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‘Curb over Rs 5,000-cr tax evasion,grants under sangat darshans’

Ahead of presentation of state budget,Punjab economists on Wednesday brought out a policy document on reviving the state economy.

Written by Express News Service | Chandigarh | Published: June 14, 2012 2:58:55 am

Ahead of presentation of state budget,Punjab economists on Wednesday brought out a policy document on reviving the state economy.

Pegging the tax evasion to over Rs 5,000 crore on the basis of low tax to gross state domestic product (GSDP) ratio,it said the state needs to raise it up to 10 to 12 per cent as in other developed states by curbing tax evasion and imposing new taxes. “Since the services sector contributes nearly 42 per cent to the GSDP,more taxes can be imposed on the sector,” it stated.

It also called for rationalising subsidies being provided by the government,saying they need to be targeted towards small and marginal farmers. The document also observed that discretionary grants under sangat darshan programmes had undermined the principle of equity and accountability. “It has demoralised the public servants and made development oriented public institutions dysfunctional,” stated the document prepared by the Centre for Development Economics and Innovative Studies,in collaboration with Department of Economics and Innovative Studies of Punjabi University in Patiala.

The document that brings together viewpoints of 22 professors of economics of various Punjab universities also suggests that the state should devote at least one percent of its income for research and development. “The credit-deposit ration in Punjab has been low since days of green revolution. It is possible to raise investible resources to tune of Rs 25,000 crore per annum,” said Lakhwinder Singh Gill,professor of economics at the Punjabi University while addressing mediapersons.

With the farm sector still contributing a high 30 per cent to the state’s income,the document called for freeing farmers from the “tyranny of middlemen”. “It is suggested that the government should ensure that the system of paying farmers through commission agents is replaced by direct payments. To stop suicides,a moratorium on debt held by all categories of farmers with commission agents and informal moneylenders is desired,” it added.

It also called for focus on diversification and agro-industry and said the state government should develop a cargo airport for transportation of high value crops to international markets. Observing that Punjab is a laggard in education and health sectors,it said the state funding on education should be raised to six per cent of GSDP and on public health to two per cent from present one percent in 2012-13 budget and higher subsequently.

It concludes by advocating a debt relief package for the state. However,it cautions that the package will not alone solve the fiscal crisis. “The Union government needs to provide a compensatory Special Investment Revival Package of Rs 55,000 crore,Rs 11,000 crore for each of the next five years,to cover the gap between Punjab and the Indian economy,” the document stated.

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