Articles by Amaresh Bagchi

Is there a case for continuing with planning and persisting with practices that on the face of it seem to be irrelevant? This article draws attention to the need to define the role of planning and the Planning Commission in the economy post-liberalisation with greater clarity and to reform the institutions that are supposed to support the planning process to make them relevant and effective. With control over investment in the private sector beyond the purview of the Planning Commission, development planning can at best be indicative.

In July 2004, the United Progressive Alliance government removed long-term capital gains tax and introduced a tax on transactions. There are good reasons - on grounds of revenue, efficiency and equity - to reconsider the abolition of the capital gains tax.

An exclusive focus on deficit reduction has had the adverse fallout for public spending on health and education in several states, forcing a shrinkage of the public sector's involvement in the social sector. Policy-makers are now seeking an escape route by getting the fiscal and revenue deficit targets relaxed. While there can be valid arguments against inflexible targets, abandoning the discipline underlying fiscal responsibility legislation, as has been suggested, is questionable. For, at base, the fiscal problems of democracies have their origin in the short time horizon of governments and their penchant for promising the moon to the electorate while showing an extreme reluctance to tax.

The Twelfth Finance Commission has broken new ground in several key areas and made recommendations which, if fully implemented, will have a far-reaching impact on the finances and functioning of government in the country at all levels. In order that the issues raised by the TFC report are debated in a wider forum, the EPW invited some of the leading scholars in the field to join in a symposium by contributing papers to this special issue. An overview of the papers and the issues is presented in this introductory article.

Rationalisation of the transfer system and restoration of fiscal balance in the states will not be possible without a radical review of the practice of planning, plan financing and central assistance for state plans. While determining revenue needs of the states normatively, it is necessary to take a holistic view and do away with the plan and non-plan distinction in revenue expenditures, which is a source of other distortions in expenditure priorities. Until that happens, rationalisation of the transfer system will not be possible.