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

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NEW DELHI-Political System Losing Credibility

from macro balance in the form of the national accounts matrix where each row and column in the matrix refers to income and expenditure transactions of the sector in question. The Draft Plan statements on macro-economic estimates serves a useful though limited purpose However, an examination of the Annexures reveals some fundamental flaws. Thus, for example, according to the Annexures, for the private sector, gdp at factor cost is equivalent to gdp at market prices. According to "System of National Accounts", indirect taxes are defined as ''taxes assessed on producers in respect of the production, sale, purdhase or use of goods and services, which they charge to the expenses of production. Also, included are import duties and the operating surplus, reduced by the normal margin of profits of business units of fiscal and similar monopolies of government" (p 234). Similarly, subsidies are defined as "all grants on current account made by government to private industries and public corporations and grants made by the public authorities to government enterprises in compensation for losses when these losses are clearly the consequence of the policy of the government to maintain prices at a level below costs of production" (p 237). It is therefore untenable that all indirect taxes and subsidies are collected from/ granted to public sector. Also private final consumption expenditure and investment (public and private) are measured at market prices, i e, inclusive of net indirect taxes. Estimates of gdp both for public and private sectors essentially has therefore to include the corresponding components of indirect taxes paid and subsidies received. An examination of NAS (January 1978) suggests that it is possible to obtain the corresponding estimates for public and private sectors separately.

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