Looking merely at direct taxes, it is often suggested that India is an under-taxed nation. This, says R. Vaidyanathan, does not take into account the speed money paid for government service. This rent-seeking makes the nation high-taxed.

THERE is a view among some experts that India is an under-taxed economy. Many a time Finance Ministers believe in this and exhort people to pay their dues.

Advertisements are issued to induce people to pay taxes and novel schemes are suggested before every Budget to augment government revenues. One of the common arguments is based on the share of taxes to GDP and it is suggested that it can be much higher. Another is in terms of the composition of the taxes - direct and indirect - and it is suggested that the latter, which are regressive, are larger share of the pool.

Table 1 gives the share of taxes to GDP for select years from 1991. The share of taxes, both direct and indirect, has been around 15 per cent of GDP in the last decade and half. The share of indirect taxes was of the order of 11.5 per cent and that of direct taxes 3.6 per cent.

Based on this data of direct taxes to GDP of nearly 4 per cent, many experts, particularly of the Left persuasion, argue that we are a under-taxed nation from the view of the direct taxes. But, as we will show, they do not take in to account the payment to be made to government employees (variously called bribe, rent seeking, speed money, lubrication, etc.) for carrying on any activity and to that extent the total taxes are much higher than reflected.

Table 2 gives the level and composition of taxes of both Central and State governments in the last decade. A slight shift in the proportion of direct taxes from 1991 to 2003 is seen. It has gone up from 14 per cent of all taxes to nearly 24 per cent during this period when the proportion of the indirect taxes came down from 86 per cent to 76 per cent.

A substantial drop is seen in the Customs duties due to our international commitments. Excise duties declined from 28 per cent to 23 per cent during 1991 to 1996 and by a similar magnitude later. The share of personal income-tax showed an increase from 6.6 per cent to 9.9 per cent. As personal income-taxes and excise duties are shared with State governments, there is no enthusiasm for the Centre to reform them.

The aggregate taxes do not reveal the full picture of evasion and coverage. Table 3 provides the number of returns filed by salaried and non-salaried persons in 1999-2000 according to the I-T Department.

It says that there were no salaried persons earning more than Rs 1 crore annually and in all only 200 persons above Rs 25-lakh. In the case of self-employed, the number is around 900 in the Rs 25-lakh category with none in the Rs 50-100-lakh category.

From Table-3, it looks as if a relief fund should be created for all our top film-stars, cricket players, surgeons, lawyers, chartered accountants, architects, tax consultants and other self-employed persons. They all seem to be in distress!

Table 4 provides the number of returns from some categories of services as published by the I-T Department. The numbers speak volumes about the coverage and the nature of underlying collections.

The whole country there are apparently only 10,539 utensil and 5477 furniture shops in the taxable category. Pinch yourself.

Immediately the argument will be to strengthen, enhance, improve and network the I-T Department. The issue is not that. It is much more serious and cancerous. If you visit the Postal Department officers’ quarters in, say, Mumbai you will find mostly cycles and scooters.

But if you visit the residential quarters of the staff of Direct or Indirect Tax Department, you may find expensive cars parked there. That should provide clues to the issues facing us.

At the same time we find that the income of government employees rising faster than the inflation rate in the last thirty years.

Table 5 provides the increase in salaries of public sector employees in relation to inflation. The emoluments have risen 3610 per cent from 1971-72 to 2000-01 when the Consumer Price Index climbed 1440 per cent. This implies the public sector employees are net gainers with their real income well protected.

Hence decline in the real income cannot be a reason, if at all it is justifiable, for rent seeking from ordinary citizens.

The West Bengal government wants the center of the largest insurance functions to the health sector, but also a clarification on the true budgetary situation of the application.

Dr. Surya Kanta Mishra, ’s Health Minister of State, said here on Thursday, it will soon take the EU finance ministers on the budget for 2004-05.

“After the common minimum programme of the current government, three to four percent of GDP was estimated that for the health sector. But what we do in the budget do not find that reflection on the intention, “he said in a seminar organised by the FICCI, Indian Institute of Social Welfare & Business Management.

The minister said the USA have been clamouring for increased allocations in relation to the sector in recent years. A little earlier would have allowed households with less than one percent of GDP to health.

The government grants to industry and entrepreneurs to explore the country “hidden” competitive advantages and dismantle all trade barriers and controls barriers to international trade and economic growth, the former European Union Finance Ministers , P. Chidambaram said today.

Terming the government is “ambivalent” vis-à-vis the international trade and economic openness, India said it was already part of the global economy, and it could become the biggest hub of development in next ten years in several sectors such as banking, De insurance, financial - Services and research and development, if only they could develop.

Mr. Chidambaram was to provide a briefing on “Competitiveness of India Inc. in the global economy after the opening ceremony of the silver anniversary of the Department of Management Studies (DOM) of the National Institute of Technology (NIT).

International trade has been a major engine of economic growth and India could no longer afford to remain isolated in a world increasingly interdependent. His failure to recognize, during the four decades after independence led to a serious crisis in early 1990, when the country of gold reserves were pledged for the short term, an increase of the loan.

The country has been promoting open market economy falls within the framework of the World Trade Organization. The development of a world-class infrastructure with public-private partnership, investment promotion, information technology and international trade were imperative for the use of competitive forces in the country. The enormous potential of human resources available.

Paying rich Tributes to farmers for their contribution to the country, economic growth and one of the largest producers of wheat, rice and sugar, M. Chidambaram, however, said the farmers in India there is more than most “cheated segment” because it was rejected international prices for its products. While the USA and European countries have huge subsidies for extension their farmers, Indian farmers were the burden of “negative subsidy. If only farmers have received international awards and freedom on the industry, it would lead to a much higher productivity, he said.

The former vice-chancellor of the University of Bharathiar, B. Ilango, invited the NIT Faculty efforts that the leaders of vacuum in the country, channelising the talents of students. ICT Director (in charge), S. Subramanian, invited the French overseas departments, to identify industry’s problems and come up with solutions.

The head of the DOM, G. Kannabiran, said the department has been highly evaluated consistently in the B schools, and there was a growing School of Management within the structure of NIT. Besides the creation of tie-ups with B-schools abroad, was planning the establishment of research centres in new areas and a centre of development management.

The Director-General, Sebi, D. Ravi Kumar, Dean, students, crafts, nit, KA Kuppusamy, and the chairman of the Association of Management ICT, Sumedha Mukherjee, spoke.

New Delhi: Who will be the next heads of two leading Indian Institute of Management, IIM Ahmedabad and IIM Bangalore? The race for the best work in the country’s most prestigious business schools has now reduced that four of the best in both FACULTY IIMS.

Two of them were IITS, between one third and the Institute of Technology in BHU, and between them, they cover some key areas of administration and the economy: capital markets and international finance to ‘infrastructure, technology and business transformation.

The HRD ministry sources have confirmed to express, strengthening Pankaj Chandra IIM-A as director of IIM-B and K Sameer Barua, including by IIM-A, as director of the IIM-A. The file is registered with the department of human resources and training, where they go to the Secretary General of the Cabinet for approval by the Minister of the Interior, followed by the Prime Minister.

The ministry also named as “the second candidate,” J Ramachandran of the IIM-B for the top job at IIM-B and Raghuram G. IIM-A for the management of IIM-A. These names were submitted, HRD ministers to approve, on the basis of recommendations of the research-cum-selection committee, headed by CEO and Repeated IIM Calcutta’s governing body president Ajit Balakrishnan.

The official announcement should be made next week as IIM-A director Bakul Dholakia enters the retirement age to the 9th October.

BARUA is considered an expert on capital markets, portfolio theory and international finance since 1980, he is ready for the strategy papers by the finance ministers, governor of the RBI and FICCI. BARUA, son-in-law of the CPI leader AB Bardhan, made his MTech in Industrial Engineering and Operations Research at IIT Kanpur.

Author of the Great Indian Scam: The history of hypothermia crore RS 4000, Barua is currently a member of the IIM institution of the function. He was president of the MBA program two years between 2002 and 2004, there were, if the increase in the maximum seats. It was also the Investment Committee, cinema body IIM-A, and received the distinction “Best Teacher ‘Award in several IIM.

Raghuram, a professor of IIM in public systems group, it is an expert on transport infrastructure and systems. A BTech (electrical engineering) IIT Madras, he received his MBA from IIM-A-PhD and the Kellogg School. He taught at the Kellogg’s and the ABFreeman School of Business at Tulane University before IIM-A.

His most recent peak profiles of work has been completed Indian Railways and its reversal. Pankaj Chandra BTech of the Institute of Technology, BHU, and has a Ph.D. from the Wharton. He is currently Professor of Operations & Technology Management in IIMA and is chairwoman of the doctoral program. He taught at McGill University, Montreal, universities of Geneva and Philadelphia and universities in China and Japan.

Chandra’s areas of interest are Supply Chain coordination and management of technology in manufacturing. It was in conjunction with knowledge of the National Commission, the National Institute of Design, Ahmedabad, India and the School of Mines, Dhanbad.

J Ramachandran is a professor of political business IIM, Bangalore. With a doctorate CA IIM-A from its areas of interest corporate transformation. It also examines corporate globalization. Ramachandran is visiting professor at Wharton and was an adviser to Daimler Chrysler, HP, Wipro and Infosys

Chennai, Jan. 5 - YALE University and the Great Lakes Institute for Management (GLIM) plan for the establishment of a management research centre in India, for which they signed an agreement on Thursday.

Dr. Richard C. Lewin, president of Yale University, the agreement signed with Dr Bala V. Balachandran, founder and honorary president of Dean, GLIM, as well as reveal the foundation stone for the centre.

Mr. Balachandran, said that this was the first time an Ivy League university, the link with an institution of India, the establishment of a research centre.

He said that his dream of facilitating Yale to develop research programs in various areas of administration for the private, public and not-for-profit sector.

A corpus of Rs 3 crore collected contributed to the funding of the initiative during the first phase.

The GLIM Yale Centre for Management Research in the management in relation to the activities of research and consultation projects.

The program is administered by the Faculty of exchange, the sharing of research and case studies and the simultaneous publication.

As regards the initiative of Yale University, Professor Shyam Sunder, Honorary Director of Research, GLIM Yale Center, and Dr. James L. Frank, professor of economics of the general contractor of teaching and accounting, economics and finance ministers from Yale University, said the goal of the collaboration is the development of capacities for research and teaching in GLIM.

One area of thrust Yale GLIM research is an analysis of the Indian financial markets cited by Professor Shyam Sunder, an international authority in experimental economics.

Yale plans to create its own line of the Chamber of Commerce GLIM investment in the new campus is in the course of the year from now on time.

Authors line: Ashish Gupta, Venkatesha Babu, PV Sahad, Priyanka Sangani, Nitya Varadarajan, Narendra Nathan, Kushan Mitra, Barbara Shrinate, Anil Padmanabhan, Arnab Mitra, Rahul Sachitanand

FIRST

Pound-of-Time meat

For India communist parties, the 2005 budget might be a chance to prove to the world and to itself, it remains a force with which to rely.

With Ashish Gupta

The wish list, finally, when he reached the afternoon of February 1st, and not India, the Finance Minister P. Chidambaram surprised. Finance ministers are not accustomed to receiving such lists in advance on the last day of February, when the Union for a government of the declaration of one of the accounts and the publication of its policy document Economic, is presented. This desire of the list came from communist parties which, with its 63 members, the support of the dominant United Progressive Alliance (UPA), and not by the government.

Newspapers and television stations had anyway been leaked from the list down to the smallest detail, a day earlier, it is appropriate, the chances of Chidambaram known the exact nature of the claims whatsoever before the meeting with the Leaders of the Communist Party of India (Marxist), Communist Party of India, Revolutionary Socialist Party and Forward Block.

So far, the reform-minded fm his path. He managed to convince the flatter or ignore the communists. If all others, it has neglected its reform with the same sensitivity Boss, the Indian Prime Minister Manmohan Singh in Why, the UPA was even ready to tunkt an offset for reforms, the agreement increases the interest rate on employees Provident Fund (EPF) 8, 5 percent to 9.5 percent in exchange for the possibility of an increase in the ceiling of foreign direct investment (FDI) in the telecommunications sector from 49 percent to 74 percent.

Some of the claims are made to the land, you have the original logic, constant readers know that deficit financing is a better way to fund social initiatives, with funds from the sale of the participation of the State profitable companies in the public sector, given that the former that “interest payments of government in the future against a single loan,” while the latter, trade off “The future flows of revenues dividends, compared with a single entry from the sale of “Chidambaram, but may not be able to brush them off; Are not say, as the communists, with their stands clear react when things do not go their way. The Communists, are now trapped in a trap of their own making: its capitulation on several occasions in recent months, particularly prompted by the desire, the Congress of Traditional rivals, the Bharatiya Janata Party, in power, the vision of World as a paper tiger. The question is, it is Chidambaram ignore their requests, they shout?

What do the red

Increased Rs 50000 crore in the center of the effort to plan for the implementation of the commitments made in the common minimum programme

An additional allocation of Rs 20000 8000 crore each to education and health

The amount allocated to agriculture, irrigation and rural infrastructure to increase by Rs 14000 crore

The money for the funding gap; Fiscal Responsibility and Budget Management Act (FRBM) are damned

The money through increased tax revenue, rising taxes in GDP of 1.5%, the reduction of defence spending

Scrap idea of a special fund revenue from disinvestments, the power to invest the field of social protection

Reintroduce tax; impose ad valorem tax on foreign exchange transactions all drains; ban foreigners from holding rupee-denominated debt of the State

Focus on rural credit cooperative banks recapitalise; farm and a fund at risk, the introduction of variable tariffs and agricultural produce for the protection of domestic producers; theme food stamps

Review Administration of Customs and Excise to ensure that the goods are no longer taxed as to put in place through the restructuring of rates of petroleum products

Protection of the household decision-making power, such as BHEL not qualify to benefit from the duty-free import of 1000 MW to 250 MW. Review provision for those who seek to 1,000 MW

Scheuen transfer of shares of profitable PSU; discuss the merger of banks with unions; scrap the idea of capping the increase in foreign direct investment in private banks in India by 74 percent