Finance ministry starts work on Nilekani proposals

In a major step towards technology reforms, the finance ministry has approved setting up two special purpose vehicles, called National Information Utilities (NIU), for handling information technology (IT) aspects of the Goods and Services Tax (GST), and the Tax Information Network (TIN).

While the government will focus on policy formulation and enforcement, the focus of NIUs will be on implementation of IT systems. While GST is a proposed indirect tax reform that will allow both the Centre and states to tax a common pool of goods and services, TIN is a repository of nationwide tax-related information which helps file online returns etc.

The Technology Advisory Group for Unique Projects (Tagup), headed by Nandan Nilekani, had suggested adoption of NIUs in five areas — GST, TIN, Expenditure Information Network (EIN), National Treasury Management Agency (NTMA), and the New Pension System (NPS) — to strengthen the IT backbone.

According to Tagup recommendations, NIUs should be a government-private initiative with the government having a stake of at least 26 per cent and private players at least 51 per cent. An individual private entity, however, should not hold more than 25 per cent stake.

Finance Minister Pranab Mukherjee recently approved the report of the group. The finance ministry has also set up a high-level coordination committee (HLCC), headed by Finance Secretary Sushma Nath, to decide the structure of NIUs. These could be similar to National Securities Depository Ltd, National Payments Corporation of India, and Centre for Railway Information Systems.

“NIUs have been approved for GST and TIN. HLCC will take forward the implementation process. The finance minister has directed that for remaining three projects, HLCC in consultation with relevant departments should decide how many NIUs are required. This will take forward reforms which will be citizen-friendly and deliver services by adopting best global practices,” said a finance ministry official.

The HLCC will also comprise revenue secretary, economic affairs secretary, financial services secretary, member (budget & computerisation), member (legislation & computerisation), controller general of accounts, and director general (systems), as its members.

Joint secretary in revenue department will be the member secretary. Former member of the Central Board of Direct Taxes, S S Khan, will be appointed as consultant to the group to expedite the implementation of the Tagup recommendations.

The Tagup report had said NIUs would be set up as private companies with a public purpose: Profit-making, but not profit maximising. It said these should be financially independent, able to get funding independently and have a self-sustaining financial model.

“An NIU should be structured as a company with limited liability and be subject to sound corporate governance norms, such as those required for listed companies though the company may not be listed. The board composition, accountability, and transparency norms for NIUs should be the same as prescribed for listed companies,” it said.