A group of officials chaired by the Secretary, Department of Revenue, Ministry of Finance, and based at NIPFP, redrafted the Indian Stamp Act, 1899. The Act which has been in use now for 100 years, has outlived its utility and is constraining both in terms of providing evidentiary value to transactions, as well as source of revenue.

The newly drafted Stamp Act, which will have to be vetted by the Ministry of Law and pass through normal channels of processing, has been substantially revised in respect of two areas (a) conveyancing of properties, including machinery for assessment of property values; and (b) treatment of financial instruments.

This study is an exhaustive scrutiny of the present system that includes rate structure, valuation, evasion of duty, administrative structure, collection of tax, administrative organisation, interface with other departments and legal considerations. Experience of other states and inter-state comparisons are used where required. The report recommends substantial reduction in rates of stamp duty for efficiency reasons as well as to contain tax evasion, and a series of administrative measures to modernise an essentially unchanged system of several decades in line with changed circumstances. It also recommends substantial changes in the relevant Act to control widespread evasion through under-valuation and avoidance of tax through legal loopholes.

The committee appointed by the Reserve Bank of India recommended a revision of the WMA limits of states to bring them in line with the size of their respective budgets. The recommendations also included a liberalisation of the special WMA limits and a tightening of the overdraft regulation scheme. Most of the recommendations have been accepted and implemented by the RBI

The central aim of the State Fiscal Study: Tamil Nadu is "to establish the capacity of the state of Tamil Nadu to absorb development aid effectively - that is, to determine its capacity to generate necessary counterpart funds in the short-term and, in the longer-­term, its capacity to generate funds to maintain the assets and programmes financed by development aid". The growth performance of Tamil Nadu has been impressive despite the modest natural resource base and it i;: ; among the most industrialized states in India. Although its finances are well-managed there is still room for selective fiscal correction. During the period under study, there was a significant rise in revenue expenditure at the expense of capital expenditure. In financing the expenditure, the revenue-raising effort has so far been concentrated only on tax revenue and attempts to augment non-tax revenues through cost recoveries has been a neglected area and therefore need clear revamping. Fiscal balance for most part of the study period was negative as also on the decline because of fast growth of revenue expenditure while signs of improvement in recent years have not proved to be long lasting. If the same fiscal trends continue, fiscal deficit is likely to assume disquieting levels due to increasing component of revenue deficit. In addition, capital expenditure is likely to shrink further, government debt is likely to be used more for consumption purposes rather than for investment, and maintenance expenditure will be on the decline. A simulated fiscal scenario with a set of suggested reforms, if implemented, can reverse these trends and turn the fiscal balances into surpluses. :

The objective of the study was to ascertain the fiscal performance of Assam in the past and to construct an alternative fiscal profile for the period 1997-98 to 2001-02 utilising the base scenario as a benchmark. Assam has been suffering from insurgency causing diversion of resources for maintaining law and order. It was declared a special category state in 1991-92 owing to its poor resource base. Non-discretionary expenditures (interest payment, wages and salaries, pensions and current transfers to local bodies) have crowded out resources for development resulting in inadequate capital formation with little or no provision for basic minimum services.

The study has proposed two alternative scenarios of reform. In the first reform scenario, state-specific initiatives have been suggested, which are (a) improving the tax receipts; (b) augmenting non-tax revenues; and (c) restructuring expenditure. The quantitative impact suggests that the state's tax revenues would improve from the level of 4.3 percent of GSDP in 1997-98 to 6 percent in 2001-02. Likewise, non-tax revenue would improve from 1.76 percent to 2.24 percent. Expenditure on wages and salaries would decline and capital outlay would increase. Even while the situation would improve with this reform package, it would still not be enough to restore the fiscal health of the state.

The model law is aimed at providing the States with a statutory framework for introducing a system of VAT. It would help states in having harmony in the structure and procedures of the proposed VAT in the country. It is observed that in the absence of any model before the states, varied systems causing diversity in the structures and procedures have cropped up.

The objective of the study was to prescribe ways to put state-level finances on a sound footing, and improve the developmental impact of public spending and sectoral policies.

The purpose of this World Bank sponsored study was to review the performance of the finances of the Government of National Territory of Delhi (NCT), assess its fiscal stance, and suggest options for sectoral and fiscal reforms to improve and strengthen its finances. The focus of the study was on two sets of questions: (i) what, if any, are the major fiscal issues facing the Government of NCT?; and (ii) what reform measures would best address those issues?

The fiscal study of Delhi differs from the fiscal studies of other states in two respects

The report was finalised and submitted to the World Bank (the sponsors) and the Government of Haryana. This is a detailed study of the trends in Haryana state finances and its various components in the backdrop of the macroeconomic features of the state. It also examines some specific sectors like education, power, irrigation and transport that have a direct bearing on the public finances of the state and makes estimates of additional investment required, if any. A number of suggestions regarding policy are made in the area of taxation, cost recovery and expenditure compression. Also projected are budget­ary components over the medium term under a 'no reform scenario' (incorporating the power sector reforms already started), and 'additional investments with revenue reforms scenario'. The results indicate that only with reforms can additional investments, needed to maintain and accelerate growth, be undertaken.

The Infrastructure Development Finance Corporation (IDFC) sponsored this study for examination of broad trends in the budgetary components of the Government of Maharashtra. The report also incorporates projections of the same over the medium term under alternative sets of assumptions regarding different policy scenarios, including the 'best case' and the 'worst case'. The study highlights the recent deterioration of the government finances in Maharashtra and underscores the need for corrective action.

This paper attempts to identify the main sources of vehicular pollution in Delhi. It highlights the importance of traffic scenarios and modes of transport on the emissions, and underscores the need for policies to induce shifts to more efficient transpoIt4tion modes with lower energy consumption and emission. The paper makes several specific recommendations to: (i) induce shifts to more efficient transport modes; (ii) encourage use of new technology alongwith phasing out of old vehicles; and (iii) induce production and use of cleaner fuels.

This report proposes, and provides the design for, a crop-specific presumptive supplement to the land revenue, which like the land revenue will be land-based and levied per acre. The supplementary levy is to be related, on the basis of income norms obtained from field surveys, to observed crop yields, which will serve as the presumptive indicator. The case for a crop-specific levy is predicated on the assumption that returns to cultivation are not equalised by cropping pattern shifts, even within a homogenous agro-climatic region, because of supply-side entry barriers in terms of soil and irrigation requirements, and further constraints imposed by the need for bilateral tie-ups between the cultivator and buyer in sunrise sectors like seed propagation. The design for the levy proposed includes exemption for crop failure, whether idiosyncratic or non-idiosyncratic, in the form of a threshold yield below which the tax does not apply. The only information required for each assessment year is a listing of cultivators growing any of the crops in the subset selected for taxation. and an identification of those in each list whose yields did not fall below the stipulated exemption threshold. Such information will be easily and costlessly obtainable locally, which is why levies of this type are feasible only at panchayat level. The list of crops for consideration will first be identified by panchayats in accordance with the local ordering in terms of profitability, and forwarded to a state-level agency, which will define the taxable subset based on surveyed data. It is recommended that the revenues so raised should be jurisdictionally retained for improvement of agricultural and other infrastructure. This will facilitate compliance, give panchayats a stake in enforcement, and enable downward accountability in place of the upward accountability ensured by present systems of audit and control of government expenditure.

The NIPFP collaborated with the Madras School of Economics and the World Resources Institute, in conducting a cross-country study on Fiscal Instruments for Environmental Sustainability for three countries, India, Mexico and Poland. The study looked into the relevance and effectiveness of fiscal mechanisms for addressing environmental problems. The critical issue for the study was economic and fiscal mechanism effectively addresses the environmental problems?

As part of the study, the pricing policies and practices in respect of energy, water and solid wastes were examined on the basis of secondary evidence and published reports.

The study focused on the system of state transfers to the municipal bodies, addressing itself to one basic question - what should be done to improve the system of financial 'transfers' from the state governments to municipalities or what kinds of norms and rules should govern the system of transfers that would allow the municipalities to make better use of them and conform to the basic canons of simplicity and transparency?

This study, sponsored by the UNDP as part of an overall project to study tax administration in India, examines the administration of motor vehicle tax in three states:Orissa, Punjab, and Maharashtra. Looking briefly at the tax structure in these states, it examines the major legislative provisions and practices related to the various aspects of administration of this tax including collection, enforcement, and computerization. It also makes some suggestions for improving the administration of this tax in terms of cost of collection, taxpayer convenience, and general economic efficiency.

Why is the performance of property taxes in India so dismal? What has constrained the property tax system - the prevailing methods of property valuation and assessment, the administrative and enforcement procedures or other factors? The study reviews the existing procedures and practices and suggests an agenda for improving the tax system.

This study is a part of the UNDP-supported programme on Policy Studies on Economic Reforms.

This was the theme paper presented at the seminar on Issues Before the Eleventh Finance Commission. The paper covers major issues of fiscal federalism in India at the present juncture, keeping in' view the terms of reference of the Eleventh Finance Commission. After covering the essential features of the macroeconomic imperatives before the governments at the central and the state level, it critically reviews the revenue sharing and grants system currently prevailing, and makes suggestions for changing them. It reviews the thorny problem of indebtedness of the states, and examines ways in which the Finance Commission can tackle the issue.

Abatement of mounting health and other costs arising from environmental degradation require major changes in government policy. Governments and others, such as, industry quite recognise that regulations should be supplemented and combined with a system of economic incentives that internalise the externalities arising from pollution in a cost effective manner. The use of economic instruments to address environmental problems has been endorsed by the Government of India in its policy statement for abatement of pollution in 1992. The statement asserts that, keeping in line with the 'polluter pays' principle, the introduction of economic instruments such as effluent charges should be investigated. The study addresses the task of designing effluent charges which can be introduced to control water pollution.