Using essentially the same methodology that has been developed at the Institute over the years, the study first estimates the amount of subsidies – in the sense of unrecovered costs – given by the central government on various types of services provided. This is done for two years, 2002-03 (accounts data) and 2003-04 (provisiol data). The subsidies are estimated for each service (by major heads in most cases) and also for three groups under Merit I, Merit II and non-Merit services. It examines three types of subsidies in some detail – on food, fertilizer, and petroleum – that account for a large part of the central subsidies, along with an assessment of a number of schemes initiated by the central government for poverty alleviation. The main focus of the detailed alyses based on available literature is on the success of these subsidies/schemes in reaching the target group of the poor and on suggesting reforms that would enhance the targeting. Using this study report as the main input, the Ministry of Fince tabled a report on the subject in the Parliament in December 2004.

The study alyses the relationship between forestry and poverty alleviation in a village level Social Accounting Matrix (SAM) for two contrasting ecological zones in India located in the Shivalik region of the Himalayas and the arid region of Aravalli dunes. It takes into account the flow of input and output, including monetised values of the environmental goods and exterlities of all major rural activities and the accrual of income, consumption, savings, trade of different income classes of the village. The accounting framework also includes human health cost related variables across income classes to take into account the quality of life The study then derives accounting, fixed and mixed multipliers to explain the relationship between forestry and poverty. The study filly suggests policy recommendations for poverty alleviation though forestry programmes.

The study alysed the possible revenue loss in the event of introduction of value added tax at sub-tiol level in India for two states, viz., Andhra Pradesh and West Bengal. The study suggested that, under the proposed implementable VAT design, the revenue loss to both the states is insignificant when the reform envisages intra-state VAT. However, when the reform includes phasing out of the Central Sales Tax, there would be revenue losses and it is necessary to find appropriate mechanism to compensate the loss.

Studies on debt sustaibility in India have addressed the issue at the level of the central government alone, or aggregated across centre and states, or at the aggregate level for states.Since the constituent states of the Indian union are highly heterogeneous in terms of size, level of income, and ability to raise own resources, there is a need for a state-specific assessment of debt sustaibility status. After operatiolising the alytics of debt sustaibility for subtiol governments, states are grouped and ranked by the indicators selected. The significant increase in the outstanding indebtedness and sharp increase in the average interest rate require states to carry overall primary surpluses in order to stabilise debt as a percent of GSDP. The problem is reaching crisis proportions, with states facing increasing market reluctance to absorb their securities. Fiscal correction at state level is no longer an option, but has become an imperative. The study identifies states in need of expenditure compression and improvement in own revenue collection effort, and lists other institutiol changes required, such as introduction of fiscal responsibility legislation, and participation in the Compensatory Revenue Fund and the Guarantee Redemption Fund, in order to gain fiscal credibility in fincial markets. Legislated fiscal conduct has to explicitly prohibit budgetary malpractices, such as loss cover for non-departmental state PSUs through incremental contributions to share capital from the capital account of the budget. It can be nobody’s case that states are entirely responsible for the fiscal situation in which they find themselves. In a fiscal federation, the ultimate responsibility for macroeconomic control rests with government at the tiol level. The provision for this is presently enshrined under Article 293(3) of the constitution. The coverage of this is however partial, and does not extend to borrowing against small savings collections, or direct borrowing from the public through small savings schemes floated by the state government. It is only when the coverage of Article 293(3) comprehensively extends to all avenues of possible borrowing that ebling conditions for unsustaible debt paths will have been elimited. These recommendations have been adopted in the Report of the Twelfth Fince Commission.

This paper alysed the problems of state finces in Kartaka and the constraints posed on fincing human development in the state. The alysis shows that adequate allocation to human development expenditures in the 1990s has been seriously constrained by the steadily deteriorating fiscal health of the state. Although a high growth rate in the state has led to an increase in per capita expenditures in the social sector and human priority areas, there has been a decline in social allocation and human priority ratios in the state in the 1990s. The declining trend in these ratios has posed a challenge to achieving the millennium development goals and targets set out for the Tenth plan. Expenditures by local government in the state have also been segmented, idequate, and unequally distributed. Although Kartaka is likely to meet certain human development targets in the Tenth plan in urban areas, public expenditure needs to be focused towards rural areas, in particular towards the backward districts of the state where human development indicators are far below the targets.

The study aimed at examining the recent trends in government expenditure with respect to those directly aimed at poverty alleviation, economic growth in general, and indirect poverty alleviation and expenditures on general services. The study found no radical change in the allocation to these three types of expenditure over the four-year period 2000-2004. There was, however, some evidence of general services gradually claiming a greater share mainly at the cost of the more growth-oriented public expenditures.

The study aimed at creating and promoting sustained reduction in poverty levels in India by improving the efficacy of fiscal policies in the provision of vital social and economic services, in terms of their impact on poverty reduction. In this study, poverty has been viewed in a comprehensive sense, involving not only income or nutritiol thresholds but also issues of access to services like education, health, water, and security. With increasing globalization of the Indian economy, and greater reliance on market forces, fiscal intervention becomes critical for combating trends towards increasing spatial concentration of poverty. The study has examined poverty issues in India focusing on four high poverty-incidence states, viz., Uttar Pradesh, Madhya Pradesh, Uttaranchal, and Chhattisgarh, where an extensive primary survey was undertaken canvassing household level and village level questionires. Although the incidence of poverty in India, measured by the head count ratio, has fallen by about 30 percentage points during the last 30 years, it has become regiolly more concentrated and urbanized, and in all the four states studied, more than 40 percent of the poor were found to be below 18 years of age. Gender discrimition, in terms of sex ratio and female literacy rate, is significant and in some cases rises as the incomes of the poor increase. New policy initiatives are needed to address this problem. The system of centrally sponsored schemes needs to be overhauled and involvement of Panchayati Raj Institutions in implementing these schemes should increase substantially. The study calls for focus on employment generation schemes, better targeted fiscal intervention, and emphasis on health and education as long term antidotes to poverty.

The objective of the project is to help Government of Assam design reforms in the area of resource magement and governce and strengthen its capacity to implement them. Major areas of the project are fiscal reforms that include improvement in resource mobilisation, public expenditure magement reforms to strengthen fiscal discipline, debt magement, and budgetary reforms, and improvement in governce and public magement to introduce cost-effectiveness and sustaibility of reforms. Fiscal reforms are critical to accelerating growth, reducing poverty, and achieve the millennium development goals of human development and gender equity.

Suga’s model has been used to estimate quarterly tax receipts and annual tax collection at the end of each quarter for the period 1994-95 to 2003-04 for which actual tax receipts data are available.

Projections of tax receipts for 2004-05 have been made by using projected values of the ratio of effective average tax rate in 2004-05 to the actual in 2003-04.

The CMIE data has been used to alyse CT accruing from a panel of four sectors (manufacturing, mining, electricity, and services) for 14 years 1989-90 to 2002-03. Since the four sectors are simultaneously affected by the general economic conditions prevailing in the country and by changes in government policies, it is assured that individual sectors do not operate in isolation and independently of each other. Accordingly Seemingly Unrelated Regressions (SUR) method for estimating the system of regressions has been used. CT has been estimated from individual sectors in terms of (i) PBT (profit before tax) both actual and estimated; and (ii) the upper bracket statutory tax rate. For manufacturing sector PBT has been estimated in terms of - infrastrucure, sales, Interest payments, debt equity ratio and depreciation. For other sectors in terms of – infrastructure, -sales and bank rate of interest.

This study undertaken for the Twelfth Fince Commission (TFC), examined the fiscal performance of municipalities in different states and seeks explations for their differential performance. Additiolly, it assesses the load on state finces on account of implementation of the recommendations of the Fince Commissions of States (SFCs). It also indicates options for the TFC on how it might contribute to improving the finces and functioning of municipalities.

Disaggregation of corporate tax (CT) according to the source of accrual may be useful in improving the precision of forecasts. In this paper, CT from the manufacturing sector in terms of level of profits (actual/estimated), contribution of the manufacturing sector to GDP and the upper bracket statutory corporate tax rate are estimated. The study shows that a 1 % increase in profits would lead to 0.34% increase in CT, a 1% increase in the contribution of manufacturing to GDP would result in 0.58% increase in CT and a 1% decrease in statutory tax rate has a positive effect on CT of the order of 0.44%.

The worsening of fiscal indicators since 1999-00 called urgently for a fiscal reform programme, aligned with a fiscal responsibility bill. A draft Fiscal Responsibility Bill was designed and fully drafted, scheduled to come into operation on April 1, 2005, and ending on March 31, 2010. This was fully coterminous with the award period of the Twelfth Fince Commission and anticipated the requirement placed by the TFC on all states. Annual path limits on the revenue deficit are specified in the form of two options. The choice between these options is vested with the state government. Simulations of expenditure compression under the two options are performed to eble the choice. The report also examines the debt swap scheme of the Government of India (GoI), in which Tripura has been a participant. Since the interest bill itself accounts for only 15 percent of revenue expenditure in Tripura, fiscal restructuring efforts have to be focused largely on non-interest expenditure, and on own revenue, both of which do fall entirely within the control of the state. The report makes a number of suggestions in respect of both these imperatives. The report also evaluates the debt swap scheme of the centre; examines avenues for enhancement of own revenue; and estimates staff redundancy by department. Filly, the report examines nineteen non-departmental PSUs, and suggests reform measures for each including, but not confined to, manpower reduction.