As trends in air pollution levels in most Indian cities reflect deterioration in air quality, there is a growing emphasis on finding and implementing methods and instruments that are more efficient in controlling air pollution than those which have already been tested and tried. The focus is on more innovative approaches, such as economic instruments based on 'pollution pays principle’ and command and control measures. This study assesses the feasibility of economic measures to prevent and control vehicular air pollution in Delhi. It estimates air pollution emissions of automobiles and suggests cost-effective measures to reduce vehicular emissions. The persistent and rigorous implementation of pollution control laws is also emphasised.

The study suggests measures for the augmentation of the Consolidated Fund of the State to supplement the resources of municipalities. After assessing the needs of municipalities, the study estimated the revenue resources that can be tapped by the municipalities under the tax provisions delegated to them. Revenue gap, or the difference between the need and availability of own resources, would indicate the requirement resources to be transferred. The study undertaken for the Eleventh Finance Commission has assessed the revenue gap of municipalities and projected their financial requirement for the time period 2000-01 to 2004-05.

The project aimed to estimate tax revenues of the three levels of government for the country as a whole, and individual states in a disaggregated manner, i.e., by individual taxes for the years 2000-01 to 2004-05. The methodology used, as required by the sponsor, is that of projection on the basis of assumed growth rates of (relevant parts of) GDP/SDP and estimated buoyancies for the period 1985-86 to 1997-98, for the projection of central and state taxes. At the state level, buoyancy-based estimates are not feasible in all cases, and a variety of estimation methods, essentially based on past growth of tax revenue are used. Owing to limited availability of data, local taxes are assumed to grow in line with the growth in SDP for different states.

This study was commissioned by CBDT to investigate agricultural taxation as it is presently practised in India, and the possibility of transference of powers of taxing agricultural income from the state fiscal domain to the central government. The study provides outlines of a crop­-specific levy on land calibrated in physical rather than value units, levied in rem (on land regardless of ownership characteristics) rather than in personam, stratified by crop, and/or irrigation status, with provisions for catastrophe exemption. The levy carries an informationally parsimonious design which requires updated information only on area sown to taxable crops, and identification of those cultivators in each list whose yield falls above the threshold (ex­emption) yield. Even limited information of this kind can be obtained only at village level. Upward transmission to a higher-level government will carry transmission losses and intro­duce scope for corruption. The study does not, therefore, recommend levy of agricultural taxation at any higher than panchayat level. There are also recommendations for expansion of central fiscal perimeters without implications for states' rights (Article 246 of the Constitution), which can immediately be implemented.

The study, a first of its kind in India aims at designing an intra-firm emission trading for an integrated steel plant. Trading scheme is designed for suspended particulate matter (SPM), a toxic air pollutant emitted by steel plants. Further, it assesses the potential savings associated with the trading scheme vis-a-vis the current regulatory approaches to control SPM. Results of the study demonstrate that emission trading is more cost effective than the existing regulatory system. They also show that intra-plant trading would yield significant savings to the industry while securing improvement in ambient air quality in the focused geographical area. Imple­mentation of emission trading would, however, require a reform of the existing regulatory framework.

The study is focused on discriminatory tax treatment of domestic vis-a.-vis foreign products. Tax discrimination is identified in terms of effective rates of protection (ERP) and differential composite duty rates on imports and domestic products. In analysing the impact of central, state, and local taxes on competitive tax disadvantages of domestic producers vis-a-vis foreign products, the study reveals that even though most products are subject to higher net protec­tion, some products suffer competitive tax disadvantage in domestic as well as international markets because of inverted duty structure, input taxation without full set off and nil or low customs duty. A rationalisation of the tax system to ensure a level playing field between im­ports and domestic products, through immediate removal of all exemptions, end use conces­sions and input taxation along with phased reduction in high duty rates and their number, is recommended. In fact, a minimum customs duty should apply to all imports including imports of products currently not produced in the country for giving the right signal to domestic pro­ducers to venture into production of such products. The level of minimum duty can also be lowered in line with reduction in high duty rates.

The Ministry of Petroleum set up a committee of three members (the authors of this report) in September, 1999, to examine the State Surcharge Scheme applied to controlled petroleum products. The committee was required to suggest necessary changes in the extant system in view of the ongoing decontrol of the petroleum sector, in general, and specifically the emer­gence of large standalone refineries. The state surcharge scheme essentially prevented tax exportation, using the administered pricing mechanism employed by the Oil Coordination Committee. The final report examines the history and details of the scheme, assesses the magnitude of the problem - particularly with reference to the impending decontrol of the sector - and recommends modifications keeping in view its practical feasibility and suitabil­ity as a precursor to the dismantling of administrative pricing.

The study aims at a diagnosis of the existing degree of gender inequality in India through gender segregation of the relevant macrodata; valuation of the existing non-NAS unpaid work of women; gender disaggregated benefit incidence analysis of public expenditure and to pre­scribe policy suggestions to build in a gender sensitive national budgeting process.

After assessing the current situation in general and recent policy initiatives in particular, the report chalks out a reform programme for the state that is designed to meet the identified problems, and alleviate the financial bur­den on the state government.

The study gives a brief description of the salient features of the taxes/duties, fees and other charges assigned to the three tiers of government in Sri Lanka, and identifies major issues relating to provincial taxes in the context of fiscal devolution there. Broad directions for re­form of the system of fiscal devolution and proposals that deserve consideration in the context of rationalisation of tax design in Sri Lanka are discussed. It throws some light on the desirable characteristics of the inter-governmental transfer mechanism if it is to encourage exploitation of full revenue potential by different tiers of the government. An attempt is made to estimate revenue potential of the major provincial tax as well as that of central taxes.

This study examines the overall policy framework for the management of capital account in India and Malaysia, and the relation between this regime and those for monetary and macr­oeconomic policy and the exchange rate. India and Malaysia, today in mid-2000, share a similarity of capital account regimes that would have been unthinkable, a decade ago. In both countries, there is full capital account convertibility for non-residents, but tight controls on outward flows of capital from residents. There is a lesson in this that carries validity beyond the specifics of the two countries studied. The advantages of free cross-border flows of capital and of access to a global savings pool remain unquestionably valid. However, in emerging markets with institutional weaknesses in the financial sector, it is damaging to focus on the gains of free capital flows without the institutional consolidation that would prevent recur­rence of episodes of volatility.

In this paper, human development is interpreted as an 'abstract conceptual variable' which cannot be directly measured in a straight forward manner, but is linearly determined by the interaction of a large number of causal variables (socio economic indicators). An estimator of the human development index is proposed as the weighted average of principal components of the standardised causal variables, where weights are variances of successive principal com­ponents.

natural logarithm of real gross domestic product per capita) and data for 174 countries, as in HDR 1999 of UNDP. Later the set of socio-economic indicators, which determine the human development, is enlarged. Eleven socio-economic indica­tors are used and human development indices for 51 countries, data for which are available from Human Development Report (HDR) 1999 of UNDP, and World Development Indicators (WDI) 1999 of the World Bank, are determined.

Ranks of countries obtained by the principal component method (the only difference be­tween the two is in standardising the causal variables), and Borda ranks are almost perfectly correlated, where as HDI and Borda ranks have smaller correlation.

In the computation of the indicators as many principal components as the number of causal variables are used. By a little rearrangement of terms, coefficients of the causal vari­ables are compiled. These coefficients, in turn, indicate the importance of different social indicators in determining the HDI.

In the first exercise, using the same social indicators as used for computing HDI in HDR 1999, income (loge Y) is found to be the most dominant factor in determining human develop­ment. Next, in order of importance, are LE, CGER and ALR. Further, in the exercise with eleven social indicators, income is the most dominant factor. Then, in order of importance, are available health services, environment, LE, ASW (access to safe water), CGER, etc. Thus the four variables used in the UNDP exercise maintain their order of importance as loge Y, LE, CGER and ALR. It is noted that HDI in HDR 1999 assigned higher weight (two third) to ALR and lower weight (one third) to CGER to compute the index of educational attainment. The result is at variance with the UNDP assumption.

Titled as Approach to State-Municipal Fiscal Relations: Options and Perspectives and divided into six sections, the report documents the steps that are central to addressing the state-municipal fiscal relations as envisioned in the Constitution (seventy-fourth) Amendment Act, 1992, and Article 280(3)(c) of the Constitution. An earlier draft of the report was dis­cussed in a workshop for the chairpersons and members of the second finance commission of states.

Pollution from industries constitute a considerable part of the total pollution in India. But reliable information on the nature and level of emissions by plants/factories is not available. This makes it difficult for regulators to come up with cost effective strategies - in terms of design of environmental regulations as well as their enforcement - for industrial pollution control. Therefore, the need is to adopt alternative ways for estimation of environmental parameters as complements to direct measures of such parameters at the firm level. This report uses one such alternative of estimating these parameters from information on pollution intensities and abatement costs from secondary sources. The study suggests introduction of a water pollution charge, and recommends that the regulator should prioritise monitoring effort and allocate monitoring resources more efficiently by targeting industries characterised by relatively high effluent discharges and low costs of pollution abatement.

The project recommended a rational design for CST taking into consideration the issues of a com­mon market, efficiency, and inter-jurisdictional equity. The study included issues related to declared goods, consignment tax, and taxation of services.

The study examines the implications of the mechanism of transmission of external assistance to the states on terms and conditions different from the original terms and conditions. It quantifies the gains or losses between the centre and the states in the process of transmission of external assistance as Additional Central Assistance (ACA) on the terms and conditions of plan assistance. Further, it argues that instead of the present system, external assistance should be transmitted to the states on the original terms and conditions envisaged by the creditors except for one single modification. In particular, grants should be transmitted as grants and loans should be transmitted on all the original terms like grace period and maturity period, but the rate of interest should comprise two elements: the interest rate in foreign currency terms and anticipated depreciation rate. This would cover the exchange risk for the states as well as the centre. It would also expose the states to the true costs of external assistance.

The mineral sector, an important segment of the Indian economy, is completely dominated by the public sector. This study enlisted various taxes and levies by all levels of government in India and analyzed the impact of the overall tax regime on the mineral sector with a view to suggesting possible reforms. For designing a tax regime, the specific issues that need to be resolved are (i) how much to tax; (ii) how to coordinate the two roles of the government- one as the owner of the mineral resources, and the other as an agent responsible for achieving economic and social development; (iii) whether a separate tax regime is needed for the mineral sector; and (iv) how to combine different levies in a multi-levy system. The profile of the major taxes and non-taxes in India, levied by all the three tiers of government - central, state, and local reveals that they are corporate income tax, union excise duties and custom duties by the central government, prospecting and mining lease fee, royalty, dead rent, surface rent, stamp duty and registration fee, sales taxes, and environmental protection fees, and charges by state governments and tax on entry of goods, besides other general taxes. An assessment of the burden of the various levies on the prices of selected minerals and variations across states has been attempted by adopting two measures of tax impact on mineral prices, namely, the domestic tax burden and the effective rate of protection (ERP). From a review of mineral levies in India, the tax system does not appear to be designed to take into account the risk that characterizes mineral exploration and extraction. In the medium-term, the following changes are recommended - rate rationalization of the income and corporate tax structure; conver­sion of the specific royalty rate structure into ad valorem structure; combining state sales tax with royalty, abolition of the octroi and other local levies that hinder the transport of minerals; and rationalization and simplification of the various local levies.

The primary objective of the study is to investigate pricing policies of Indian hotels and to examine their implications on the industry on one hand, and on tourism and the Indian economy, on the other. At present a number of hotels quote two official prices for any given category of room a rupee price for the Indian client and a dollar price for the foreign client. The study aims at examining the optimality of the tariff structure and the need, if any, for a changeover from the dual tariff structure to single tariff in regard to the future full convertibility of the rupee. In addition, it also tries to analyze the current pattern of the central and state taxation policies, especially those pertaining to the expenditure tax and luxury taxes impacting the hotel industry, and to suggest a rational tax structure.

This report outlines a strategy that will set the state on a path of eco-friendly, sustainable development, aimed at expanding income and employ­ment opportunities. It analyses the reasons for the slow pace of development in the past, despite substantial financial support from the central government and a low population den­sity. After spelling out goals for the economy, it elaborates the underlying fiscal policy frame­work and sectoral strategy necessary for realizing these goals. A vastly expanded role for the private sector and community is envisaged, and the introduction of technology and modern scientific methods to help the state overcome its natural handicaps of inaccessibility is emphasized.

This study was sponsored by the CBDT under a larger UNDP project entitled, "Public Sector Reforms: Redesigning Management Systems and Procedures for Enhanced Resource Mobili­sation through Direct Tax Systems". The report analyses the impact of tax incentives to chari­table trusts and for charitable contributions on effectiveness and revenues.