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

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From 50 Years Ago : The States Default.

Editorial from Volume IX, No 24, June 15, 1957.

We are now in the second year of the Plan. The first year was understandably one in which the attention and the energies of the Government, both at the Central and State levels, were not directed towards the furthering of the Plan as fully as one would have desired it to be. This applies with particular force to the effort to raise resources for the Plan. The elections prevented the Government to do all that they should have done in tapping new sources for financing the Plan. Also since the Plan outlay was to pick up gradually, the first year was not expected to be one of particular strain. These two factors explain the abandon with which the problem of resources was approached when the budgets were presented last year. According to the financial scheme of the Plan, a sum of Rs 850 crores should be obtained in additional taxation. That is, on an average, additional tax effort should be of the order of Rs 170 crores a year. The actual performance in this respect was extremely disappointing in the first year. The Central Government budgeted for an additional tax revenue of Rs 34 crores and the State Governments for Rs 15 crores, making a total of Rs 49 crores. The short-fall in the first year amounted, therefore, to Rs 121 crores. This has meant that in the remaining four years of the Plan, additional taxation should yield Rs 200 crores a year on an average if the Plan target of additional taxation is to be reached. We are told now that the total outlay of the Plan will have to be higher by some Rs 400 to Rs 600 crores for a variety of reasons. This would call for a still greater tax effort than was considered necessary when the financial scheme for the Plan was finalised.

It is in the light of the above that the current year’s budgets have to be appraised. The Centre’s taxation proposals are expected to fetch about Rs 100 crores this year and Rs 125 crores from the next year onwards. These combined with the proposals made last year should yield additional receipts amounting to Rs 645 crores over the entire plan period. Thus insofar as the original target is concerned, the Centre may be said to have fulfilled its part of the job.

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