Indirect Tax Reform and Fiscal Federalism in India

Raghbendra Jha

ASARC Working Papers from The Australian National University, Australia South Asia Research Centre

Abstract: 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. This paper 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 ensure the stability and predictability needed to ensure that India's state driven growth blossoms and attains full fruition.

Keywords: Fiscal Federalism; GST; federal transfers; India (search for similar items in EconPapers)
JEL-codes: H2 H5 H6 H7 O5 (search for similar items in EconPapers)
Pages: 55
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-pbe, nep-pub and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pas:asarcc:2013-09

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