The Hindu Editorial Analysis
04 September 2021

 

1. An uneven uptickGST revenue trends indicate the recovery is neither smooth nor fast

  • Page 6/Editorial
  • GS 3: Economy

 

Context: With gross revenues of ₹1.12-lakh crore in August, the GST has now yielded over ₹1-lakh crore a month for almost a full year.

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  • There came a blip in the when GST fell below ₹93,000 crore in the aftermath of the second COVID-19 wave that compelled mobility restrictions across States.
  • Those curbs have been progressively easing up — just as they were a year ago when the country saw a phased unlocking from the national lockdown. Compared to those lows, the August collections are 30% higher and also 14% above the pre-pandemic levels of 2019-20, though one must remember India’s growth had stuttered sharply that year.
  • The GST collected in August pertains largely to economic activity in July and the mobility restrictions in most States had been eased further that month compared to June, including in the southern States.
  • While revenues from domestic transactions were up 27%, key industrial States saw faster growth, including Karnataka, Tamil Nadu and Maharashtra.
  • Going forward, the Government expects such ‘robust’ GST revenues to persist. Most economists agree that may be the case, unless the fears of a third wave come true, triggering lockdowns.
     

Problems with the recovery:

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  • Lower sequential collection: GST e-way bills generated in July surged to an average of 2.1 million from 1.8 million in June. Yet, on a sequential basis, GST revenues in August are almost 4% lower than the ₹1.16-lakh crore collected in July.
  • Stagnation despite more taxpayers: higher compliance levels;  At the start of the GST regime four years ago, it had 6.6 million taxpayers. On GST Day this July, the Finance Minister said this had risen to 12.8 million. But how many of them are filing returns each month is no longer known since the Government stopped disclosing that number from February 2021. This makes it virtually impossible to distil the effects of compliance and growth on GST revenues.
  • Data Disclosure: The current data shows many such paradoxes. The Government would do well to restore and enhance its quality of data disclosures — even State-wise revenues have been selectively shared recently. 

Conclusion: As the Reserve Bank of India Governor has highlighted, the economy is still delicately poised — manufacturing recovery has stumbled in August, services remain stressed, exports stay strong but have slipped on a month-on-month basis just like GST collections. This recovery appears choppy rather than ‘fast’. 

Expected Question: What are major reasons for lower than expected GST collections despite increasing number of taxpayer? (150 Words)

 

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2. Certainly not the end of the road for the U.S.Even if the Afghan exit was disastrous for various reasons, to declare it as the demise of America is a misreading

  • Page 6/Editorial
  • GS 2: IR

 

Context: The future of Afghanistan is yet to be determined, but the debate has abruptly shifted to the future of the United States after its withdrawal from Afghanistan as many see this as an end to the influence of US in the world Politics. However, nothing can be farther from the truth.

Defining event

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  • 9/11: To understand the present plight of the U.S., we need to go back to the terrorist bombing of 9/11, which was a game-changing global experience. It transformed the geopolitics of the world, which was determined by the size of the nuclear arsenals of the nuclear weapon states. The most powerful country in the world, which had the capacity to destroy the world many times over, became powerless before a few terrorists, who had only knives and forks as weapons, who blew the twin towers of New York.
  • Once the responsibility of the attack was traced to Osama bin Laden and the terrorists in Afghanistan, it was imperative for the U.S. to retaliate by overthrowing the Taliban regime and hunting out and killing bin Laden

Benefits of the U.S. presence

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  • The U.S. accomplished its mission within a short period but it was not able to withdraw because the Afghanistan government was unable to withstand the onslaught of the Taliban and other terrorist groups. Even neighbouring countries, including India, were strongly in favour of continuing the American presence.
  • Pakistan played a double game — of being a partner on the one hand and an adversary on the other. It was not a matter of the Americans imposing themselves, but being invited to provide a certain stability for Afghanistan.
  • A relatively Peaceful US years: The result of their presence was the prevalence of relative peace in the region except that Pakistan fattened the Taliban with American largesse. In the process, the troops in Afghanistan protected the homeland and the Americans, because the Taliban and other groups were kept engaged in Afghanistan territory. The U.S. presence in Afghanistan had succeeded in containing the dangers of terrorism for two decades. 

 

The Afghan exit

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  • Biden had no option: The clear mandate given to Mr. Biden was to clean up the Augean stables left behind by his predecessor, President Donald Trump, and how the world as a whole and a majority of the U.S. citizens heaved a sigh of relief that the U.S. finally had a predictable, steady and experienced leader to combat the novel coronavirus pandemic and racism in the country and to recover its position in the centre of the world that the Chinese were hoping to grab.
  • Post Afghan Polity: Mr. Biden moved in earnest to return to the Paris Agreement (climate), resume the dialogue on the Iran nuclear deal and to reassure America’s traditional allies that the U.S. would stand by them. He gave a clear signal to China and Russia that no confrontation would be tolerated, but cooperation, wherever possible, will be pursued.
  • No setting sun: US is still the most powerful economic and military power around which the whole constellation of the world rotates.
  • Importance of US: In fact, the world has a stake in ensuring that a democratic nation leads the world rather than an expansionist dictatorship which has no public opinion to restrain it. The free world has a responsibility to maintain the American leadership of the world till a wiser and more benign alternative is found. 

Conclusion: Many commentators have argued that the Kabul fiasco was worse than Vietnam, Tehran, 9/11, Iraq and COVID-19 because the details of the other disastrous developments had lost their sharpness with the passage of time. However, nothing can be farther from truth.

 

Expected Question: What do you mean by the term 'US hegemony' in the international relations. Can the power of US be said to be in decline? Give reasons for your answer. (250 Words)