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Mobilisation of resources - Coggle Diagram
Mobilisation of resources
Meaning - efficient allocation+ of resources
issues
Vertical + horizontal imbalance - vertical imbalance (between the Centre and the States) and horizontal imbalance (among the states with varying fiscal capacities) in the distribution of financial
resources.
Low tax-to-gdp ratio - 11.7% in 2021.
Reasons for low tax to gap ratio -
low per capita income --> hence low tax collections
exemptions in taxable income growing at a faster rate than the income --> reduces tax buoyancy
tax evasion, arbitrariness in deciding corporate tax
Subsidy system - inefficient, inaccurate targeting. NITI AAyog - better targeting through socio-economic and caste census data; subsidies should be reoriented - make people more economically independent rather than making them perpetually dependent upon them
Corporate tax exemptions - effective tax continues to be low
Steps taken by govt
Merger of general and railways budget
FBRM for fiscal consolidation
Rationalising subsidies - direct benefit transfer scheme, no fuel subsidies except LPG and Kerosene
Levying long term capital gains tax
Reviewing PPP - robust infra for approving ppp pros, increasing all of finance by creating dedicated institutions to fill gap funding , standardised docs like model concession agrnts
Suggestions
Fill infra investment gap through pet investment , infra financing and global institutions like AIIB, BRICS bank
EPC contracts model in investment