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Envisioning Tax Policy for Accelerated Development in India

Author

Listed:
  • Rao, M. Govinda

    (National Institute of Public Finance and Policy)

  • Kumar, Sudhanshu

    (National Institute of Public Finance and Policy)

Abstract

The objective of the paper is to highlight the reforms needed in the tax system to improve the revenue productivity of the tax system to conform to the vision of accelerating economic growth and development in India. Based on the cross-country analysis of tax-GDP ratios in 98 countries, the paper estimates the extent of under-taxation in India. Assuming 8 per cent growth in GDP, the paper estimates the increase in tax-GDP ratios needed to be raised and this additional effort would provide fiscal space for much needed investments in physical infrastructure and human development. The paper goes on to identify the reforms needed to raise the revenue productivity of the tax system keeping in view the best practice approach to tax reform in India.

Suggested Citation

  • Rao, M. Govinda & Kumar, Sudhanshu, 2017. "Envisioning Tax Policy for Accelerated Development in India," Working Papers 17/190, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:17/190
    Note: Working Paper 190, 2017
    as

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    File URL: http://www.nipfp.org.in/media/medialibrary/2017/02/WP_2017_190.pdf
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    References listed on IDEAS

    as
    1. M. Govinda Rao & R. Kavita Rao, 2005. "Trends and Issues in Tax Policy and Reform in India," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 2(1), pages 55-122.
    2. Engel, Eduardo M. R. A. & Galetovic, Alexander & Raddatz, Claudio E., 1999. "Taxes and income distribution in Chile: some unpleasant redistributive arithmetic," Journal of Development Economics, Elsevier, vol. 59(1), pages 155-192, June.
    3. Rao, R. Kavita & Sengupta, D.P., 2014. "Action Plan on Base Erosion and Profit Shifting: An Indian Perspective," Working Papers 14/133, National Institute of Public Finance and Policy.
    4. Richard M. Bird & Eric M. Zolt, 2005. "Redistribution via Taxation: The Limited Role of the Personal Income Tax in Developing Countries (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0507, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Patnaik, Ila & Felman, Joshua & Shah, Ajay, 2017. "An exchange market pressure measure for cross country analysis," Journal of International Money and Finance, Elsevier, vol. 73(PA), pages 62-77.
    6. M. Govinda Rao & Sen, Tapas K., 2011. "Federalism and fiscal reform in India," Working Papers 11/84, National Institute of Public Finance and Policy.
    7. Bird, Richard M. & Zolt, Eric M., 2005. "The limited role of the personal income tax in developing countries," Journal of Asian Economics, Elsevier, vol. 16(6), pages 928-946, December.
    8. M. Govinda Rao, 2013. "Property Tax System in India: Problems and Prospects of Reform," Working Papers 13/114, National Institute of Public Finance and Policy.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Rao, M. Govinda, 2017. "Public Finance in India in the Context of India's Development," Working Papers 17/219, National Institute of Public Finance and Policy.
    2. Dillip Kumar MUDULI & Nityasundar MANIK, 2020. "Tax structure and economic growth in general category states in India: A panel auto regressive distributed lag approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(623), S), pages 225-240, Summer.
    3. M. Govinda Rao, 2018. "Public finance in India: some reflections," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 45(2), pages 113-127, June.
    4. Sacchidananda Mukherjee & Shivani Badola, 2021. "Public Financing of Human Development in India: A Review," Indian Journal of Human Development, , vol. 15(1), pages 62-81, April.
    5. Bose, Sukanya & Noopur, A. & Nayudu, Sri Hari, 2022. "Intergovernmental Fiscal transfers and Expenditure on Education in India: State level analysis, 2005 to 2020," Working Papers 22/377, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Tax Policy ; Tax System ; Revenue Productivity ; India;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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