCE OF INVESTMENT AVENUES
H0: There is positive correlation between awareness on investment avenues and
X Y
(AWARENESS) (PREFERENCE)
28 2
17 0
27 1
25 0
31 0
50 7
50 2
50 6
50 20
50 12
The value of R is 0.6893. This is a moderate positive correlation, which

means there is a tendency for high X variable scores go with high Y variable
scores (and vice versa). From this it is evident that preference of investment
avenues positively depend on awareness of investment avenues.
The value of R2, the coefficient of determination, is 0.4751.
88
FINDINGS
General findings:
1. Thirty eight per cent of the respondents belong to the age group 41-50.
Thirty per cent respondents are above 50 years. Eighteen per cent
respondents belong to age group 31-40 and the rest 14% belongs to age
group 18-30.
2. Fifty eight per cent of the respondents are male and 42% are female.
3. The educational status of respondents shows that 32% of the
respondents qualified S.S.L.C and 24% have passed plus two. Eighteen
per cent have primary education. Sixteen per cent of the respondents are
graduates while, 4% are post graduates.
4. The economic activity of the respondents shows that 28% are farmers
and 24% are daily wage workers. Sixteen per cent of the respondents
have private job and 6% hold government job. Ten per cent of the
respondents are engaged in self- employment activities and the rest 16%
are doing other kind of activities.
5. The monthly income of 50% of the respondents is between 10,000 and
25,000. Twenty eight per cent of the respondents have an income less
than 10,000 and the monthly income of 22% of the respondents is
between 25,000 and 1,00,000. None of the respondents have an income
more than 1 lakh.
89
Major findings:
1. All of the respondents are aware of the traditional ways of investments

like bank fixed deposits, post office deposits, life insurance policies,
land and properties and gold investments. Sixty two per cent
respondents are aware of mutual funds. Fifty six per cent are aware of
shares, while, 54% are aware of debentures and bonds. Fifty per cent of
the respondents are aware of money market instruments and 34% are
aware of government securities.
2. Thirty six per cent investors came to know about the investment
avenues from their relatives and friends. Brokers and agents inform 32%
respondents about the investment avenues. Eighteen per cent
respondents become aware of the investment opportunities from
advertisements. Eight per cent came to know about investment avenues
from government authorities and the rest 6% from other sources.
3. Thirty four per cent respondents are making investments as savings for
next generation. Twenty two per cent are making investment for
meeting their future needs. Eighteen per cent respondents are making
investment with a motive of capital appreciation. The purpose of
making investment by 16% respondents is for return and the aim of
10% respondents is to make their funds safe.
4. Sixty per cent respondents are making long term investments and the
rest 40% are making short term investments.
5. Fourty per cent respondents prefer to invest in land and properties.
Twenty four per cent prefer gold investment. Fourteen per cent prefer
bank fixed deposits and 12% are opting life insurance policies. Four per
cent each of the respondents are opting shares and post office deposits
and the rest 2% prefer to invest in debentures and bonds. None of the
90
respondents prefer government securities, money market instruments

and mutual funds. This is due to the reason that they are not much aware
of these types of investments.
6. Capital appreciation is the important factor influencing 28% of the
respondents to make investment. Twenty per cent are influenced by
return and 18% are influenced by liquidity of investments. Safety is the
factor influencing 14% respondents and 12% are attracted by the low
level of risk in the investments. The factor attracting 8% respondents is
the tax benefits in the investment.
7. Preference of investment avenues positively depend on awareness of
investment avenues.
CONCLUSION
From the study it is found that the most preferred investment avenue by
rural people is land and properties. None of the respondents prefer government
securities, money market instruments and mutual funds. This is due to the
reason that they are not much aware of these types of investments. They are
more aware of traditional means of investments and prefer to invest in these
type of investment avenues. It is evident that preference of investment avenues
positively depend on awareness of investment avenues. Capital appreciation is
the most important factor influencing the rural people while making investment
decision.
SUGGESTION
Government authorities and local bodies can provide more awareness on

non-traditional means of investments to the rural people.
91
REFERENCES
Books
Gupta K. Shashi and Joshi Rosy. Security Analysis and Portfolio Management,
Ludhiana: Kalyani Publishers, 2014.
Kevin. S. Security Analysis and Portfolio Management, 2nd ed. New Delhi: PH
1 Learning Pvt. Ltd., 2015.
Kothari C. R and GargGaurag. Research Methodology-Methods and

Techniques, 3rded. New Delhi: New Age International Publishers, 2014.
Articles
BialowolskiPiotr and BialowolskiWeziakDorota. ―External Factors Affecting

Investment Decisions of Companies‖, Economics, (Aug 2013), pp.1-18.
CleetusSibi Regina. ―Factors Influencing Investment Decisions in Capital

Market: A Study of Individual Investors‖, Southern Economist, (July
2017), pp. 42-45.
Jagongo Ambrose and Mutswenje S. Vincent. ―A Survey of the Factors

Influencing Investment Decisions: The Case of Individual Investors at the
NSE‖, International Journal of Humanities and Social Science,
Vol.4(4),(Feb 2013), pp.92-102.
SadiqNanman Muhammad and Ishaq Muhammad Hafiz. ―The Effect of

Demographic Factors on the Behavior of Investors during the Choice of
Investment: Evidence from Twin Cities of Pakistan‖, Global Journal of
Management and Business Research©, Vol. 14(3),(2014), pp.47-56.
92
Shinde C. M and PriyankaZanvar. ―A Study of Investment Pattern on the Basis

of Demographic Traits‖, International Journal of Research-
Granthalayah, Vol. 3(11), (Nov 2013), pp.136-142.
Shinde C. M and PriyankaZanvar. ―An Empirical Study on Factors

Influencingin Investment Decision Making in Pune‖, International
Research Journal of Management and Commerce, Vol. 1(6), (Sep 2014),
pp. 10-23.
Subramaniam V.A and Athiyaman T. ―The Effect of Demographic factors on

Investor‘s Risk Tolerance‖, International Research Journal of Commerce
and Management Research, Vol. 2(3), (March 2016), pp. 136-142.
Website
www.wikipedia.com
93
ECONOMIC DEVELOPMENT V/S ENVIRONMENTAL

SUSTAINABILITY-A PANORAMA
Ms. ASEEJA RV
Guest Lecturer
P.G. Department of Economics,
M.E.S Ponnani College Ponnani.
ABSTRACT
With the passage of time, it was observed that there was environmental
degradation on a large scale and thereby, quality of life was adversely
affected. Rapid industrialization, development of science, technology &
communication resulted in high rate of economic growth, higher production of
output in industries, agriculture and territory sectors. But such development
adversely affected the environment. That is, it resulted in the poisoning of
earth‟s resources. The process of economic development caused atmospheric
pollution which was reflected in the form of Global warming. As a result, the
environment has become polluted and it has a severe damaging effect on the
human life, plant life and wild life. This would not only result in the poor
quality of life of the present generation but also a threat for the future
generation to thrive. It is stated that economic growth and environmental
balance do not go together. They both oppose each other. To achieve a higher
rate of growth, resources have to be exploited and environment has to be
harmed. Environmental balance can only be maintained, if resources are not
exploited & pollution is not formed. This leads to low rate of economic growth.
But the fact remains that both of them are needed for the economy. The only
solution is controlling the scale of pollution & optimal use of the resources.
Keywords: Economic Development, Economic Growth, Environment, Pollution.
______________________________________________________________
INTRODUCTION
Environment and economic development have always been the topics
for discussion. The existing pattern of interaction between society and
environment in the name of development has turned to be a threat to human
94
survival. After the independence, India launched a series of economic plans for
rapid expansion in agriculture, industry, transport and other infrastructure with
a view to increase production and employment, to reduce poverty and
inequality of incomes and to establish socialistic society based on equality and
justice. But because of mindless and ruthless exploitation of natural resources,
we have degraded our physical environment. By environment, we meant the
whole complex of climatic, soil, water and biotic factors on which we all
subsist, and on which our entire agricultural & industrial development depends.
Rapid economic development is turning India into a vast wasteland. Poverty in
pre-independence India was the result of under utilization of resources, there is
every possibility that poverty, unemployment and inequality would continue to
persist due to destruction of environment.
However, the Objective of the paper is not to unlock the whole story, but to
focus on the following:
1. To study how the indiscriminate pursuit of economic development

resulted in the environmental degradation.
2. To study the measures that can foster development with environmental

protection.
METHODOLOGY
The study has made use of secondary data compiled from various
sources.
EARTH IN DANGER: NEED INTENSIVE CARE
In 1992 scientists gave an alarm warning about the hazardous future of

our earth. Man is endangering his own living environment in the name of
‗development‘ but the entire life system in the planet is collapsing. Ozone
95
depletion, air and water pollution, deforestation, destruction of oceanic wealth,

these threats faced by flora and fauna, deterioration in the productivity and
fertility of soil, global warming etc…are some of the accounted topics hinted
by the scientists gave the ―second choice‖ that these challenges made reach us
in a fire gauge, within the short period of 25 years the temperature on earth
surface has increased. 50C and Carbon expulsion on atmosphere increased for
62% per year. Lifeless oceanic parts are increasing flora and fauna are
disappearing from earth.
Now our capital city Delhi is recognized as one among the 10 cities in
the world; where the situation is evaluated as ―dangerous living condition‖.
New roads, new pipelines, new power plants; even all election promises are in
constructional and developmental strata‘s .But no one takes the initiative to talk
about sustainable development considering the environmental outputs.
Industries are considerably less in Delhi, but for road tax system government
gave permission to the business of second hand cars. This policy boomeranged
on the government itself.
Now! Delhi has the most number of cars in India (21.67 lakhs). About
30% vehicles are older than 20 years. These old Vehicles pollute air 5 times
more to that of a new vehicle. Pollution monitor board revealed the fact that an
increase in the number of Diesel vehicles has also added to the hazard of air
pollution in Delhi. The quantity of pollution which a diesel vehicle spit out is
equal to that of 24 petrol vehicle!!
Earth is the only planet so far known to have an environment that can
sustain life. It stated that economic growth and environment balance do not go
together. They oppose each other. There is a controversy between the
environmentalists and economists. The economists contended that if all eggs
96
are used for omelets, it will cater to needs of the citizens. On the other hand the
environmentalists opine that there will be no eggs to lay chicks. However, we
need both eggs and chicks so that the needs of the present and future
generations can be fulfilled. So there is no point in having a very high rate of
growth when the people are suffering due to poor environmental standards.
ENVIRONMENT SUSTAINABILITY ISSUES IN INDIA

India makes up 2.4% of the world‘s land, supporting 16% of the world
population. Now India experiencing rapid environmental degradation at
alarming rates. Tremendous pressure is placed upon the country‘s land and
natural resources to support the massive overpopulation. Overuse and
mismanagement of India‘s once abundant forests has resulted in
contamination, dissertation and soil depletion throughout the sub continent.
Thus, the desired rate of growth is the rate of growth that achieves optimal use
of the resources and no exploitation. In this context, the role of government is
highlighted. The government through various tools like tax, expenditure, fee,
fine, subsidy etc..Can control the flow of investment and help save
environment.
In order to have desired rate of growth along with better environmental

quality; we should go for sustainable development which is the only answer to
the survival of the earth and societies. The following measures may be taken
up with a view to ensuring sustainable development.
 The countries should limit rates of development without harming

our environment.
 Afforestation on a large scale should be undertaken.
 Non-biodegradable wastes should be recycled and reused.
97
 Necessary steps should be taken up to control wastes through

new technology.
 The government should be highly vigilant and careful to take
every possible step to maintain better environment.
 The individuals should be made aware of better environmental
quality which is essential for the good quality of life.
CONCLUSION
However, it may conclude that, environment is an important determinant
in developmental process. The fact remains that environmental legislation has
not been very effective and vested interest have obviated the rules, thereby
endangering human life. Thus, it is high time that our planners review the entire
position of development and environment crisis and evolve a new process of
balanced sustainable development. All the countries of the world should have
the objective of a rate of development along with better environmental quality
which will be a key to the survival of the earth and the persistence of the
livelihood.
REFERENCES
 Hemaadri Singh Rana, third Concept, Vol.30, No.359, Jan 2017.

 Karpakam M. Environmental Economics, sterling publishers, Pvt.
Ltd.2007.
 Michael Eric Lytton, Robert W. Collin and Rajesh Kumar Rai,
Economic and Political Weekly, Vol. No. 41, Oct 2016.
 Dr. R. Renganathan , Third Concept, Vol.30, No.354, August 2016.
98
PERSPECTIVES ON GST IN INDIA

Dr. JENNIFER WILSON FERNANDES
Asst. Professor, PG Dept. of Economics, Jain University, Bangalore
Mr.IKRAM PASHA M
Research Scholar, M.Phil, Dept. of Economics, Jain University, Bangalore
ABSTRACT
Goods and Service tax is considered to be one of the biggest tax reforms in
India has it subsumed 17 indirect taxes and 23 cesses.GST replaced multiple
central taxes such as centre excise duty, countervailing duty, cesses and state
taxes including value-added tax, octroi, purchase tax and luxury tax with a
single tax.GST framework makes the entire country of 1.3 billion consumers as
one single market and marks a historic milestone. GST changes the production-
based taxation to a consumption-based system. By removing cascading tax
effects GST checks tax evasion which means more revenue to the government
and more services to people which further leads to the economic integration
and strengthen national integration of the country. GST is also a huge step in
the digitization of businesses. For the first time, 7 million taxpayers, who pay
excise or service tax or VAT to state governments, are on one unified platform
to file all returns digitally. GST reduces the cost of doing business for firms;
reduce logistics costs of moving goods across states, no loss in equity, lead to
higher tax collection and greater digital financial inclusion. Keeping health
and education out of tax slab, GST is criticized as “inconsistent with equity” as
these services are consumed disproportionately by the rich people.
Keywords: GST& Digitalisation
_______________________________________________________________
99
1. INTRODUCTION
Goods and Service tax is said to be one-nation, one-market and one-tax
system. It is considered to be the nation's biggest tax reform has it impact both
the businesses as well the common man. It is termed as 'financial independence
movement' of modern times since the country witness a greater inflow of funds
from all over the world and from within India. GST is administered both by the
Central and state tax authorities. Four-tier GST structure Centre GST Act, the
Integrated GST Act and the State GST Act. IGST on imports replaces
countervailing duty and is levied in lieu of state GST and Central GST, but over
and above basic customs duty. Under the GST regime, all goods that are
imported will pay the full rate of central and state GST in the form of integrated
or IGST. Any individual who sells goods and or provides services of more than
20 lakh (10 lakh for North East states) in a financial year must seek registration
under GST.GSTIN is a 15-digit alpha numeric code with PAN prefixed by state
code and suffixed by three-digit details of business verticals of the PAN holder.
It is assigned to each registered business or trader. GST is a destination-based
tax and not origin-based tax. If a transaction originates in Bengaluru and
terminates in Delhi, the buyer in Delhi would like to claim input tax credit
against the purchase if he is a dealer himself. If an ecommerce firm sells
products from 100 dealers from its fulfillment centre in Bengaluru, and deducts
1 percent tax at source, the buyers in dozens of other states can claim credit for
the tax already paid only if the firm has registration in each state where it is
engaged in buy or sell transaction.
The GSTN is the nodal agency that uploads their invoices and files the
returns. In the first phase, GSTN had shortlisted 34 companies including EY,
Deloitte, Tata Consultancy and Reliance Corporate IT Park and in the month of
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August CSC e-Governance Services, Compare Infobase, Taxspanner,

Adaequare and Gamut Infosystems were selected to be GSPs in the second
batch. The GST Common Portal will enable taxpayers filing returns and making
tax payments. Over 60 lakh taxpayers had enrolled in the first round while more
than four lakh have enrolled in the second round till the second last day ( June
15, Economic Times).The objectives of the present paper is to study Pre and
Post GST in India and to analyze the impact of GST on various sectors of
Indian economy.
RESEARCH METHODOLOGY
The present paper is based on secondary sources which are collected

from various reports, published articles, journals and websites.
2. PRE-GST IN INDIA
On March 20, the cabinet cleared the four GST related bills such as the
Central Goods and Services Tax Bill 2017, the Integrated Goods and Services
Tax Bill 2017, the Union Territory Goods and Services Tax Bill 2017 and the
Goods and Services Tax (Compensation to the States) Bill 2017 and on March
29 the four Bills were tabled in the Lok Sabha for discussion. The GST Council
decided four-slab structure 5 percent, 12 percent, 18 percent and 28 percent for
both goods and services and the peak rate of 40 percent.
Hotels and restaurants across segments in Tamil Nadu, Pondicherry,

Bengaluru, Kerala and parts of Andhra Pradesh and Telangana came together to
stage a protest against the steep rates of tax under the goods and services tax
(GST) regime. Not only the hotels and restaurants but even the traders of
branded rice and lentils, sugar went on a strike protesting the imposition of
goods and services tax in the country. The industry reported 80-100 percent
101
growth in sales in June during the GST discounting and several leading retailers
like Reliance Digital, Vijay Sales, Viveks and Great Eastern had reported sales.
TAX SLABS
The GST Council decided four-slab structure 5 percent, 12 percent, 18

percent and 28 percent for both goods and services.5 percent GST includes
Sugar, tea, coffee; edible oil, mithai, life-saving drugs, PDS Kerosene,
Domestic LPG, agarbatti, coal, coir mats, matting, floor covering and
restaurants have been placed in this tax slab. 12 percent GST includes butter,
ghee, almonds, fruit juice, packed coconut water, nuts, umbrella, mobiles and
ayurvedic medicines. The GST Council fixed a GST rate of 3 percent on silver,
gold jewellery and processed diamonds. With 10 percent import duty,
consumers will have to pay an effective duty of 13 percent on gold jewellery,
which is higher than the earlier 12.5 percent. The 18 percent GST rate consist of
hair oil, toothpaste, soap, pasta, corn flakes, soups, ice cream, computers,
printers, mobile phone bills, service tax, service cost for ATMs. 28 percent GST
slab includes white goods, washing machines, refrigerators, televisions, kitchen
appliances, small appliances, cars, ATMs machine, electrical fittings, ceiling
fans, watches, automobiles, tobacco products, nutritional drinks, auto parts,
plastic furniture and plywood.
But the levy excludes real estate, electricity and alcohol besides
petroleum products (that will be brought under the net subsequently). Milk,
jaggery or gur, food grain, cereals have been exempted from tax. Schooling up
to higher secondary and most of the services provided to educational
institutions are exempt except certain items such as school bags etc. Mid-day
meal scheme as well as security, cleaning and housekeeping services, Services
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relating to admission and examination, Services provided by an educational

institution to students, faculty and staff, Transportation of students, faculty and
staff services to an educational institution providing education up to higher
secondary school or equivalent, are also exempt. Crude oil, natural gas, petrol,
diesel, jet fuels are exempted from GST. Small businesses such as traders,
manufacturers and restaurants can pay tax at 1 percent, 2 percent and 5 percent
respectively. Businesses with a turnover of up to 20 lakh are exempted from
payment of tax. 81 percent of items fall below/in 18 percent GST slab.
3. POST-GST IN INDIA
The GST Collections under the goods and services tax dropped
marginally to 90,669 crore for August from the revised figure of 94,063 crore
for July (Table 1 below). Collections for July were pegged at 92,283 crore. Of
the total collections in August, the share of central GST stood at 14,402 crore,
state GST at 21,067 crore and integrated GST at 47,377 crore. Of the total
integrated GST, 23,180 crore is from imports and the rest is from inter-state
sales.GST collections dipped 3.6 percent in August from July due to delay in
filing the tax. The following are the impact of GST on various sectors of
economy in India.
Automobiles: After the introduction of GST the prices of luxury cars

like Mercedes Benz, BMW, Audi and JLR have become cheaper by 5- 10
percent. Maruti announced a 3 percent price reduction across models, whereas
Toyota Kirloskar has already reduced prices 10,500 to by 217,000 across its
portfolio. Honda Cars India reduced prices across its range of vehicles by up to
131,663 and Ford India too slashed prices by 4.5 percent across the portfolio
(SIAM, Aug 2017 report).
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Industry: Due to delay in GST transition the primary sales from

companies to distributors and trade were severely hit in the month of July.
However, it increased from August growing by 30-50 percent with retailers
building up their inventory.
Logistics / Warehousing: GST is considered to transform this sector by

removing multiple tax structure, delays in transit, wastage of fuel and
investment, varying regulations, policies and approvals in different states that
the sector struggles. Large format modern warehousing will be closer to
consumption centres.
Telecommunication: Apple slashed prices of all iphone models by 4-7.5

percent. iPhone 7 Plus with 256 GB storage which cost 92,000, is now costing
85,400.The iPhone SE cheaper by at least 4 percent. The 128 GB version now
comes cheaper by 6 percent at 35,000.iphones business reduced by almost 35
percent due to online discounting.
4. CONCLUSION
The primary impact felt by the consumers due to change in prices of
goods and services on account of GST rates. Logistics, Warehousing, Education
and healthcare are considered to be the gainers due to roll out of GST in the
economy. Pradhan Mantri Awas Yojna will also get bigger support towards the
housing for all initiative. After the implementation of GST, the immediate
impact was the fall in the price of luxury cars and iphones in order to increase
the sales among the customers.GST is said to be beneficial tax in the long run
for the input tax credit given to sellers.
104
REFERENCES
1. Economic Survey of India 2016-17
2. SIAM, Aug 2017 report
3. ASSOCHAM India Report 2015
4. Indirect Taxes Committee, Institute of Chartered Accountants of India (ICAI)
(2015). Goods and Series Tax (GST). Retrieved from:
http://idtc.icai.org/download/Final-PPT-on-GST
5. The Economic Times, January- November, 2017
6. Business Line, January- November, 2017
7. www.thehindu.com
8. www.timesof india.com
9. www.gstindia.com
Appendix
Table 1. GST collections of July & August, 2017 in India.
In Rs Cr July Aug % Change
CGST 14,894 14,402 -3.3
SGST 22,722 21,067 -7.3
IGST 47,469 47,377 -0.2
IGST- Imports 20,964 23,180 10.6
Compensation Cess 7,198 7,823 8.7

Comp Cess- imports 599 547 -8.7
GST* 92,283 90,669 -1.7
*The revised collections for July are estimated at Rs.94, 063cr

Source: Finance Ministry
105
CASHLESS INDIA AND ECONOMIC GROWTH- A REVIEW
Mr. SUMESH PS MBA. NET

Asst. Professor, Dept. of Management Studies,
Christ College Puliyanmala Idukki.
ABSTRACT
An economy is said to be cahless when the transactions inside are done through
means other than hard currency. Facilities like credit cards, debit cards, e-
wallets and online fund transfers contribute to it. The central government‟s
increasing stress for the use of cashless means following demonetisation in
November 2016 is widely believed to be a good sign for Indian economic
growth. Following the demonetization policy the dependence on online banking
and e-wallets has increased remarkably, which further reduces the risk of theft
and burglary in using hard cash. Mounting volume of black money in a
corrupted economy will pull down the growth, cause higher unemployment
rates and ultimately lower the living standards. Digitalizing the transactions in
the economy is a solution for these economic hazards and believed to favour a
fair growth. The present paper aims to study the importance of a cashless
society in facilitating growth of the country and also brings out the challenges
faced by our government to digitalize the economy.
Keywrods: Cashless Economy, Digitalisation, Economic Growth

________________________________________________________________
INTRODUCTION
The advancement of Information Technology has enabled human beings
to have access to financial system eliminating time and place constraints.
Transactions done through credit cards, debit cards, online fund transfers and e
wallets contribute the features of a cashless digitalized economy where hard
currency is replaced by the fore mentioned. The go digital initiative of the
government is fully supported and accepted as it facilitates faster and secured
transactions. Over the past few years the global trend in market is observed to
106
be going cashless. A cash rich economy at present is less supported by

economists. Walk-inn market having hard cash in pocket has already become
stereotype hence a large number of consumers started using plastic money and
online modes to payoff and receive payments. Less thin pockets and safely
locked e-wallet app in a mini screen has already became part of our life style.
From the Indian perspective it can be observed that advancement of card and
online payment facilities has caused a volume increase in buying behavior of
individuals. People who do cashless transactions do higher transactions in
number when compared to people who deal in hard currency. A base analysis of
bills of purchases of these two classes could prove the researchers view. Hence
cashless economies have higher consumption rates and GDP.
Banking institutions in the country play a vital role in digitalizing the

transactions in the economy. Still we have to work on many people who are
without bank accounts, not only account penetration is comparatively low but
so is the use of accounts for make or receives payments. Modi Govt.‘s PMJDY
scheme has impacted considerable increase in the bank accounts in the country
with 200+ million new bank accounts. KYC and zero balance features of
accounts further attracted people. Still miles to go; according to RBI 41% of
citizen in India do not have bank accounts. Authorities are struggling to
penetrate this number to boost up the financial inclusion initiative. Lack of
familiarity and limited access to advanced technology in rural areas, fear of the
unknown and quality skill oriented education act as a hurdle for growth to
digitalization and use of e-cash.
A completely digitalized receipts and payments system in an economy

will bring down black marketing to the maximum extent and impact positive
with income of the state. This study brings out the impact of cashless economy
on the various aspects of Indian economic growth and development and also,
107
the challenges faced by government to digitalize receipts and payments in the

economy.
MODE OF STUDY
To gather information on impact of digitalisation and cashless
transaction on Indian economy the researcher sorts both to primary and
secondary sources. Interaction with people who depends on cashless
transactions was a major help.
FINDINGS
There are many benefits that are related directly or indirectly to the
India‘s economy with the use of cashless transactions in the market. The direct
benefits include
1. Eradication of black money: Tax evasion is found to exist high in real

money deals. Neither shopkeepers nor industrialists never show the
actual figures on paper to save tax. It has caused a large amount of
money to disappear from economy and a loss to tax benefits to the
government. This unlawful practice impacts negative on the growth of
the state and general well being of the people in the economy. Our
economy going cashless will definitely support development by means
of collecting surplus taxes and spending these collected taxes on public
welfare schemes of the government. Modi in his poll manifesto said
he‘ll sent 15 Lakhs rupees to individuals of the country by claiming the
black money in circulation to the government.
2. Eradication of corruption: Simple and transparent transactions in the

economy will reduce the corruption rates in a systematic way. India has
108
been ranked 79th among 176 countries in the Corruption Perception

Index 2016 released by the Transparency International organization. Its
score marginally improved from 38 in 2015 to 40 in 2016. India had a
score of 36 in 2012. The researcher is of the opinion that corruption
eradication should be from grass root level. Most links in the public
service are corrupted in way that they expect favors for their action.
3. Saves printing costs: Currency printing costs of RBI is a burden to the
system and is high in an economy where people depend more on hard
currency for their needs. Researcher feels going cashless will benefit the
system saving this cost. According to the data released by RBI, the cost
of printing notes doubled to Rs 7,965 crore in FY‘17 from Rs 3,421
crore in FY‘16 on account of new currency printing post noteban.
4. Reducing related costs: These include costs faced by government and
RBI in storage, transportation, security etc incurred in dealing with hard
currency. Saving this cost will help the government to reallocate the
money to development needs of the nation.
5. Stop to money laundering: Digitalizing the transactions in the
economy will reduce the illegal money laundering crimes hence the
amount of black money in the country is under watch.
6. Stop to terrorist financing and robberies: Cashless transactions will
considerably reduce hard-cash reserves with individuals and bring stop
to organized robberies and terrorist activities.
7. Formalizing the Indian financial system: Simple, transparent and
taxed transactions in the economy will give a more formal face to our
financial system.
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CHALLENGES IN ESTABLISHING A CASHLESS ECONOMY
1. Lack of education: Adequate and quality education is yet to reach in

remote villages of the country. Illiterate villagers are not able to
effectively utilize the technology but also in a state to seek assistance
even in filling up application forms. As far as banking is concerned
these illiterate people doesn‘t know the various uses of plastic money
and to the worse extent doesn‘t have the knowledge to operate ATM in
a machine for withdrawal. This marks the primary responsibility of the
government to design skill oriented syllabus for education and develop
infrastructure in village areas.
2. Limited access to technology: the last decade‘s technological
advancement resulted in a revolution in the banking sector. But these
resources are distributed unequally hence the accessibility and
availability of these are concentrated highly in urban areas. One another
hurdle is the unfamiliarity and lack of knowledge of people towards
using modern banking facilities online.
3. Financial Inclusion: Modi Govt was able to penetrate the number of
bank account holders of the country through the PMJDY scheme. Most
of these accounts were of zero balance type and till date majority of it
remain dormant. People are inefficient in using bank accounts and other
reasons contribute; low income and savings, hesitant and unfamiliarity
to technology, lack of information, reach and availability etc.
4. Stereotype/ Hesitant to go digital: the researcher observes; even

educated people are indifferent to technology and unwilling to change.
Fear of loss of money and unknown as a result of mounting reports of
online frauds may be considered as a reason for this behaviour.
110
5. Geographical constraints: The facilities are yet to reach the rural India
in its full potential. The market competition in the telecom industry has
forced them to reach to the so far unreached rural areas of the country,
which is a good sign. More people are getting a taste of data based
entertainment. This number need to be penetrated and diverted to
digitalizing their transactions which further takes investment of time and
skills from the part of government.
A deliberate analysis of available information enabled the researcher to reach

the following conclusions.
CONCLUSION
India going digital has become the need for development of the
economy and general wellbeing of people in it. Cashless transactions contribute
greater good to the society and economy. It is quite true that there has been an
astounding growth in digital transactions in India viz. mobile wallet, mobile
banking, IMPS (immediate payment service) and POS transactions. More
efficiency in systematic planning from the part of government is needed for
accelerating the pace of going cashless. The authority must be able to bring
down the value of direct ATM transactions and promote other means. Some key
areas where the system needs greater concentration are;
1. Since one year from demonetization the proclaimed results are yet to
reflect in the economy as promised. The acceleration of digitalization
process is frozen post to noteban and the government visibly struggling
for a fresh start.
2. Reach and distribution of technological infrastructure to the rural India.
3. Affordability of tech devices by rural people as factor of financial
inclusion.
111
4. Skill oriented technical education. E.g.: user education for e-wallets and
plastic money.
5. Increased buyer and seller awareness with respect to digital transactions/
or making cashless transactions a habit among countrymen.
REFERENCES
https://rbi.org.in/Scripts/Statistics.aspx
http://www.moneycontrol.com/india/finance-
general/bharatfinancialinclusion/SM11
https://pmjdy.gov.in/
http://cashlessindia.gov.in/
http://www.businesstoday.in/current/economy-politics/india-ranked-79the-in-
the-corruption-perception-index-2016/story/245092.html
http://www.financialexpress.com/economy/rbi-releases-big-demonetisation-
data-cost-of-printing-notes-doubled-to-rs-7965-cr-due-to-noteban/833305/
http://blogs.lse.ac.uk/southasia/2017/11/28/digital-india-dream-or-reality/
112
PEOPLE PERCEPTION TOWARDS GST WITH SPECIAL

REFERENCE TO TIRUVANKULAM PANCHAYAT
Dr. VINEETH. K. M.
Maharaja‘s College Ernakulam
Ms. ANJU KRISHNAN
Rajagiri College of Management And Applied Sciences
Kakkanad
ABSTRACT
GST is a new buzz in the arena of Indian Business environment. GST, in a very
small time period has become the talk of town and the matter of discussion for
all. Goods and Service tax is one of the largest tax reforms after the
independence of this country. Opposition parties, though have criticized this
step a lot and people (Agarwal, 2017). Goods & Services Tax Law in India is a
comprehensive, multi-stage, destination-based tax that will be levied on every
value addition. The overture of Goods and Services Tax (GST) would be a very
momentous step in the field of indirect tax. Goods and Services tax (GST) has
been acknowledged as one of most imperative tax reform post-independence. It
is a tax trigger, which will lead to business transformation for the industry. The
sizeable efforts by the Government machinery to introduce the reforms at the
earliest are worth appreciable but at the same time with stiffer deadlines it
seems that government is in haste to implement this reforms at the earliest
which may be paralyzed by lack of information and orientation of small traders
in rural areas who form a sizeable community of traders (Barhate, 2017).
People perception towards GST attracts research interest herein. The proposed
study aims to survey the people perception using a structured questionnaire
with an adapted scale from Agarwal (2017) with 9 point scales. Both
descriptive and inferential statistics will be used for the study.
Key Words: People Perception, GST, Policy Perception
113
INTRODUCTION
GST is meant to be a unified indirect tax across the country on products
and services. In the current system, tax is levied at each stage separately by the
Union government and the States at varying rates, on the full value of the
goods. But under the GST system, tax will be levied only on the value added at
each stage. It is a single tax (collected at multiple points) with a full set-off for
taxes paid earlier in the value chain. The overture of Goods and Services Tax
(GST) would be a very pivotal step in the field of indirect tax. Goods and
Services tax (GST) has been unquestioned as one of most obligatory tax reform
post-independence. It is a tax trigger, which will lead to business revolution for
the industry. State assemblies, the Government of India give the impression to
be on way to implement GST with effect from 1 July 2017. The sizeable efforts
by the Government machinery to introduce the reforms at the earliest are worth
appreciable but at the same time with stiffer deadlines it seems that government
is in haste to implement this reforms at the earliest which may be paralyzed by
lack of information and orientation of small traders in rural areas who form a
sizeable community of traders. The GST was established to subsume various
indirect taxes levied at different levels, with the idea of reducing red-tape,
plugging leakages and paving the way for a transparent indirect tax regime. In
order to avoid the payment of multiple taxes such as excise duty and service tax
at Central level and VAT at the State level, GST would unify these taxes and
create a uniform market throughout the country. Integration of various taxes
into a GST system will bring about an effective cross-utilization of credits. The
current system taxes production, whereas the GST will aim to tax consumption.
India adopted a dual GST model, meaning that taxation is administered by both
the Union and State Governments. Transactions made within a single state will
be levied with Central GST (CGST) by the Central Government and State GST
(SGST) by the government of that state. For Inter-state transactions and
114
imported goods or services, an Integrated GST (IGST) are levied by the Central
Government.
STATEMENT OF THE PROBLEM

Impact of the GST on the prices of goods and services will largely
depend on the item in question. It will also depend upon the respective State
governments and their intervention with respect to controlling prices of
essential commodities. Milk, for example, which is likely to see a spike in
prices after GST is implemented, can still be sold at cheaper rates, if the State
government offers a subsidy on it.
A comprehensive IT system, GSTN, will allot universal GST numbers

(similar to PAN) to all manufacturers, traders, stockists, wholesalers and
retailers. This will simplify the administration of indirect taxes and plug
leakages. The government also plans to incentivise tax compliance by traders.
Whether the GST will be beneficial to the poor or not only time can tell. Prices
of vegetables and fruits are likely to rise under the GST regime and services
such as eating at restaurants will get more expensive. What will likely get
cheaper are items such as clothes, as cascading taxes at various stages of
manufacturing would no longer apply to them.
OBJECTIVES
 To understand the concept of GST
 To assess people perception towards GST
 To comprehend the association of socio economic variables in the
response of people towards GST
115
METHODOLOGY
The study is empirical in nature based on primary data collected from 50
sample respondents from Tiruvankulam panchayat and secondary data from
published sources. Both descriptive and inferential statistics have been applied
to arrive at the conclusions based on the study.
HYPOTHESES
The presents study hypothesises the following based on the objectives:
 There is no significant difference in the people‘s perception towards
GST
 There is no significant association between people‘s perception towards
GST and socio economic variables
116
RESULTS
Table 1
Profile of the Sample
Variable Categories Frequency Percentage
Male 25 50.0
Gender Female 25 50.0
Total 50 100.0
Below 30 10 20.0
30-50 35 70.0
Age
Above 50 5 10.0
Total 50 100.0
SSLC or Below 10 20.0
Highest +2 2 4.0
Educational Graduate 32 64.0
Qualification Post Graduate 6 12.0
Total 50 100.0
Self Employed 10 20.0
Wage Worker 11 22.0
Salaried - Govt or Public
5 10.0
Occupation Sector
Salaried - Private Sector 14 28.0
Unemployed 10 20.0
Total 50 100.0
(Source: Survey Data)
There had been due representation from the socio economic categories across
gender, age, education and occupation.
117
People perception towards GST

Table 2 . Level of perception
Frequency Percentage P value#
Low 20 40.0
Moderate 10 20.0
0.135
High 20 40.0
Total 50 100.0
Source: Survey Data
# Chi Square Test
The perception towards GST appears to be equally distributed across the

people. High perception is found among 40% where an equal portion is found
to have a low perception. The difference was not found to be significant using
chi square test.
ASSOCIATION OF SOCIO ECONOMIC VARIABLES AND LEVEL OF
PERCEPTION TOWARDS GST
The analysis on the people perception towards GST on basis of socio
economic factors produced the following result
Table 3
Association between Socio Economic Variables and Perception towards
GST
Variable P Value# Inference
Gender 0.741 Not Significant
Age 0.915 Not Significant
Occupation 0.999 Not Significant
Education 0.721 Not Significant
Source: Survey Data
# Chi Square test
118
There is no notable difference found in the guild between Socio Economic

variables and perception towards GST.
PROBLEMS PERCEIVED IN THE IMPLEMENTATION OF GST

Survey of the most important problems faced in the implementation produced
the following results.
Table-4
Most Important Problems Perceived in the Implementation of GST
Mean Rank P Value#
Increasing Price Levels 3.25
Lack awareness or clarity 2.05
Manipulation by Traders 2.65 < 0.001**
Shortage in Supply of some Goods 2.25

# Friedman Test
**Significant@1% level of significance
Lack of awareness is considered as most important problem perceived in the
implementation of GST followed by shortage in supply of some goods. Mann
Whitney U test also affirmed that there is no significant association between
socio economic variables in perceiving the most important problem in the
implementation of GST
119
DISCUSSION
GST is still not reached a satisfactory level. Due to the lack of
information on GST, the respondents had a high negative perception. Therefore,
the government must convince that GST will not have a lasting impact on the
public as particularly convincing end users that no increase in prices of goods
and services. The public also are not well informed on the implementation of
the GST. Therefore, in order to ensure efficient implementation of the GST, the
government should come out with a proper guideline to the society on the
procedures for the implementation of GST. The government may also revise
rates , which may not burden the people. Gradual stages may be employed for
the implementation like the agricultural sector, then industrial and then the
service sector. The relevant authority especially the Customs Department must
work closely with other departments like information department, Inland
Revenue and other enforcement authority in order to ensure good
implementation. Lastly, the government must ensure a good management of the
income collected from the GST. The benefits from the collection must be
returned to the people
REFERENCES
 Anon, (2017). [online] Available at: The Hindu. (2017). Breaking News,
India News, Sports News and Live Updates. [online]
 Binti Ishak, N., bin Othman, M. and Fuzi Omar, M. (2015).
International Journal of Contemporary Applied Sciences. [online]
Available at: http://International Journal of Contemporary Applied
Sciences [Accessed 5 Dec. 2017].
 Barhate, D. (2017). An Analytical Study of Awareness and Perception
towards GST amongst Traders in Rural Areas. [online] International
120
Research Journal of Engineering and Technology (IRJET. Available at:

http://International Research Journal of Engineering and Technology
(IRJET [Accessed 5 Dec. 2017].
 The Indian Express. (2017). Goods and Services Tax (GST) Bill,
explained.[online]Availableat:
http://indianexpress.com/article/explained/gst-bill-parliament-what-is-
goods-services-tax-economy-explained-2950335/ [Accessed 5 Dec.
2017].
 Raj,Jyoti. (2017). www.gstindiaonline.com - Articles - Window to GST.
[online] Gstindiaonline.com. Available at:
http://www.gstindiaonline.com/pages/gstlegislation/article/arp/cur/01/04
.asp [Accessed 5 Dec. 2017].
 GSTIndiaExpert.com. (2017). Articles on GST| GST India Expert.
[online] Available at:
http://www.gstindiaexpert.com/Home/GSTArticles [Accessed 5 Dec.
2017].
 Research gate. (2017). The Impact of GST (Goods and Services Tax) on
the Indian Tax Scene. [online] Available at:
http://www.researchgate.net/publication/228285785_The_Impact_of_G
ST_Goods_and_Services_Tax_on_the_Indian_Tax_Scene [Accessed 5
Dec. 2017].
 Elcomaindia.com. (2017). Article on GST - ELCOMA India. [online]
Available at: http://www.elcomaindia.com/article-on-gst-2 [Accessed 5
Dec. 2017].
 Anon, (2017). [online] Available at:
http:////economictimes.indiatimes.com/gst [Accessed 5 Dec. 2017].
121
DEMONETISATION: A SURGICAL STRIKE ON BLACK MONEY

AND CORRUPTION?
CHRISLIN JOSE & RUPA R NAIR
Student, St. Albert‘s College Autonomous, Ernakulam
ABSTRACT
November 8th 2016, witnessed a massive change in the Indian economy. The
high denomination notes of Rs.500 and Rs.1000 lost their purchasing power all
of a sudden. This work , „Demonetization: A surgical strike on Black Money
and Corruption?‟ tries to explain the twin menaces of the Indian economy :
Black money and corruption and the way in which the surgical strike of the
Central Government called Demonetization made a change in them after a
year of its implementation. The practice of Corruption and accumulation of
unaccounted money in the economic structure have persisted for decades and
it‟s still continuing though measures adopted by the governments have limited
results with no breaking impacts. It was at this juncture, the new policy called
demonetization was introduced which was praised as a stringent measure taken
by the Government in the economic system.
This paper points out that the rising tendency of corruption and black money in
the post reform era. As the economy was opened more to the world outside with
liberal imports, concessions, inflow and outflow of capital etc all these marked
an influence on the acquisition of unaccounted money and offshore transfer of
funds to tax havens like Mauritius, Cayman Islands etc. As the dimension of
corruption and black money enlarged, various measures were taken by the
Governments. This paper also portrays the various measures and policies
adopted in the country like The Real estate bill, Black money Act , Income
disclosure scheme , compulsory use of PAN, linking PAN – AADHAR etc for
122
reducing the impact of these twin problems. As all these efforts could not bring
desirable objectives and finally the currency reform, demonetization was
introduced mainly to curb the problems of black money and corruption, money
laundering and prevent terror funding. The paper also focuses on the impact of
demonetization on Indian economic structure in a general way.
Keywords: Black Money, Tax havens, Corruption, Demonetization, LPG

Reforms
________________________________________________________________
INTRODUCTION
By the term parallel economy we mean the working of an unofficial

economy parallel to the parent economy of the country. This type of economy is
also known as ―Black Economy‖, ―Illegal Economy‖, ―Unsanctioned
Economy‖ etc. Multi-dimensional problems are experienced under this
economy. The basic objective of the establishment of a socialistic pattern of
society is very much disturbed with the existence of a parallel economy. Its
working in the Indian economy is visible even during the Second World War
when the country had to experience serious shortages in essential items and the
government resorted to a system of controls and rationing of these items. With
the growth of economy in the post-economic reforms period the extent of the
black money has been magnified and now it is playing a dominant role in
determining the trend of economic activities.
Independent India started with high aspirations along with the transfer
of power from colonial masters the relatively unaccountable political class and
civil servants were accountable mostly to the ruling elites. As the democratic
aspirations of the national movement weakened, the political class became
more corrupt and power aspirants. The Government of India Report of 1956
123
argued for the need to keep the black economy in check so that more resources
could be raised for development. In 1991 the government liberalized the
existing economic policies. Alterations via marketization allowed the greater
play of the markets in the economy by reducing government intervention.
Controls and regulations were greatly reduced throughout the economic system.
Economic liberalization included massive concessions to the private sector.
Direct taxes were reduced, licensing was eliminated, imports were liberalized
and so on. As the white economy grew so did its black counterpart. The
withdrawal of state gave a ground for private players to enjoy the profits and
acquisition of wealth from accounted and unaccounted sources.
One of the important reasons behind the generation of black income is

the prevalence of higher tax rates both in direct and indirect taxes. Higher rate
of taxes has resulted in a growing tendency of tax evasion among the tax
payers. Tax haven refers to a state, country or territory which maintains a
system of financial secrecy, which enables foreign individuals to hide assets or
income to avoid or reduce taxes in the home jurisdiction. Offshore wealth held
by Indians in tax havens surged nearly more than 90% since 2007 to $62.9
billion (about Rs 4 lakh crore) in 2015. That‘s about 3.1% of the country‘s GDP
in 2015. Indian wealth is now held closer home in Asian tax havens like Hong
Kong, Singapore, Macau etc. These new estimates for India show that the much
publicized struggle against hoarding of black money in foreign banks
has limited impacts. The Government of India has taken up various measures in
order to curb the growing menace of black money and corruption. On 26th May
2015, the government passed the Black Money and Imposition of Tax Act to
make provisions to deal with the problem of the Black money that is
undisclosed foreign income and assets, the procedure for dealing with such
124
income and assets and to provide for imposition of tax on any undisclosed
foreign income and asset held outside India for matters connected there.
On 25th March 2016, the government enacted the Real Estate

(Regulation and Development) Act. It is an Act to establish the Real Estate
Regulatory Authority for regulation and promotion of the real estate sector and
ensure sale of plot, apartment or building or sale of real estate project in an
efficient and transparent manner and to protect the interest of consumers in the
real estate sector and to establish an adjudicating mechanism for speedy dispute
redressal.
The Income Declaration Scheme came into force on 1st June, 2016. This
urged the public who have not declared income correctly in earlier years to
come forward and declare such undisclosed income. The scheme remained in
force for a period of four months from 1st June 2016 to 30th September 2016 for
filing of declarations and payments towards taxes, surcharge and penalty.
The Benami Transactions (Prohibition) Amendment Act came into force

on November 1st 2016. This existing act came to be renamed as the Prohibition
of Benami Property Transactions Act (PBPT Act). According to the PBPT Act,
a benami transaction prohibits them and further provides that the violation of
the PBPT Act is punishable with imprisonment and fine. Properties held as
benami are liable for confiscation by the government without payment of
compensation.
The government has implemented a major change in the Indian

economic environment by demonetising high value currency notes- of Rs 500
and Rs 1000 denomination. These ceaseto bein legal tender from the midnight
of 8th of November 2016. This proposition by the government involves the
elimination of these existing notes from circulation and a gradual replacement
125
with a new set of notes. All citizens were asked to deposit the cash held in Rs
500 and Rs1000 denomination bank notes in their bank accounts by 30th
December 2016. All these were subjected to various conditions and constraints
like people could exchange their cash with new bank notes and notes of other
denomination.
As stated by the Government of India and Reserve Bank of India the

objectives of Demonetisation are as follows:
 To fight Black Money and Corruption in the country by preventing the

hoarding of cash.
 To fight terrorism by cutting off funding in cash.
 To prevent counterfeiting of currency notes.
 Transition towards a cashless economy.
THE IMPLEMENTATION AND THE IMPACT OF THE

DEMONETISATION POLICY
As per RBI data on 31st March 2016 the total value of Rs 500 and Rs
1000 currency notes in circulation were Rs 14.18 lakh crores which amounts for
86% of the entire currency in different denominations in circulation before 8th
November 2016. In India, about 90% of transactions are done with cash. It is
estimated that liquid cash forms just 6% of undisclosed money and it is with tax
evaders and cash hoarders. The majority of undisclosed income is held in the
form of jewellery, undisclosed properties, assets etc. So the question arises if
entire policy targets this 6% undisclosed income or black money.
126
The implementation highlights is as follows:-
1. Absolute secrecy was maintained so that black money hoarders could

not get sufficient time to convert their stash of 500 and 1000 rupee notes
to white currency.
2. The consequence of maintaining the secrecy was that the banks did not
have advance information about the demonetisation policy and hence
could not get the ATMs re-calibrated for the new Rs 500 and new Rs
2000 currency notes, resulting in ATMs running out of cash within 15
minutes since they were dispensing only Rs 100 notes instead of high
value notes.
3. This policy caused hardship to common man including the salaried
class, students, labourers, farmers and housewives with small savings
and need for urgent cash.
4. Since only 28% - 32% Indians have access to financial institutions the
rest of the population found it very difficult to deposit their money or
exchange it for new ones.
Corruption and Black Money have affected the Indian economy and the
Government took various steps to tackle them. Demonetization policy is one of
the most pivotal steps. It has been a year after its initiation and now we will
look into the impact of the demonetisation policy on the economy and on the
people and how far it has succeeded on being a surgical strike on corruption and
black money
127
IMPACT OF DEMONETISATION ON THE INDIAN ECONOMY
1. GDP growth
India's GDP which grew at 7.6% in the financial year 2015-2016 slowed
to 6.1% in the first quarter and moderated further to 5.7% in the subsequent
three months. The RBI had to spend 79.65 billion rupees on quickly printing
updated replacements for the 500 rupee and 1000 rupee notes. The availability
of cash reduced in the economy, purchasing power of consumers has been
negatively affected due to the same. Only 10% of the economic transactions
were digital transactions the rest 90% accounting to cash transactions.
2. Tax compliance
India's tax-to-GDP ratio is quite low at 16.6% compared to other

emerging economies. It was estimated that since more money, including black
money, gets accounted for, this will lead to better tax compliance whereby tax
rates would be lowered as the tax base widens and more people will start paying
taxes. The Reserve Bank of India said in its annual report on 30th August, 2017
that 99% or around 15.28 trillion rupees worth of cancelled high-value notes
were deposited or exchanged for new money – just 1% shy of the scrapped
currency notes have to come back into the system.
3. Impact on Small and Medium-sized Enterprises (SMEs)
Contributing to about 8% of the Indian GDP, the Small and Medium-

sized Enterprise (SME) sector is a big chunk of the economy. The labour wages
in this sector are generally paid in cash and wages have been adversely affected
by the demonetisation move. Unemployment has also been reported in various
sectors especially the unorganized sectors due to the decline in demand of
SME goods as the purchasing power of the consumers has contracted in the
128
short term. Restaurants, transport operators and so on have also been negatively
impacted since economic activity has declined as theireconomic transactions
were mainly through cash only.
4. Impact on Agriculture
Wholesale vegetable markets have been witnessing a decline in demand

and prices of vegetables and other food items have fallen drastically making it
economically not viable for the farmers to produce these crops. All transactions
are in cash in this sector. Since there was acute shortage of Rs 500
denomination notes, change for the high denomination Rs 2000 notes was not
readily available with the vegetable and fruit vendors.
5. Employment generation
Since consumer demand has slowed, consequently industrial production

declined, employment generation was severely affected. Industry had temporary
job losses due to demonetisation, as production gets hit, especially in labour-
intensive sectors like jewellery, textiles and leather. As many as 4 lakh people
(mostly daily wagers) have either lost their job or have shunned work
temporarily due to lack of payment.
DEMONETISATION: A SURGICAL STRIKE ON BLACK MONEY

AND CORRUPTION?
Undeclared, untaxed and potentially criminal money in the economy was

believed to largely exist in big bills and so this policy was designed to draw that
cash out of the shadows. The thought process was that many bills would not be
exchanged as criminals refused to declare their funds and so those enterprises
would lose out. Instead, the plan appears to have only briefly inconvenienced
holders of this black money.
129
A report by the Financial Times said complex money-laundering

networks sprang up in Asia's third-largest-economy after the demonetisation
policy was announced. Wealthy individuals, attempting to evade tax authorities,
sold the banned notes at a discount to brokers who dispatched low-income
Indians to deposit or exchange them at banks. Others turned to friends and
relatives to help channel their undeclared cash into the banking system.
India's demonetisation policy did not result in any direct fiscal benefit to
the government. The RBI's annual report showed its dividend paid to the
government fell 53% to 307 billion rupees in the last fiscal year (2016) partly
due to sharp rise in expenditure as the central bank spent more on printing new
notes (about 7,965 crores) to replace banned ones. The economy was also
affected by the shortage of cash, growth slowed to 5.7%. Apart from printing
new 500 and 2000 rupee notes, RBI also printed new 200 and 50 rupee notes.
Citing how RBI gained Rs 16000 crore out of the note ban, former Finance
Minister P. Chidambaram said the central bank lost Rs 21000 crore in printing
new notes.
A total of Rs 3185 crores in black money of which Rs 86 crores in new

notes has been seized by the Income Tax Authorities since the shortly after the
time of the launch of the demonetisationpolicy. This implies that on one hand,
black money is getting brought to light and on the other leakage of new
currency notes is taking place, probably through the banking system itself. One
of the stated objectives of the currency demonetisation policy was to curb the
funding of illegal activities like terrorism. Initial reports suggested that terror
related activities in Jammu & Kashmir witness a noticeable halt in the days
following the implementation. But recent reports don't agree to the same.
130
However, analysts claim that the economic benefits of demonetisation

will emerge over time. As a result of the same, merging with the Prime
Minister's ―Digital India‖ strategy, which aims to expand India's online
infrastructure, the country now sits on a treasure trove of data. The government
has gradually making enrollment to its National Electronic Database –
'Aadhaar', mandatory for tax returns, opening of bank accounts and any
purchases above 50,000 rupees. It is estimated that over 99% of Indians aged 18
and above are now enrolled in the scheme. This means that the government can
expect to see the benefits of taxation on previously hidden black money over
the coming months and years. Furthermore, the RBI has told a parliamentary
panel that it has ―no information‖ on how much black money has been
extinguished as a result of demonetisation of Rs 500 and Rs 1000 notes or about
unaccounted cash legalised through exchange of currency post note ban.
CONCLUSION
Demonetisation was not a complete failure but not a complete success

either. No major changes have happened so far even after a year of the
demonetization policy. The set back of demonetisation was the failure of the
timely pumpimg of new currency into the economic system or the problem of
remonetisation. Demonetisation had an increased impact on the common people
- middle and low income earning group. Even though the increase of the digital
transaction was estimated to be a 300% hike after the launch of the policy, the
increase has been noticed only on the urban areas, while the majority of the
Indian population resides in the rural area with no access to these facilities and
this digitalisation won't bring any sort of change to them as they are mostly
illiterate and poor. The major reason for demonetisation policy to not bear
fruits as expected was due to the failure in its implementation. In a vast country
like India, the practicality of introducing such a policy is questionable. It is not
131
possible to withdraw such a huge amount of money and pump in new currency
at ease. Furthermore, black money is not hoarded in the form of just liquid cash;
it is hoarded in the form of counterfeit money, gold and other forms of assets as
well. The government should have conducted a proper background study before
implementing this policy. The government should also have enforced strict
policy measures to avoid confusion and avoid the loopholes that the large
business and other big-shots have found now. Moreover, there is no authentic
data that proves that black money is completely out of the system as mentioned
earlier. This entire exercise seemed more of a ―carpet bombing‖ than a surgical
strike where the vast majority of the population had to undergo hardships for
the same cause.
The real impacts of demonetization and success of the process of

remonetisation can be better evaluated in the years to come.
REFERENCES:
 N Agarwal and M K Agarwal. Indian Economy: Problems of
Development and Planning. New Age International P Limited, New
Delhi.
 Arun Kumar. Understanding the Black Economy and Black Money in
India: An Enquiry into Causes, Consequences and Remedies Aleph
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133

Contemporary Issues in Economy and Society

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CONTEMPORARY ISSUES IN ECONOMY AND SOCIETY

Contemporary Issues in Economy and Society

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I am extremely happy and proud to know that the output of Indian

Dr.Sr.Geege Joanamma Xavier (Sr Shalini CTC)

St. Xavier’s College for Women, Aluva

With profound gratitude, deepest admiration and respect , I express my heartfelt

I express my whole hearted gratitude and obligation to Ms. Vandana

1. Insolvency & Bankruptcy Process and Non-Performing Assets ................................... 1-15

3. Role of Government Institutions in the Make in India Campaign ............................... 25-31

4. Central Taxes in Indian Federal Polity :

6. A GST A Need of Hour: An Analysis ......................................................................... 69-77

7. Investment Decisions of Rural People: A Study in Kunnukara Gramapanchayath ..... 78-93

8. Economic Development V/S Environmental Sustainability-A Panorama ................... 94-98

9. Perspectives on GST in India ..................................................................................... 99-105

10. Cashless India and Economic Growth- A Review ................................................... 106-112

11. People Perception towards GST with Special Reference to

Tiruvankulam Panchayat ......................................................................................... 113-121

INSOLVENCY & BANKRUPTCY PROCESS AND

Bank‘s financial intermediation between the surplus and deficit units of

development of the economy. India‘s banking system is characterized by

Non-performing assets (NPAs) has been the single largest cause of

An asset becomes non-performing when it ceases to generate income to

Based on the period to which a loan has remained as NPA, it can be

The growing mountain of NPAs in Indian banking system is one of the

percentage NPAs increased from 4.4 percent in 2014 to 6 percentage in 2015

4. CAPITAL ADEQUACY RATIO

5. INSOLVENCY AND BANKRUPTCY CODE

promoter had submitted a plan, and such promoter is found to be ineligible,

The amendments also place foreign bidders in an advantageous position

Table 2.Most Stressed Banks in Need of Capital.

Table 3. Indian Banking sector at a Glance in 2015-16

1.Balance sheet operations

a) Net profit 341 -61.7

a) Total number of credit cards ( million) 25

TEACHER PERCEPTION TOWARDS INCLUSION OF GST IN THE

which may be paralyzed by lack of information and orientation of small traders

STATEMENT OF THE PROBLEM

OBJECTIVES OF THE STUDY

SCOPE OF THE STUDY

district covering government / aided colleges and self financing colleges.

Ahmad et.al. (2016) concludes that the level of awareness of GST is

Ishak et.al. (2015) concludes that in order to ensure efficient

Barhate (2017) The respondents have no doubt whatsoever regarding

Normality: One Sample KS test for normality produced a p value of 0.484,

Table. 1 Level of Total Teacher Perception

Source: Survey Data

Table .2 Teacher Perception – One Sample t test

N Mean Std. Deviation Std. Error Mean

Source: Compiled from Survey Data

Table. 3 Specific Observations towards Teacher Perception

Inference: The complexity and confusion in implementation of GST is

Table 4 Socio Economic Profile and Teacher Perception

The teacher perception has no significant influence from socio economic

Table 5 Hurdles in Teaching GST – Friedman Test

Hurdles Mean Rank P value

Absence of Sufficient Reading Material 2.00

Lack of Practical Knowledge 2.00

Absence of sufficient reading material and lack of practical knowledge

ROLE OF GOVERNMENT INSTITUTIONS IN THE MAKE IN INDIA

Keywords: Make in India, FDI

The Make in India campaign was officially launched on 25th September

Sectorial perspective & initiatives‖ was conducted on 29th December, 2014

IS THE MAKE IN INDIA LION ROARING?