Decentralization, indirect tax reform and fiscal federalism in India

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Tuesday 01 July 2014
2.00pm–3.30pm

Venue

Coombs Seminar Room B, Coombs Building 9, Fellows Road, ANU

Speaker

Professor Raghbendra Jha, Crawford School, ANU

Contacts

Arianto Patunru
6125 9786

This paper underscores the substantial spatial disparities across India and evaluates the case for putting together (various versions) of the Goods and Service Tax (GST) and also indicates the risks involved in the process. It argues that, on balance, there is a case for an appropriately constituted GST but that the federal transfer formula must be sensitive to any fallout from such a move. The paper also argues that there is an urgent need to review the totality of transfers from the central to state governments and local bodies. This review would include transfers through Finance Commission, Planning Commission and Centrally Sponsored Schemes. There is a compelling necessity to review and recalibrate the entire gamut (and not piecemeal) of federal relations – tax, expenditure and transfers. This is critical to facilitate the stability and predictability needed to ensure that India’s states-driven growth blossoms and attains full fruition.

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