Jewellers across the country have suffered a business loss of around Rs14,000 crore while the revenue loss for the government comes to about Rs690 crore, due to the ongoing strike against the excise duty hike in Budget 2012-13
The ongoing indefinite nationwide strike by jewellers, demanding roll back in the excise duty announced in the Union Budget, is proving to be a costly affair not for the jewellers, but also for the government. On Monday, the strike entered into its 17th day.
In a statement, the All India Jewellers Association (AIJA), said, “…with continuous nationwide strike of 17 days, there is an estimated loss of business worth Rs14,000 crore resulting into a loss of custom duty revenue of Rs550 crores to the central government and about Rs140 crore loss has been caused to state governments on account of VAT.”
According to the Association, the government has fetched only Rs25 crore as tax from jewellers during the past 17 days. The Association has urged the government to act wisely and accept genuine demand of traders by rolling back the excise duty immediately.
“We do not mind paying taxes, but we will not pay any excise duty. What is the rationale behind (charging) it? The government will soon announce the Goods and Services Tax (GST), so there is no point in levying the excise duty and therefore we demand complete roll back of this (excise duty). Till then the strike will not be called off,” said Manish Jain, of Rajmal Lakhichand, one of the biggest jeweller in Maharashtra.
Sarafa bazaars (jewellery markets) in Delhi, Maharashtra, Gujarat, Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, West Bengal, Chhattisgarh, Tamil Nadu and in other states remained completely closed and no trading activities took place as markets wore deserted look, the AIJA said in the release.
To control the current account deficit (CAD) partly caused by the imports of gold and other precious metals in the first three quarters of this fiscal, the finance minister has proposed additional duties to limit the imports of gold and silver. Finance minister Pranab Mukherjee has proposed to increase import duty on gold to 4%, increase excise duty on branded and non-branded jewellery by 1%, 2% tax on cash sales of over Rs2 lakh, while removing the 1% excise duty on branded silver jewellery.
To protest against the hike, jewellers from across the country are on a strike since 17th March.
AIJA, in an earlier release said, “…the trade does not hesitate to collect and pay taxes in any other form like surcharge or cess but certainly not interested in becoming subject to one another department of excise. Already the trade is subject to numerous other taxes like custom duty, VAT, directly and several other taxes indirectly. Further, the traders are required to comply with other state and local self-government laws, rules and Acts.”
Measures announced in Budget 2012-13:
The paradox of the situation is that despite sitting on such massive money resources, Mumbai is unable to generate funds to finance its most essential requirements
According to a report by Jones Lang LaSalle, Mumbai’s realty and infrastructure situation now needs a serious boost. The city has invested Rs 275 billion in land since 2005, and the city needs a similar amount of in within five years to only complete the infrastructure projects that are underway.
“The city of Mumbai needs additional investments of about Rs275 billion in the infrastructure sector over the next five years if these projects are to be completed on schedule. This is equal to the amount that the city has buried in its land. The paradox of the situation is that despite sitting on such massive money resources, Mumbai is unable to generate funds to finance its most essential requirements. This would be an apt time for the authorities and policy makers to focus on breaking this deadlock,” says Subhankar Mitra, head-strategic consulting (West) Jones Lang LaSalle India.
He also says that most of the investments in land, particularly in South Mumbai, have actually remained non-yielding. Incidentally, South Mumbai is the area where maximum investments were made. Investors have not been able to fully monetize their investments and the end users have faced spiralling price rises despite economic slowdowns. Add to that, with the change in DCR (Development Control Rules), both the builders and customers have been left in the limbo.
In 2005, when FDI in real estate was enabled, Mumbai saw many high profile land deals and since then, many projects have been launched. Apart from the recorded transactions amounting to Rs 276 billion; there are unaccounted investments made in slum rehabilitation and redevelopment projects—which can amount to another Rs100 billion. 2008 saw an exemplary rise in investments in South Mumbai, says the report.
However, the city has managed to launch 2.5 lakh of residential units in the last five years—and all of them are yet to be completed. The report says that quantum of investments in mega infrastructure projects amounts to only 60% of the investments made in prime land in the city, approximately in the same period.
In other words, Mumbai needs to beef up its infrastructure, and fast. But the realty situation does not look very bright either. Sky-high prices are putting off buyers, and the developers are also confused with the new DCR. The proposed hike in stamp duty of leave-license agreements will also dampen the spirit of those who want to rent an apartment. Read Maharashtra Stamp duty hike: “Neither can you afford to own a home, nor take it on rent”
Pankaj Kapoor, MD, Liases Foras, however, finds it surprising that such a huge amount has been invested in land; because the RBI (Reserve Bank of India) does not allow foreign direct investment (FDI) in buying land. “What this money has done is that it has created speculation; and has created unproductive land values. If you check builders’ balance sheets, they are burdened with debt”, he said. “Residential realty does not really need money—and no amount of money will solve the problem. It needs sales; but the prices are too high. Instead of getting more money, builders should make housing affordable,” Mr Kapoor said. As of December, more than one lakh housing units remain unsold in Mumbai.
The US government has always been a mouth-piece of American big business. That is why the protest of US commerce secretary John Bryson against India giving a compulsory licence to Natco Pharmaceuticals to produce a generic version of a patented anti-cancer drug leaves a bad taste in the mouth
Granted, it has been a unipolar world since Mikhail Gorbachev made it so, though Ronald Reagan took credit for defeating the "evil empire". Granted, the US can now justifiably claim the post of the world's big and only policeman.
In an ideal world, one of the roles of the policeman is to protect the poor from the predators (please don't laugh; it happens sometimes.) That is why the protest of US commerce secretary John Bryson against India giving a compulsory licence to Hyderabad-based Natco Pharmaceuticals to produce a generic version of a patented anti-cancer drug leaves a bad taste in the mouth.
The government has allowed Natco to produce a generic version of Bayer's patented cancer drug called Nexavar. This will bring down the price of the drug by 97%. Natco will sell the drug at around Rs8,880 for a month's therapy of 120 tablets against Rs2.8 lakh charged by Bayer. Experts say that this decision paves way for cheaper drugs in several other areas.
The US government has always been a mouth-piece of American big business. A large portion of its diplomatic effort is aimed a protecting "big, vulnerable MNCs" from the depredations of "poor, small, bad wolves" protecting the poor in their countries.
Therefore it was no surprise when commerce secretary Bryson repeated, almost word to word, Bayer's arguments against India granting the compulsory licence to Natco.
Mr Bryson told Anand Sharma that India's action would discourage new investments in drug R&D (research and development) and dilute the international patent regime. He said "pharmaceuticals is a very competitive area and heavy investments went into research and development every year. Any dilution of the international patent regime is a cause of deep concern for the US". Considering the tremendously cheaper price at which Natco will supply the drug, the US commerce secretary's words leave a bad taste in the mouth.
Now, let us take a look at this news item reported by Sky News, the British television channel.
A man suffering from the deadliest form of skin cancer told Sky News how a new drug brought him back from the brink of death. Charlie Jones woke up two weeks ago from emergency surgery on tumours that had spread to his kidneys to be told he had a matter of hours to live.
But doctors at the Christie Hospital in Manchester decided to try out a drug called Vemurafenib that has only just become available. To their amazement, his response was almost immediate. He is now much better and has returned home.
"Since I've been taking the drug I have been getting stronger and stronger," he said. "I'm getting colour in my face. My body is feeling a lot better. It's helping me feel like the old me."
Charlie and his girlfriend Louise Howard now hope to get married.
The drug is expected to be supplied to other cancer patients through Britain's National Health Service (NHS), which means it will be practically free.
Doesn't this make us all feel better and take away the bitter taste left by the US commerce secretary's words?
(R Vijayaraghavan has been a professional journalist for more than four decades, specialising in finance, business and politics. He conceived and helped to launch Business Line, the financial daily of The Hindu group. He can be contacted at firstname.lastname@example.org.)