The Hindu Business Line : Full Plan panel meet stresses need to raise tax/GDP ratios

THE meeting of the full Planning Commission today zeroed in on raising the tax/GDP ratios both at the Centre and the States in order to meet the requirements of public expenditure, which would be necessary to meet the many commitments of the Government during the 10th 5-year Plan period.

Acknowledging the fact that despite acceptance of lower growth targets and greater focus on private participation in a wide range of infrastructure, the requirements for public investment would continue to be sizeable if growth is to be accelerated in the remaining two years of the Plan, the full Commission said that the Finance Ministry and the Planning Commission would have to jointly work out systems that would ensure the progress of the Plan is not hampered by lack of resources.

"Clearly, the focus will have to be on raising the tax/GDP ratios both at the Centre and in the States, and the State VAT is an important step forward. This initiative will have to be built upon to evolve a tax system that eventually covers all goods and services. Strengthening tax administration and encouraging compliance is also important and recent developments in this regard are encouraging," said an official release at the end of the meeting.

The meeting diagnosed decelerating agricultural growth as a structural problem and not just a distributional one; it was decided that the Planning Commission and the Agricultural Ministry would work out a long-term agenda paper to bring back dynamism in agriculture.

This would require action across a broad front, including the rejuvenation of agricultural support systems, investment in irrigation and water management, improved flow of technology, strengthening of post-harvest and marketing infrastructure, and higher flow of credit, among others.

On the policy front as well, steps such as rationalising prices, removing restrictions from sale and transportation, promoting participatory management of natural resources, and promoting alternative uses of agricultural products are required.

On infrastructure, the meeting said that while some sectors like telecom and ports have performed reasonably well, others are lagging behind.

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