ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Arindam Das-GuptaSubscribe to Arindam Das-Gupta

An Assessment of the Revenue Impact of State-Level VAT in India

Revenue and GSDP data for 29 states for 1993-94 to 2008-09 are used to study the revenue performance of the state value added tax in India. The direct revenue impact was assessed by testing if VAT introduction increased VAT or state's own revenue buoyancies or the VAT or SOR to GSDP ratios. The indirect impact of VAT introduction on the VAT base (proxied by GSDP) and base growth were also examined. No indirect impacts of the VAT on its base was found. The direct revenue impact of the VAT was found to be positive in two-thirds of sample jurisdictions. A positive impact on SOR was however found only in Orissa and Haryana among 11 major states and 50% of other jurisdictions. Limited VAT revenue performance can partly be traced to large-scale evasion given weaknesses in VAT administration identified in a 2009 performance audit by the Comptroller and Auditor General. The implications of this study for the planned move to a goods and services VAT (from the current goods only VAT) are drawn and a suggestion is made for a non-VAT goods and services tax which should be less vulnerable to tax evasion.

Public Expenditure Management Committee Report: A Critical Review

The report of the High-Level Expert Committee on Efficient Management of Public Expenditure has recommended abolishing the current dichotomy between Plan and non-Plan expenditure and has suggested that certain public expenditure management reforms must accompany these changes. Overall, while the committee has made some useful points, both the scope of the report and its content are disappointing.

The 13th Finance Commission and Improving Fiscal Outcomes: An Assessment

The Thirteenth Finance Commission does not seem to have chosen the best possible path to meet its mandate of recommending ways to make public expenditure less wasteful and inefficient, in other words, of making the spending of public money more outcome-oriented. However, its report has a number of important suggestions that should help achieve output-oriented outlays, though these do not add up to a comprehensive reform package for result-oriented expenditure reform. Though it has done admirably well given the constraints it faced, two major problems with its approach are not noting the importance of unit costs of public outputs and inadequately treating the distinction between outputs and outcomes.

Dissection of a Bold Budget

Arindam Das-Gupta Dilip Mookherjee Barring adverse harvests or oil price movements, the 1993-94 budget is likely to increase the industrial growth rate, without significantly increasing inflation. The balance of payments situation may, however, deteriorate, resulting in downward pressure on the rupee, necessitating intervention by the RBI to stabilise the exchange rate The resource mobilisation assumptions underlying the budget projections for 1993-94 appear to be slightly optimistic. Never- the less, the likely increases in customs and excise revenues and direct tax receipts should cover the effects of the duty concessions. There is some uncertainty, however, about the ability of public enterprises to raise enough resources through market borrowings to implement plan outlays. In terms of the aim of longer term structural adjustment, the fiscal policy of the government appears to be successful in reducing government borrowing, but unsuccessful in stepping up investments, particularly in infrastructure. Detailed aspects of tax policy are appraised and some suggestions for administrative initiatives and for insurance market reform are offered.

Taxation, Non-Tax Policy and Capital Equipment Leasing

Equipment Leasing Arindam Das-Gupta This paper examines the relative merits of financial options for the purchase of capital equipment
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