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Political Economy of Government Revenues:
An Analysis of Orissa
-- Tushar Kanti Das
Macroeconomic stability is an indispensable precondition for growth. Like most of the states of India, the fiscal situation of Orissa deteriorated in the late 1980s and the 1990s. The enactment of the FRBM Act in 2005 helped the Government of Orissa to reduce deficits and generate surplus. The planners should now identify the avenues of revenue to sustain this surplus over the years. © 2011 IUP. All Rights Reserved.
Examining the Convergence in the Economic Growth
of Indian States
-- Mukund Kumar
After crossing the Hindu growth rate in the 1990s, the Indian economy has been experiencing a consistent and increasing growth of national Gross Domestic Product (GDP) both at current and constant prices. This growth in the national level GDP is resulting in a high growth rate of the State Domestic Product (SDP) of various states. However, it will also be interesting to find out whether there is a convergence in the economic growth of the Indian states or not. National level data indicates that the growth rate of the country is over 8% in the Eighth, Ninth and Tenth Five Years Plans, except some bad years and it is expected that the annual growth rate will go even further in the Eleventh Plan. But whether this growth is for all or it is just for some states—is the objective of the present study. This has been done by taking the SDP of 18 Indian states into consideration. The paper calculates the growth rate of all the 18 states for the period of 1980-81 to 2004-05. The entire period has been divided into two parts: 1980-81 to 1990-91 and 1991-92 to 2004-05. The period 1980-81 to 1990-91 can be referred to as the pre-Globalization, Liberalization, and Privatization (GLP), whereas the period 1991-92 to 2004-05 can be referred to as the post-GLP period. This bifurcation has been done for finding out the differences in the convergence of growth rate between pre- and post- GLP. In the pre-GLP period the national level as well as the state level growth rate in per capita GDP was less than that in the post-GLP period. So it will be interesting to see whether the increase in the annual growth rate of the country has led to the convergence or divergence in the growth rate of SDP. © 2011 IUP. All Rights Reserved.
Understanding the Revenue Productivity
of Value Added Tax
-- Jose Sebastian
Available evidences show that Value Added Tax (VAT) has been quite revenue productive in the case of most Indian states. This paper enquires into the factors contributing to it by piecing together evidences from various sources. There are four major factors—harmonization of the rate structure, abolition of exemptions and concessions to industries, widening of the tax base, and reduction in compliance cost—behind the revenue productivity of VAT. The paper argues that the transparency that VAT has brought about in the tax structure and the whole process of tax compliance and the reduction in compliance cost have been more important than the widening of the tax base that VAT is supposed to have brought about. In the context of switching over to Goods and Services Tax (GST), this factor has important implications. © 2011 IUP. All Rights Reserved.
Perception of Tax Professionals Regarding
Income Tax Administration in India
-- Vaneeta Rani and R S Arora
Tax policy and tax administration mutually affect each other. An efficient tax administration is a prerequisite for the successful implementation of tax policy. Income Tax Department in India administers direct tax laws. On the other hand, tax professionals play an important role in the implementation of income tax law of the country. The present study has been carried out with the objective of analyzing the perception of tax professionals with respect to some selected parameters, viz., completion of assessments, unreasonable delay in refunds, physical environment prevalent in income tax offices and quality of services provided by income tax administration. The universe of present study comprises of tax professionals, i.e., chartered accountants practising in Punjab (India). A sample of 250 respondents has been taken by selecting 50 respondents from Chandigarh (L1), Patiala (L2), Ludhiana (L3), Jalandhar (L4) and Amritsar (L5) each. The primary data was collected with the help of a well-structured questionnaire. The analysis of data collected was carried out by using simple frequencies, percentages, average weighted score, chi-square test, Kendall’s coefficient of concordance, etc. The study offers a few suggestions for improving income tax administration in India. © 2011 IUP. All Rights Reserved.
Development Agencies’ Support to States
for Fiscal Reforms in India
-- Ratna Vadra
More than a decade after the launch of the reform process, it seems that significant attention is still not paid to the fiscal reforms at state level. Despite several years of fiscal consolidation effort, large and persistent fiscal deficits remain. India’s overall government spending, currently around 33% of GDP (center and states together), will need to be brought down substantially as a proportion of national product in order for India to achieve its reform goals of macroeconomic stability and long-term rapid growth. The states’ increasingly large deficits mean their fiscal policy is an important factor not only in their own performance but in India’s overall fiscal sustainability. More and more states are now turning to fiscal reforms as the only way out of the financial crisis they are facing. Besides the support of center, states are also receiving financial and technical support from various development agencies like World Bank and Asian Development Bank. The basic objective of the paper is to study whether the support given by these developmental agencies like World Bank will prove fruitful for the development of states and which states in India are the major beneficiaries. The support from development agencies is for a limited time period. Will the support of development agencies be the only way for states to improve their fiscal situation? The fact is that the states have to boost up their own efforts and create new avenues for generating finance. © 2011 IUP. All Rights Reserved.
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