The views presented in this chapter are those of the authors and are not to be interpreted as necessarily indicating the position of the International Monetary Fund. Willem Buiter would like to acknowledge support from Ford Foundation Grant ‘Economics, Politics and Policies of Stabilization, Structural Adjustment and Long-term Development. ’
The immediate product of spending the summer of 1982 in the Fiscal Affairs Department was Buiter (1983a).
Since July 1991 the central government has also initiated major trade and industrial sector structural reforms. This included the dismantling of most central government industrial licensing, the opening up to the private sector of many industries previously reserved for the public sector and the liberalization of foreign investment. Trade liberalization has consisted in removing quantitative restrictions on capital and intermediate goods, and reducing peak tariff rates from 400 per cent to 50 per cent. In February 1993 the government announced full convertibility of the Rupee on the trade account. Non-tariff barriers (such as licensing) imposed by state governments were, however, left untouched.
There has not been any reduction in public sector employment, and the bloated public sector payroll has in fact been boosted further through the granting of inflation-indexed wage increases to government employees.
As a ratio to GDP revenues from direct taxes—about 2.7 per cent in 1992/93- have not changed since 1950/51 (Government of India, 1993a).
6 The following table is instructive:
Table 16n.6 India: number of sales tax rates in selected states, 1991-92
Number of tax rates
General rate of sales tax (%)
Source: Sales Tax Systems in India: A Profile, NIPFP, 1993
There are over a thousand public sector enterprises, about 700 of which are owned by the states. As of 31 March 1992, there were 246 central public sector enterprises (excluding 8 companies with central government investment but without direct responsibility for management, 6 insurance companies and 3 financial institutions). Of these, 9 were under construction, 72 in the services sector and 165 in manufacturing (Government of India, 1993b).
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Macroeconomic Dimensions of Public Finance: Essays in Honour of Vito Tanzi.
Contributors: Mario I. Blejer - Editor, Teresa Ter-Minassian - Editor.
Place of publication: London.
Publication year: 1997.
Page number: 408.
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