Assam Tax and economic reforms - Assam PCS Exam Notes

Assam Tax and economic reforms:-

Assam is located in the northeast of India. The state shares its borders with Arunachal Pradesh, Nagaland, Manipur, Mizoram, Meghalaya, Tripura and West Bengal. The state shares international borders with Bangladesh and the Kingdom of Bhutan. Assam is India’s gateway to Northeast India and acts as a vital link for trade with Southeast Asian countries. The state is known for its tea, petroleum resources, muga silk and bio-diversity. It is also becoming an increasingly popular destination for wildlife tourism.

The Assam economy and development depend on the production of the state. The economy is prevalently agrarian in nature. The government makes continuous efforts to develop the already existing agrarian economy and to improve the other sectors of the economy in the state of Assam. Almost 63 percent of the society of Assam earns its living from the agricultural sector. The state is reputed all over the world for its production of tea. The state produces 15 percent of the tea produced in the world. A large section of the labor force of the state is employed in the tea estates of Assam that cover large areas of the state. The other agricultural produce involves rice, sugarcane, pulses, potatoes and jute. Fruits like mangoes, bananas, pineapple and guavas are also produced in the state.

The secondary sector of the economy comprises of the industries in Assam with large and medium scale productions. Agro based industries prevail in the state coupled with the tea industry that has a major contribution to the economy of the state of Assam. Other industries include the petroleum industry with one of the oldest oil ventures of the world situated in Digboy. The state also earns revenue from the mining industry that produces the four important industrial minerals of coal, limestone, sillimanite and oil.

Assam’s Economy:-

Between 2012-13 and 2014-15, agriculture sector’s growth has declined (real) from 16.5% to 0.3%. Over the same period, industrial sector’s growth increased from -5.5% in 2012-13 to 8.1% in 2013-14, to 5.1% in 2014-15. Services saw the most growth of 12.2% in 2014-15, an increase from 2.1% in 2012-13. Industrial production in the state declined by 1.7% and 1.8% in 2014-15 and 2015-16 respectively. During the same period, the industrial production of the country grew by 2.8% and 2.4% respectively.
Assam’s finances are, however, in a much better position than those of its peers. Assam was one of first SC States to pass the Fiscal Responsibility and Budget Management (FRBM) Act in 2005, and had a revenue deficit of 0.1 per cent of GSDP in 2013-14, against the average of 1.7 per cent for the SC States.
The State’s debt-to-GSDP ratio was fairly comfortable (19.2 per cent of GSDP in 2013-14); it was the lowest among all the SC States. The tax-revenue-to-GSDP ratio was 32.8 per cent in 2013-14, the highest in the country and nearly double that of the next best State.
At current prices, the Gross State Domestic Product (GSDP) of Assam was US$ 30.72 billion in 2015-16 while the average annual GSDP growth rate from 2004-05 to 2015-16 was 9 per cent.
The 12th Five Year Plan estimates the growth rate to be around ten per cent overall, while estimating industry and services sub-sectors to grow at 9 per cent and 13 per cent respectively.
The state is rich in water resources and has vast tracts of fertile land. Assam is also the third-largest producer of petroleum and natural gas in the country and has ample reserves of limestone. With its five national parks and 18 wildlife sanctuaries, the state is a biodiversity hotspot. Other potential areas of investment include power and energy, mineral-based industries, tourism and crude oil refining.
Assam has adopted numerous investor-friendly policies to attract investments and accelerate industrial development. Key areas of focus include the IT, tourism and power sector along with several other initiatives such as the North East Industrial and Investment Promotion Policy (NEIIPP) 2007 and the Industrial and Investment Policy 2014. Assam stands 22nd among Indian states in rankings based on ease of doing business and reforms implementation, according to a study by the World Bank and KPMG.
According to the Department of Industrial Policy & Promotion (DIPP), cumulative FDI inflows during April 2000 to March 2016 totaled to US$ 94 million.

Recent Developments:

Recently Assam government has decided to come up with International Trade Centre in Guwahati. State cabinet has approved land for centre which will have twin towers with 65 storeys. The international centre will have trade advisers office from different countries. Already Bangladesh government has an office in Guwahati. Bhutan has applied to government of India for opening consulate office in Guwahati.
Assam has come up with a Bamboo Technology Park with an investment is Rs 62.28 crore in Chaygaon in Industrial Growth Centre in the vicinity of Guwahati. The Park has been set up at the initiative of Industries & Commerce department of Government of Assam with the help from Department of Industrial Policy & promotion, Government of India through a Special Purpose Vehicle of Assam Industrial Development Corporation (AIDC) and private entrepreneurs. The park has a modern Common Facility Centre for producing many innovative bamboo products like – Strand woven bamboo block making facility, Vacuum Pressure Treatment Plant, Resin Making Facility, Bamboo Stick Making Facility, Bamboo – Waste Plastic Composite Making Facility, Charcoal making facility, etc.
The Government of India signed the agreement for third and last tranche of US$ 273 million loan, out of total US$ 800 million loan agreement with The Asian Development Bank (ADB), for constructing 6,000 kms of all-weather rural roads in Assam, Chhattisgarh, Madhya Pradesh, Odisha and West Bengal
The first passenger train was flagged off from Silchar to Guwahati that will ply on the newly converted Silchar-Lumding section in Assam.

Key Sectors:

Tea:

During 2015-16, the state government provided Assam State Electricity Board (ASEB) with US$ 1.52 million for the electrification of quarters of the Tea Workers. The state government has proposed to construct a Tea Museum in Dibrugarh, in 2016-17.

Energy-Coal, Oil, and Gas:

The Assam-Arakan Basin in Northeast India is an important oil-producing region and contains more than 15 per cent of the country’s reserves. Assam has over 1.3 billion tonnes of crude oil and 156 billion cubic metric tonnes of natural gas reserves.

Medical Herbs and Plants:

Assam, with its vast area under hills and forests, is home to a variety of medicinal herbs and plants. About 300 types of medicinal herbs and plants are found in abundance in the state with the Brahmaputra valley alone having 150 varieties of herbs and plants of commercial value.

Sericulture:

Assam enjoys global monopoly in terms of Muga silk (also known as golden silk) production. The state accounts for around 95 per cent of global Muga production. Moreover, Assam is the country’s major Eri silk producer (accounts for 65 per cent of the country’s Eri silk production). Raw silk production in the state during 2015-16 was recorded to be 3,325 MT whereas during 2016-17 (up to May 2016), the raw silk production was 1,137 MT.

Tax reforms:-

Assam became the first state in the country to pass Constitution Amendment Bill on Goods and Services Tax (GST) on August 12, 2016. The State Assembly unanimously passed the Bill following its passage by both Houses of Parliament. State to benefit about Rs. 300 crore per annum in terms of GST compensation for five years with annual growth rate of 14%.
Recently Assam has witnessed whopping growth of 21.60 per cent in revenue collection. In 2014-15 revenue from taxation stood at Rs 9449.81 Crore, this increased to Rs 10,726 Crore in 2015-16 and Rs 12180 Crore in 2016-17.
Revenue collection from non-tax sources was Rs 2412.98 Crore in 2014-15 and Rs 2188.09 Crore in 2015-16.Sarma said. The collection was all time high in 201617 and state received Rs 3500 Crore.
Using the digital platform the state government has released Rs 43000 Crore in 2016-17, this figure was Rs 33,357 Crore in 2015-16. Digitally state government received Rs 8343 in 2016-17 and Rs 6775 Crore in 2015-16 .

New Tax reforms in Budget 2017-18:–

Barcode containing holographic label on the liquor bottles is being implemented after completing the formalities like floating the tenders.
e-Governance has been taken up under the ASPIRe (Assam State Public Finance Institutional Reforms) Project and all kinds of revenue collection, permits, licences shall be made online and fully digital.
Assam Motor Vehicle Taxation Act, 1936 is being amended for effective taxation on ad-valorem basis in case of 2 Wheeler/3 wheeler (Private)/Ambulance (commercial use).
Land re-classification will be done immediately with online provision.
In eight districts, Mouzadar system will be introduced in place of existing Tahsildari system.
Sale permission will be made online and time bound. Land revenue activities will be made online in an integrated manner.
Mouzas will be computerized. Collection of land revenue will be monitored online.
101 new areas identified for extraction of Sand shall be expedited for commission so that it will fetch estimated additional revenue of Rs. 45 crore.

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