Modi govt`s landmark economic reforms since last Independence Day

New Delhi: India has experienced a great series of economic reforms since last Independence Day. These historic reforms stunned the people nation-wide. Not only it gave new heights to Indian economy but also paved way towards global recognition. Here is a glimpse of major reforms:

1) 7th pay commission

The Union Cabinet, earlier this year, had approved the Seventh Pay Commission recommendations on allowances for government employees, paving the path for payment of higher house rent and other benefits to 48 lakh of government employees. These became effective from July 1.

The revised allowances costs the government Rs 30,748 crore per annum, Rs 1,488 crore more than Rs 29,300 crore estimated by the Pay Commission due to modification in recommendations made by the government. It benefits 34 lakh government employees and 14 lakh pensioners. 

Here are the Key Highlights

• Gratuity ceiling doubled to Rs 20 lakh
  
• Housing loan allowance hiked from Rs 7.5 lakh to Rs 25 lakh
  
• Minimum pension increased from Rs 3,500 to Rs 9,000
  
• 7th Pay Commission recommendations to be implemented within 6 months from due date
  
• Existing rates of monthly contribution towards Group Insurance to continue
  
• Total annual burden of pay, pensions and arrears of 7th Pay Commission recommendations: Rs 1, 02,100 crore
  
• 7th Pay Commission recommendations on allowances to be referred to a Committee headed by Secretary
  
• Based on minimum pay, fitment factor of 2.57 approved for revising pay of all employees uniformly across all level
  
• Minimum pay fixed at Rs 18,000 per month; maximum pay at Rs 2.25 lakh
  
• The Cabinet approval will benefit nearly 50 lakh central government employees and 58 lakh pensioners
  
• Pay hike to be implemented from January 1, 2016

While the Budget for 2016-17 fiscal did not provide an explicit provision for implementation of the 7th Pay Commission, the government had said the once-in-a-decade pay hike for government employees has been built in as interim allocation for different ministries. Around Rs 70,000 crore has been provisioned for it.

2) Real Estate Act

The much-awaited Real Estate Act came into force from May 1, 2017 with a promise of protecting the right of consumers and ushering in transparency.

The government has described the implementation of the consumer-centric Act as the beginning of an era where the consumer in king. Real estate players have also welcomed the implementation of the Act, saying it will bring a paradigm change in the way the Indian real estate sector functions.

The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March last year and all the 92 sections of the Act comes into effect from May 1.

Key Highlights of the Act

• Projects with plot size of minimum 500 sq.mt or 8 apartments shall be registered with Regulatory Authorities.
  
• The developers will now have to get the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within 3 months from 1 May.
  
• Depositing 70% of the funds collected from buyers in a separate bank account in case of new projects and 70% of unused funds in case of ongoing projects.
  
• Both developers and buyers to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2% in case of delays.
  
• In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers.
  
• All developers are required to disclose their project details on the regulator's website, and provide quarterly updates on construction progress.
  
• Liability of developers for structural defects for five years: RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter, without any further charge, within 30 days. If the promoter fails to do so, the aggrieved allottee is entitled to receive compensation under RERA.
  
• Imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of Appellate Tribunals and Regulatory Authorities.

3) Demonetization 

Demonetization, one of the top economic reforms in India's history, enacted by the Government on 8 November, 2016. All Rs 500 and Rs 1000 banknotes of the Mahatma Gandhi Series ceased to be legal tender in India from 9 November 2016.

Prime Minister Narendra Modi declared that use of all Rs 500 and Rs 1,000 banknotes of the Mahatma Gandhi Series would be invalid and announced the issuance of new Rs 500 and Rs 2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.

However, the banknote denominations of Rs 100, Rs 50, Rs 20, Rs 10 and Rs 5 of the Mahatma Gandhi Series remained legal tender and were unaffected by the policy.

Below are the Key highlights

• Cash withdrawals from bank accounts were restricted to Rs 10,000 per day and Rs 20,000 per week per account from 10 to 13 November 2016. This limit was increased to Rs 24,000 per week from 14 November.
  
• For immediate cash needs, the old banknotes can be exchanged for the new Rs 500 and Rs 2,000 banknotes as well as Rs 100 banknotes over the counter of bank branches by filling up a requisition form along with a valid ID proof. The exchange was restricted to once per person.
  
• Initially, the limit was fixed at Rs 4,000 per person from 8 to 13 November 2016. This limit was increased to Rs 4,500 per person from 14 to 17 November 2016 and was again reduced to Rs 2,000 per person from 18 November 2016.
  
• Initially, all ATMs were dispensing banknotes of only Rs 50 and Rs 100 denominations and cash withdrawals from ATMs were restricted to Rs 2000 per day. From 14 November onwards, ATMs recalibrate to dispense new Rs 500 and Rs 2000 notes will allow a maximum withdrawal of Rs 2,500 per day, while other ATMs dispensing banknotes of only Rs 50 and Rs 100 denominations will allow a maximum withdrawal of Rs 2000 per day.
  
• The demonetization received support from several bankers as well as from some international commentators, although it was criticized by members of the opposition parties, which led to debates in both houses of parliament and triggered organized protests against the current government in front of the parliament and elsewhere across India

4) Goods and Service Tax (GST)

Goods and Services Tax (GST), a historic tax reform, rolled out from July 1 which completely transformed the indirect taxation landscape in the country involving both the central and state levies. In a departure from the normal practice, administration of GST is done together by the centre and states.

Know the key highlights of GST

• GST  paved the way for realization of the goal of One Nation - One Tax - One Market. 
  
• It lowered the cost of goods and services, gave a boost to the economy and made the products and services globally competitive, giving a major boost to ‘Make in India’ initiative.
  
• Under the GST regime, exports have become zero-rated entirely unlike the previous system where refund of some of the taxes did not take place due to fragmented nature of indirect taxes between the centre and the states.
  
• GST made India a common market with common tax rates & procedures and remove economic barriers. 
  
• The reform is largely technology driven and has reduced the human interface to a great extent.
  
• It improved the ease of doing business in India. 
  
• In majority of supplies of goods, the tax incidence approved by the GST Council is much lower than the previous combined indirect tax rates levied [on account of central excise duty rates / embedded central excise duty rates / service tax post-clearance embedding, VAT rates or weighted average VAT rates, cascading of VAT over excise duty and tax incidence on account of CST, Octroi, Entry Tax, etc.] by the centre and state(s).
  
• The threshold limit for exemption from levy of GST is Rs. 20 lakh for the States except for the Special Category, where it is Rs 10 Lakh.
  
• A four slab tax rate structure of 5%, 12%, 18% and 28% has been adopted for GST.
  
• A cess has been levied on certain goods such as luxury cars, aerated drinks, pan masala and tobacco products, over and above the GST rate of 28% for payment of compensation to the states.
  
• The threshold for availing the Composition scheme is Rs. 75 lakh except for special category States where it is Rs. 50 lakh and they are required to file quarterly returns only. Certain categories of manufacturers, service providers (except restaurants) are out of the Composition Scheme.
  
• GST envisages all transactions and processes to be done only through electronic mode, to achieve non-intrusive administration. This minimized tax payers physical interaction with the tax officials.
  
• GST provides for the facility of auto-populated monthly returns and annual return.
  
• It also facilitates the taxpayers by prescribing grant of refund within 60 days, and provisional release of 90% refund to exporters within 7 days. Further facilitation measures include interest payment if refund is not sanctioned in time, and refund to be directly credited to bank accounts.
  
• Comprehensive transitional provisions for ensuring smooth transition of existing taxpayers to GST regime, credit for available stocks, etc.
  
• Other provisions include system of GST Compliance Rating and more.
  
• Anti-profiteering provisions for protection of consumer rights.