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As of April 23, Delhi has 2,248 cases of COVID-19. After Maharashtra and Gujarat, Delhi has the highest number of cases in the country. On March 22, when the number of cases rose to 29, the Delhi government announced lockdown in the state until March 31, to contain the spread of COVID-19. This has been followed by a nation-wide lockdown by the central government between March 25 and May 3. In this blog, we summarise some of the key measures taken by the state government in response to COVID-19 so far.
Before the lockdown
On March 8, with three cases of COVID-19 in the state, the Department of Health and Family Welfare decided to carry out an awareness drive at various crowded places during Holi. Along with it, the government also took several other steps for mitigating the spread of COVID-19 in the state. Some of these measures are summarised below.
Health Measures
Disinfecting the vehicles: On March 11 and 12, the government ordered to disinfect minibuses, school buses and school cabs daily.
The Delhi Epidemic Diseases, COVID-19 Regulations, 2020: On March 12, with six cases of COVID-19, the Delhi government notified The Delhi Epidemic Diseases, COVID-19 Regulations, 2020. These regulations are valid for a year. Key provisions include:
(i) All government and private hospitals should have dedicated flu corners.
(ii) home quarantine for people who have travelled through the affected areas, and
(iii) Certain persons authorised under the Regulations, with the approval of the State Task Force, can take necessary measures to contain the spread of COVID-19, such as: (i) sealing a geographical area, (ii) restricting the movement of vehicles and people, and (iii) initiating active and passive surveillance of COVID-19 cases.
Movement Restrictions
Educational institutions: On March 12, the government ordered the closure of all educational institutions up to March 31. The students writing examinations were allowed to attend them along with the staff. However, on March 19, the government ordered the postponement of exams until March 31.
Public gatherings:
Restaurants and private establishments: On March 19, all restaurants were ordered to discontinue sitting arrangements until March 31. Private establishments were ordered to allow their employees to work from home till March 31.
Delhi-Kathmandu bus service: On March 20, the government suspended the Delhi-Kathmandu bus service, officially known as the Maitri Bus Sewa.
During the lockdown
On March 22, when the number of cases rose to 29, the Delhi government announced the lockdown in the state until March 31. The lockdown involved: (i) suspending the public transport services, (ii) sealing borders with Haryana and Uttar Pradesh, (iii) suspending all domestic and international flights arriving in Delhi, and (iv) banning the congregation of more than five persons at any public place. This was followed by a nation-wide lockdown enforced by the central government between March 25 and April 14, now extended till May 3.
Starting from April 20, the central government allowed certain activities in less-affected districts of the country. However, the Delhi government, on April 19, announced that there will not be any relaxation in the lockdown in Delhi, until another comprehensive assessment which will be made on April 27.
Welfare Measures
The Delhi government announced several welfare measures to address the difficulties being faced by people during the lockdown. Key measures include:
Night shelters: The Delhi Urban Shelter Improvement Board is providing free meals to the homeless people staying in the night shelters. On March 25, a hunger helpline was set up which directs the needy people to the nearest night shelter for food.
Hunger Relief Centers: On March 26, the government directed the District Magistrates to set up at least two hunger relief centres in every municipal ward for providing 500 meals twice (lunch and dinner) every day at each centre.
Financial assistance: The government is providing one-time financial assistance of Rs 5,000 to drivers of vehicles such as autos, taxis, and e-rickshaws.
Compensation to family members: The Delhi government will be giving compensation of one crore rupees to the family members of the employees who may die due to COVID-19.
Health Measures
Additional manpower: On March 24, the government ordered the hospitals and institutions under the Department of Health and Family Welfare to engage up to 25% additional manpower in outsourced services such as sanitation, security, and nursing assistants.
Wearing masks made compulsory: On April 8, the government made it compulsory for all people to wear masks in public places, offices, gatherings, meetings, and personal vehicles.
Identification of paid quarantine facilities: On April 13, the government ordered all district magistrates to identify paid quarantine facilities in their respective districts for housing the people who would like to use private facilities on payment basis.
Creation of a multi-sectoral dedicated team: On April 13, the government ordered for the creation of the Corona Foot Warriors and Containment Team at every booth. The government aims to enhance ground level intervention through them.
Setting up Helpline: On April 17, the Department of Health and Family Welfare set up a dedicated 24x7 Whatsapp number for receiving complaints and requests from the people related to COVID-19.
Measures related to Media
The government took the following steps to control the spread of fake news related to COVID-19:
For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.
Over the last two months, the centre and over 15 states have passed laws to levy the Goods and Services Tax (GST). Under these laws, tax rates recommended by the GST Council will be notified by the government. The Council met in Srinagar last week to approve rates for various items. Following this decision, the government has indicated that it may invoke provisions under the GST laws to monitor prices of goods and services.[1] This will be done by setting up an anti-profiteering authority to ensure that reduction in tax rates under GST results in a fall in prices of goods and services. In this context, we look at the rates approved by the GST Council, and the role of the proposed authority to ensure that prices of various items do not increase under GST.
Q. What are the tax rates that have been approved by the Council?
The Council has classified various items under five different tax rates: (i) 5%, (ii) 12%, (iii) 18%, (iv) 28%, and (v) 28% with an additional GST compensation cess (see Table 1).[2],[3],[4] While tax rates for most of the goods and services have been approved by the Council, rates for some remaining items such as biscuits, textiles, footwear, and precious metals are expected to be decided in its next meeting on June 3, 2017.
Table 1: Tax rates for goods and services as approved by the GST Council
| 5% | 12% | 18% | 28% | 28% + Cess | |
|---|---|---|---|---|---|
| Goods |
|
|
|
|
|
| Services |
|
|
|
|
Source: GST Council Press Release, Central Board for Excise and Customs.
Q. Will GST apply on all goods and services?
No, certain items such as alcohol for human consumption, and petroleum products such as petrol, diesel and natural gas will be exempt under GST. In addition to these, the GST Council has also classified certain items under the 0% tax rate, implying that GST will not be levied on them. This list includes items of daily use such as wheat, rice, milk, eggs, fresh vegetables, meat and fish. Some services such as education and healthcare will also be exempt under GST.
Q. How will GST impact prices of goods and services?
GST subsumes various indirect taxes and seeks to reduce cascading of taxes (tax on tax). With greater efficiency in the supply of products, enhanced flow of tax credits, removal of border check posts, and changes in tax rates, prices of goods and services may come down.[5],[6],[7] Mr Arun Jaitley recently stated that the Council has classified several items under lower tax rates, when compared to the current system.[8]
However, since some tax rates such as VAT currently vary across states, the real impact of GST rates on prices may become clear only after its roll-out. For example, at present VAT rates on smart phones range between 5-15% across states. Under GST they will be taxed at 12%.[9] As a result while phones may become marginally cheaper in some states, their prices may go up in some others.
Q. What happens if tax rates come down but companies don’t reduce prices?
Few people such as the Union Revenue Secretary and Finance Ministers of Kerala and Jammu and Kashmir have expressed concerns that companies may not lower their prices despite a fall in tax rates, in order to increase their profits. The Revenue Secretary also stated that the government had received reports of few businesses increasing their product prices in anticipation of GST.[10]
To take care of such cases, the GST laws contain a provision which allows the centre to constitute an anti-profiteering authority. The authority will ensure that a reduction in tax rates under GST is passed on to the consumers. Specific powers and functions of the authority will be specified by the GST Council.[11],[12]
Q. Are there any existing mechanisms to regulate pricing of products?
Various laws have been enacted over the years to control the pricing of essential items, or check for unfair market practices. For example, the Essential Commodities Act, 1955 controls the price of certain necessary items such as medicines, food items and fertilisers.[13]
Parliament has also created statutory authorities like the Competition Commission of India to check against unfair trade practices such as cartelisation by businesses to inflate prices of goods. Regulators, such as the National Pharmaceutical Pricing Authority, are also responsible for regulating prices for items in their sectors.
Q. Could there be some challenges in implementing this mechanism?
To fulfil its mandate, the anti-profiteering authority could get involved in determining prices of various items. This may even require going through the balance sheets and finances of various companies. Some argue that this is against the idea of prices being determined by market forces of demand and supply.[14]
Another aspect to consider here is that the price of items is dependent on a combination of factors, in addition to applicable taxes. These include the cost of raw material, technology used by businesses, distribution channels, or competition in the market.
Imagine a case where the GST rate on a category of cars has come down from the current levels, but rising global prices of raw material such as steel have forced a manufacturer to increase prices. Given the mandate of the authority to ensure passing of lower tax rates to consumers, will it also consider the impact of rising input costs deciding the price of an item? Since factor costs keep fluctuating, in some cases the authority may find it difficult to evaluate the pricing decision of a business.
Q. Have other countries tried to introduce similar anti-profiteering frameworks?
Some countries such as Malaysia have in the past introduced laws to check if companies were making unreasonably high profits after the roll-out of GST.[15] While the law was supposed to remain in force for a limited period, the deadline has been extended a few times. In Australia, during the roll out of GST in the early 2000s, an existing authority was entrusted with the role of taking action against businesses that unreasonably increased prices.[16] The authority also put in place a strategy to raise consumer awareness about the available recourse in cases of price exploitation.
With rates for various items being approved, and the government considering a mechanism to ensure that any inflationary impact is minimised, the focus now shifts to the implementation of GST. This includes operationalisation of the GST Network, and notification of rules relating to registration under GST and payment of tax. The weeks ahead will be crucial for the authorities and various taxpayers in the country to ensure that GST is successfully rolled out from July 1, 2017.
[1] After fixing rates, GST Council to now focus on price behaviour of companies, The Hindustan Times, Ma 22, 2017, http://www.hindustantimes.com/business-news/after-fixing-rates-gst-council-to-now-focus-on-price-behaviour-of-companies/story-fRsAFsfEofPxMe2IXnXIMN.html.
[2] GST Rate Schedule for Goods, Central Board of Excise and Customs, GST Council, May 18, 2017, http://www.cbec.gov.in/resources//htdocs-cbec/gst/chapter-wise-rate-wise-gst-schedule-18.05.2017.pdf.
[3] GST Compensation Cess Rates for different supplies, GST Council, Central Board of Excise and Customs, May 18, 2017, http://www.cbec.gov.in/resources//htdocs-cbec/gst/gst-compensation-cess-rates-18.05.2017.pdf.
[4] Schedule of GST Rates for Services as approved by GST Council, GST Council, Central Board of Excise and Customs, May 19, 2017, http://www.cbec.gov.in/resources//htdocs-cbec/gst/Schedule%20of%20GST%20rates%20for%20services.pdf.
[5] GST rate impact: Here’s how the new tax can carry a greater punch, The Financial Express, May 24, 2017, http://www.financialexpress.com/economy/gst-rate-impact-heres-how-the-new-tax-can-carry-a-greater-punch/682762/.
[6] “So far, the GST Council has got it right”, The Hindu Business Line, May 22, 2017, http://www.thehindubusinessline.com/opinion/the-gst-council-has-got-it-right/article9709906.ece.
[7] “GST to cut inflation by 2%, create buoyancy in economy: Hasmukh Adhia”, The Times of India, May 21, 2017, http://timesofindia.indiatimes.com/business/india-business/gst-to-cut-inflation-by-2-create-buoyancy-in-economy-hasmukh-adhia/articleshow/58772448.cms.
[8] GST rate: New tax to reduce prices of most goods, from milk, coal to FMCG goods, The Financial Express, May 19, 2017, http://www.financialexpress.com/economy/gst-rate-new-tax-to-reduce-prices-of-most-goods-from-milk-coal-to-fmcg-goods/675722/.
[9] “Goods and Services Tax (GST) will lead to lower tax burden in several commodities including packaged cement, Medicaments, Smart phones, and medical devices, including surgical instruments”, Press Information Bureau, Ministry of Finance, May 23, 2017.
[10] “GST Townhall: Main concern is consumer education, says Adhia”, Live Mint, May 24, 2017.
[11] The Central Goods and Services Tax Act, 2017, http://www.prsindia.org/uploads/media/GST,%202017/Central%20GST%20Act,%202017.pdf.
[12] Rajasthan Goods and Services Tax Bill, 2017; Madhya Pradesh Goods and Services Tax Bill, 2017; Uttar Pradesh Goods and Services Tax Bill, 2017; Maharashtra Goods and Services Tax Bill, 2017.
[13] The Essential Commodities Act, 1955.
[14] “GST rollout: Anti-profiteering law could be the new face of tax terror”, The Financial Express, May 23, 2017, http://www.financialexpress.com/opinion/gst-rollout-anti-profiteering-law-could-be-the-new-face-of-tax-terror/680850/.
[15] Price Control Anti-Profiteering Act 2011, Malaysia.
[16] ACCC oversight of pricing responses to the introduction of the new tax system, Australia Competition and Consumer Commission, January 2003, https://www.accc.gov.au/system/files/GST%20final%20report.pdf.
