An autonomous research institute under the Ministry of Finance


Cost Benefit Analysis of Area Based Exemptions in Backward States

Publication date

Jan, 2009


Report submitted to the Ministry of Finance


R. Kavita Rao, Jhumur Sengupta


This study provides an assessment of the impact of the incentive schemes in income tax and excise duty for encouraging investment in backward areas of northern states, such as, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand. The study indicates that there is little to suggest long-term sustainability of the investment that came in response to the incentive regimes. The underlying constraints like infrastructure bottlenecks in Himachal Pradesh would limit the benefit that the state can derive in the long-run.

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