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

J V M SarmaSubscribe to J V M Sarma

A Road Map for Implementing the Goods and Services Tax

This paper examines the current steps being taken to implement the Goods and Services Tax in India. It analyses the provisions of the 115th Constitutional Amendment Bill and the Finance Act 2012 relating to service tax and notes the need for changes if the policy goals of the GST are to be met. It proposes steps to be taken for speedy implementation of GST. These include five changes to the Bill and five steps the Government of India needs to take to bridge the present "GST trust deficit" between it and the states.

Fiscal Management: A Review

This study attempts to assess the progress of fiscal reform in Andhra Pradesh with a view to identifying appropriate measures and formulating strategies for fiscal correction. Section II of the paper presents a brief assessment of the fiscal situation in the state prior to the 1996 reforms and Section III examines some of the remedial measures suggested in the recent past. Section IV looks at some of the important steps taken by the government as part of the reform process and reviews the progress. Finally, an attempt is made to indicate what remains to be done and to identify strategies for further fiscal correction.

Twelfth Finance Commission

Considerations of making the recommendations of the Twelfth Finance Commission more effective require the new commission to (1) remove the artificial restrictions imposed on the finance commissions' scope of operations; (2) keep in view overall macroeconomic stability; (3) streamline management of government debt; (4) provide for appropriate incentives for inducing fiscal responsibility; (5) take a broader and integrated view of tax assignments; and (6) provide operational guidelines for the state level finance commissions.

Federal Fiscal Relations in India-Issue of Horizontal Transfers

Issue of Horizontal Transfers J V M Sarma Devising optimal criteria for federal fiscal transfers to reduce fiscal imbalances across the states has always been a demanding job in India. In particular, two aspects that have become perennial sources of controversy are: the disintegrated componentwise approach, and the near-subjective assignment of weights to factors determining the horizontal shares of states. Given that the reduction of horizontal fiscal inequity is an important objective of the federal transfers, the study proposes a fiscal behavioural model to help identification of the criteria and derive weights for deciding the revenue shares, based on their observed degree of association with the fiscal balance of states. The approach is illustrated by estimating the model using panel data.

Value Added Taxation in the States-Challenges Ahead

Challenges Ahead M Govinda Rao J V M Sarma The need for co-ordinated development of domestic trade taxes in the Indian federal polity has shifted the focus to reforms in the states' sales tax systems. Detailed deliberation has led to a consensus on the need to transform the prevailing sales taxes into a destination based consumption type value added tax. Attempts to reform sales taxes, however, have not been always in the right direction and, in addition, have met with resistance from traders. Based on the experience gained so far, this paper attempts to set out the strategy and stages of reform towards evolving the value added tax which is less distortionary and more acceptable to traders.

Resource Mobilisation for New Welfare Programmes in Andhra Pradesh

Resource Mobilisation for New Welfare Programmes in Andhra Pradesh J V M Sarma THE welfare schemes announced by the new government in Andhra Pradesh have raked up considerable controversy. The food subsidy scheme in particular, popularly known as the ' two-rupee-kilo-rice' scheme, is seen in some circles as an election stratagem used by the Telugu Desam party to capture political power. While it is debatable whether the election success can be entirely attributable to the promise of rice subsidy since the Congress Party had also promised a similar scheme albeit on a modest scale, in a broader sense, the outcome does reflect the popular mood to have such safety net schemes in the wake of the liberalisation and globalisation programmes taken up by the central government.

Monitoring Budget Deficits with Time Series Models

Time Series Models J V M Sarma The ministry of finance had come up last year with a method of determining normative levels of budget deficit at the end of each month of the fiscal year, using time series models of the Box-Jenkins type. Recently, Madhur and Wadhwa have contested the validity of the model specification. This note attempts to clear some of the misunderstandings expressed by Madhur and Wadhwa regarding the model used in the Technical Note. In brief it shows that the criticism levelled against the model is not quite warranted and the points raised are inconsequential.

Measuring Tax Potential-Some Clarifications

Measuring Tax Potential Some Clarifications M Govinda Rao J V M Sarma THE first report of the Ninth Finance Commission has evoked widespread interest. This is evident from the number of articles that have appeared in professional journals and newspapers in recent times. Many of these articles are of a general nature covering the entire canvas of the recommendations made by the commission for the year 1989-90. The recent article in EPW by N Krishnaji (Feburary 4), however, assumes a special significance as it concentrates on the specific issue of the approach to measuring tax potential adopted by the Ninth Finance Commission.

Investment Allowance and Private Corporate Investment in India

Corporate Investment in India J V M Sarma This paper examines the impact of investment allowance on the corporate sector. This is attempted in an integrated model of corporate behaviour covering its three major aspects, namely, investment, financing and dividend decisions. It is essential to study the effect in an integrated model as the tax provisions relating to investment allowance contain a bias in favour of internal financing and thereby have a tendency to alter the pattern of financing new investment.
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