Accelerating the flow of investible resources into urban infrastructure and services, viz., water supply, sewerage and wastewater disposal systems, solid waste collection, treatment and magement, citywide roads, and street lighting is central to India’s economic growth and poverty reduction agenda. Current investment levels in urban infrastructural services, estimated at about 2.25 to 2.50 per cent of the total development budget, are far too low in relation to the requirements, with no sigls that these levels will be stepped up in the short run. Indeed, fiscal adjustment aimed at reducing budget deficit may force a cutback in public investments in infrastructural facilities. What altertives exist for spurring investment into urban infrastracture services? Taking note of the emergence of a capital (debt) market in the country and its sensitivity to meeting the infrastructural needs of municipalities as is demonstrated by the examples of Ahmedabad, Bangalore, Hyderabad, Indore, Ludhia, Madurai, gpur, shik, and more recently, Thane, and simultaneously examining as to what makes some municipalities to gain access to the capital market and other municipalities to continue to rely on state government grants and loans, this study entitled Fincing Municipal Services Reaching Out to Capital Markets provides a framework for municipalities to assess their creditworthiness for tapping the scent but expanding capital market for fincing urban infrastructural services.

A major shortcoming in Indian fiscal literature is the lack of attention to fiscal issues at local levels, particularly in rural areas. Much of the literature on fiscal decentralization is focused on fiscal arrangements between the centre and the states. Very little is known about public finces of Panchayat Raj institutions and fiscal relationship between state and Panchayat Raj institutions at district, block and village levels. The few studies that look at these issues are descriptive and impressionistic and are not based on reliable data.

This study is an attempt to undertake a comprehensive alysis of sub-state rural fiscal decentralization and Panchayat finces in Kartaka. It critically examines the delegation of functions in terms of various schemes and recommends reform options in consolidating the schemes. The alysis also shows virtual non-existence of fiscal autonomy at district and block levels. The alysis of own revenues, expenditures and transfers at the village level, based on the primary data collected from 636 village panchayats brings out very interesting insights. The study makes a number of reform proposals to enhance own revenues, redesign transfers and improve efficiency of expenditures.

Setting appropriate prices is indispensable to providing adequate water to India’s growing urban population. Water in most Indian cities and towns is underpriced, with damaging long-run consequences for households who have limited and poor quality water services and for water supplying entities who are uble to invest and expand water coverage. Most water supply entities – be these the Public Health Engineering Departments (PHED), state or city- level water boards, or municipal governments, run at a loss, and cover the loss – defined as the gap between revenues from the sale of water and cost of water provision – from government subsidies and accelerated depreciation of capital. The result is a low- level equilibrium low tariff, poor services, and constraints on access, especially of poor households. While the need for appropriate pricing of urban water has been long stressed and is widely recognized as central to broader urban sector reforms, what constitute water price reform remains an elusive and emotive issue. Moreover, the goals and objectives of water pricing are often conflicting. Using city- level experiences of water pricing, particularly in respect of the size of the consumer base, multiple instruments of charging, price discrimition between different water user groups, and price-cost linkages, this study titled as Urban Water Pricing Setting the Stage for Reforms , provides a framework that spells out key areas of reform, objectives that may govern water pricing, and parameters of tariff ratiolization.

Actual and estimated values of Corporate Tax and Income Tax have been compared and simulated forecasts obtained for 2003-04 and 2004-05.

This study assigned by the Planning Commission revisits the issue of budgetary subsidies in India and provides an estimate of the implicit budgetary subsidies in 1998-99 both for the centre and each of the 25 states and also combined estimates for the centre and the states. It discusses critical policy issues and suggests a reform framework. For the centre, the subsidies were estimated at Rs.79,828 crore amounting to 4.59 percent of GOP (at current market prices) and constituting 53 percent of the net revenue receipts. Of this, social service subsidies were estimated at Rs. 14,908 crore and economic service subsidies at Rs. 64,920 crore. While subsidies are shown for each state separately, the subsidies for all the states taken together amounted to RS.I ,55,923 crore. Of this, social services accounted for- 48.9 percent or Rs. 76,135 crore and economic services for 51.1 percent or Rs. 79.789 crore. As percentage of combined CSOP of all states. the subsidies of states taken together amounted to 11.11 percent of which the share of social services was 5.42 percent and of economic services 5.68 percent. Subsidies for the country as a whole (excluding inter-governmental adjustments) work out to Rs.2,35.752 crore or 13.54 percent of COP. The share of social services was 5.23 percent and of economic services 8.31 percent. This study has made a refinement about the categorisation of the subsidies according to the nature of the head under which subsidies were provided, viz., merit I, merit 2 and non-merit both-under social and economic services and for the centre and the states. This conceptual distinction suggests that while the merit subsidies are justified, non-merit subsidies do not commend themselves for such a treatment. The study has focused on a package of measures for reforming the subsidy regime both at the centre and states.

The report sought to highlight the features special to the state of Chhattisgarh, which have an adverse impact on its fince, by way of higher cost of delivery of services and/or lower realisations in the form of tax and non-tax revenue. A principal feature of the state that contributes adversely in this manner is the forest cover. The state is expected to protect and conserve the forests in the larger interest of the country. This process involves not only a direct cost of conservation, but also an indirect cost in terms of poorer resource use, lower incomes, and hence lower tax as well as non-tax realisations. On the other hand, lower density of population implies higher costs of providing basic services to the population. A basis for correction for this disability was proposed. Another interesting feature of the report is exploring altertive approaches for disbursing allocations towards calamity relief, where a case was made for increased emphasis on drought as a calamity and a re-think proposed, on the basis for allocation of this amount among the states, with greater emphasis on drought proneness, however it be measured.

Sales tax is one of the most important state taxes in Assam, yielding over 65 percent of its own revenue with central sales tax (CST) contributing about 20 percent of total sales tax revenue. However, the overall low performance of sales tax revenue has called for its reform. This study has recommended that introduction of VAT would immensely benefit the state as VAT is not only a buoyant source of revenue, but would also be efficient. The reforms necessary to strengthen the organisation for efficient administration of VAT to be adopted prior to its introduction include adequate client services to promote voluntary compliance; identify stop filers and defaulters; and maintain low administrative and compliance costs. Magement information system is yet another key to tax administration. It is suggested that recent advances in the field of information technology be grafted in the areas of VAT magement in Assam. The introduction of VAT would impact state’s own tax revenue in three ways, mely, (I) extension of the tax base into stages subsequent to the first-point up to the retail stage; (ii) providing set off on tax paid on inputs and in previous stages; and (iii) changes in the structure of tax rates. The study also attempts to estimate revenue neutral rate (RNR) and the likely combined losses of revenue, if the agreed RNR of 12.5 percent is adopted. It has also been identified that in addition to having revenue implications for the state, VAT would have direct as well as indirect impacts on several macroeconomic variables.