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

Articles By Ravindra H Dholakia

An Estimate of Evasion of Personal Income Tax in India, 2011–12 to 2017–18

An estimate of the personal income tax evasion is attempted by considering total personal income, gross income of return filers, mixed incomes of agricultural landowners, income of below the poverty line population and income of above the poverty line population but below minimum tax exempt income. Tax evasion most conservatively is around 40% of personal income by about 16% of population in 2017–18.

Issues in Measurement of Inflation Targeting

The current practice of measuring the inflation rate from fixed base weight index is outdated and likely to overstate inflation substantially compared to the chain weighted index used in developed countries. Similarly, the treatment of house rent allowance revisions to estimate the housing Consumer Price Index also significantly overstates the headline inflation. Economy-wide inflationary expectations also need proper measurement. Inflation-targeting framework without proper measurement of inflation rate can involve very high real costs and make the policy counterproductive.

Manufacturing Output in New GDP Series

The new gross domestic product series, with base year 2011–12, has mostly replaced the Annual Survey of Industries with corporate financial data for estimating manufacturing value added. This has resulted in its higher share in GDP and a faster growth rate (compared to the older series). The Central Statistics Office claims that the new series better captures value addition, as ASI reportedly left out activities outside the factory of an enterprise. This claim is probably not true, as is evident from closer examination of a sample of ASI primary schedules.

Measurement Issues in Comparing Fiscal Performance of States

Interstate comparison of fiscal performance requires the use of appropriate concepts and proper measurement of state income, fiscal deficit and debt. GSDP at market prices and a comprehensive concept of debt consistent with the fiscal deficit of a state government are the right concepts to use for the purpose. Neither the rating agencies nor the finance commissions have used the right concepts so far. Illustrative estimates for Gujarat show that this can lead to misleading target setting and wrong perceptions about the fiscal performance of the states.

Gujarat's Growth Story

If one were to use correct concepts and measurements, it will be seen that labour in Gujarat has actually significantly benefited from high economic growth and productivity gains. Annual Survey of Industries data show that the state has outperformed many others in the level of employment and wage compensation. A critical comment on "Labour and Employment under Globalisation: The Case of Gujarat" (EPW, 28 May 2011).