Update on India’s States: November 22, 2016

GST negotiations are deadlocked over the question of who will collect taxes from small and medium businesses; Andhra Pradesh students will pay in-state tuition at Ohio’s public universities; Karnataka’s winter legislative session begins; Telangana seeks overdraft approval to pay salaries during the demonetization crisis; and more.

Center-State relations

The center and states remain deadlocked over the question of which level of government will be responsible for collecting Goods and Services Tax (GST) from businesses with a turnover of less than $225,000 per year. While states want to be responsible for collection of tax from all businesses in this category, the center hopes to collect the tax from services-oriented business. The two sides failed to resolve the issue during an informal meeting November 20 between state finance ministers and Union Finance Minister Arun Jaitley; the next official meeting is scheduled for November 25. Failure to resolve this issue would make it impossible for Parliament to pass implementing legislation during the winter session. Source: Economic Times

State minister for human resources Ganta Srinivasa Rao and Ohio lieutenant governor Mary Taylor signed a memorandum of understanding (MoU) that allows Andhra Pradesh students studying in Ohio’s public universities to pay in-state tuition. The program, which begins immediately, will cut tuition costs by 50 percent. Source: The Hindu

The Asian Development Bank agreed to a $500 million loan to fund construction of India’s longest river bridge across the Ganges in Bihar. The 6-mile-long bridge will improve road connectivity between north and south Bihar. Source: The Hindu

Bihar registered a huge increase in electricity consumption over the last 11 years. Annual per capita electricity use rose to 258 units in 2016 from 70 units in 2005, while peak demand rose to 3,769 megawatts (MW) in 2016 from 700 MW in 2005. Source: Economic Times

Nothing critical to report this week.

Gujarat began migrating commercial tax payers from existing tax platforms such as value added tax to the new GST platform. The state will enroll about 466,000 traders using a Goods and Services Taxpayer Identification Number. Source: Business Standard

Inox Wind has won a second order from dye and pigment producer Roha Dyechem for windmills totaling 40 MW to form a captive power plant in Gujarat. The project will be commissioned by March 2017. Source: Economic Times

The Gujarat government launched a chain of 52 state-run pharmacies, named Deendayal Pradhanmantri Jan Aushadhi Kendra, that will sell more than 1500 generic drugs at a 40 to 80 percent discount. The state government plans 500 more such stores across the state. Source: Hindu Business Line

The Haryana government launched a Voluntary Disclosure Scheme which offers small-scale electricity consumers amnesty if they declare electricity meters that are defective or that have been tampered with. Consumers can turn in such meters until December 31, 2016. Source: Business Standard

Following a meeting between Haryana chief minister Manohar Lal Khattar and Ontario’s minister of international trade Michael Chan, Haryana signed various agreements with Ontario province for collaboration in agriculture and food processing. Ontario and Haryana agreed to constitute working groups to further promote agriculture cooperation. Source: Daily Pioneer

China Fortune Land Development (CFLD) has submitted a proposal to the Haryana government for joint development of an industrial township at Sohna with investment of around $2.5 billion. Source: Economic Times

A 10-day winter session of the Karnataka legislature commenced in the border town of Belagavi on Monday November 21. The government will attempt to pass new house rules that will split each day’s session into morning and evening sessions. By making members sign attendance twice a day, the move is meant to minimize disruption and protests on the floor of the chamber. Source: The Hindu

Nothing critical to report this week.

In a bid to lower air pollution, the Maharashtra cabinet approved the Thermal Power Plant Ash Utilization Policy, which seeks to curb transport of fly ash produced in coal-based thermal plants and identifies measures to utilize coal waste at the source. The government has announced cluster development of ash-based industries, such as cement, in the vicinity of thermal power plants; the industries will be given land, ash, and tax incentives. Source: DNA

Taxes on property sales in Maharashtra have dropped by 37 percent after the center demonetized 500 and 1,000-rupee notes. The state government’s average daily earnings from property registration charges and stamp duty had reached $6.15 million, down from $9.56 million. Property transactions in India frequently feature under-the-table cash deposits. Source: Business Standard

The Rajasthan government has raised the dearness allowance for state government employees to 132 percent, up from 125 percent, backdated to July 1, 2016. The hike will benefit nearly 800,000 employees and 350,000 pensioners and will cost the state $110 million. Source: Economic Times

Nothing critical to report this week.

The Government of Telangana has signed an MoU with Microsoft under which Microsoft will help the state government explore cloud, machine learning, and mobile based solutions to improve citizen services, education, healthcare, and agriculture in the state. Source: Economic Times

Despite an overall revenue surplus, Telangana will seek overdraft approval from the Reserve Bank of India in order to pay employee salaries and meet day-to-day expenses during the financial crisis caused by demonetization. The state’s revenues have been dwindling every day since November 8, when demonetization began. Telangana’s finance department does not believe a more standard ways and means advance will be enough to meet the state’s financial commitments. Source: Deccan Chronicle

A delegation of U.S. state officials led by the governor of Delaware met with Telangana IT and industries minister KT Rama Rao to discuss investment opportunities in the state as well as working with Telangana in skill development and other areas. Source: Money Control

The state government has ordered registrars to accept the newly invalid 500 and 1000-rupee notes until November 24 in order to allow residents to pay property registration fees. Source: Indian Express

Uttar Pradesh government approved power projects worth $113 million, including $18 million for improvement of power supply infrastructure in Lucknow. Source: Economic Times

Nothing critical to report this week.


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