Kerala Tax and Economic Reforms

Economic Reforms:

What is Economic Reform?

The basic objective of economic reforms was to improve productivity Growth and competitiveness in the Indian manufacturing sector. These reforms were aimed at making Indian manufacturing sector more efficient and technologically up to date, with the expectation that these changes would enable Indian manufacturing sector to achieve higher and sustainable growth. The government started to deregulate the Indian economy with a Liberalization-2/”>Liberalization programme, focused on the Investment pattern, trade policies, the financial sector, Taxation and public enterprises.

In recent times, Industrialization has become the catch word of the mid-twentieth century and industrial development of the under developed countries or developing countries like India. One of the great world crusades of our times, the Less Developed Countries (LDCs) hope to find in it a solution their problems of POVERTY, insecurity, overpopulation, backwardness, illiteracy etc. They consider it a panacea for all the evils of their social and economic life. In fact, the essence of Economic Development of an LDC like India consists essentially in the growth of industrialization.

Realizing the importance of industrialization, once Pt. Jawaharlal Nehru rightly remarked, “Real progress must ultimately depend on industrialization”. His vision was to see India in the group of developed nations of the world and industrialization was the only key to restructure the economy and to achieve sustained growth. Indian economy is a basically an agriculture based economy. It has been evident from the experience of the most of advanced countries that growth based upon agriculture sector will not be sustainable growth.

On the other hand, if we develop only Tertiary Sector and ignore Industrial Sector then there may be tendency of Inflation in the economy and this inflation may lead to deceleration economic growth. Therefore, industrialization is the only method to achieve sustained economic growth. Moreover, economic history demonstrates that to eliminate a country’s techno-economic backwardness it is necessary to develop the industrial sector and then to diversify it over a wide range of area and activities. Industrialization is a process of economic organization characterized by rapid setting up of industries and has invariably been the accompaniment of economic development. Nevertheless, economic development should not be treated synonymous with industrialization because industrialization is only a part of the whole process of economic development.

Economic Reforms in Kerala:

Economic reforms in Kerala were at a snail’s pace till the fiscal crisis of the state in 2001. Over the past four years, the State Government has initiated a number of measures to accelerate economic growth. Taking into consideration mid-2001 to mid-2004 as the first phase of the reform period.

The UDF government, which assumed power in 2001 has drastically changed the development strategies and economic policies of the state. The salient features of the economic reforms are the following-

The economic reforms implemented by the UDF government had the characterstic of the SAR implemented by the central government. The focus of the reform was to revive the market forces by using price variables as policy instruments. Promotion of private investment and creation of a conducive Atmosphere for investment, technological change and institutional change were the major objectives.
Though the reforms had the characteristics of structural adjustment, they also retained many aspects of the policies pursued in Kerala with respect to Public Sector Undertakings, public Health and Education and social welfare activities for the weaker sections.
In order to promote investment and create favourable conditions for investment, new policies were formulated for industries, information technology, labour, urban development, education etc.
The reforms aimed at improving the financial situation of the state government through a number of measures to increase revenue and reduce expenditure
Private investment was allowed in the professional educational sector for starting educational institutions in medicine, engineering, technology, management etc.

With these reforms Kerala managed to obtain economic growth in industries, agriculture, educations, IT and tourism. Although certain sector did not expected growth rate due to various socio-economic reasons.

Kerala village tourism development scheme:

The scheme is intended to involve local communities in the planning and implementation of tourism projects.
140 villages will be selected for assistance under the scheme this year.
“My Village, A Tourism Friendly Village”, the initiative is part of an attempt to decentralise tourism development in the State.
Kerala Tourism will provide financial assistance to the extent of 50 per cent of the cost of each project subject to a maximum of Rs. 10 lakh. The remaining funds will have to be mobilised by the local self-government institutions. However, roads to tourist centres will not be eligible for support under the scheme. Similarly, the cost of obtaining land for tourism projects will also not be considered under the scheme.

Tax Reforms:

Kerala Goods and Service Tax:

The Kerala government introduced in the state assembly, the Kerala Goods and Services Tax Bill, 2017. GST will abolish all the taxation related disputes between the States and this will make Indian economy more strong. It was the highest tax reforms of state and centre as well.

Kerala Travel Mart (KTM) Society, a leading tourism body, has expressed concern over high rates of taxation under the GST regime, saying it would stifle the tourism business in the country by making it unsustainable and drive away foreign tourists to destinations other than India

Goods and Services Tax (GST) is a comprehensive Indirect Tax on manufacture, sale, and consumption of goods and services throughout India. GST would replace respective taxes levied by the central and state governments.

DEMONETIZATION AND CASHLESS ECONOMY

What is Demonetization?

It is a financial step where in a currency unit’s status as a legal tender is declared invalid.
This is usually done when old currency notes are to be replaced with the news ones.
The 500 and 1000 rupee notes seized to be a legal tender from 8 November, 2016.

Implications of Demonetization

A parallel black economy would collapse.
Of the Rs 17 lakh crore of total currency in circulation in the country, black Money is estimated at mind-boggling Rs 3 lakh crore.
Counterfeit currency: Death blow to the counterfeit Indian currency syndicate operating both inside and outside the country.
On EMPLOYMENT: a large part of the Indian economy is still outside the Banking system. So, the cash shortage will hurt the informal sector that does most of its transactions in cash.
On Elections: It will reduce the Vote-for-Note politics making elections more clean and transparent.
On Economy:
First, it will bring more borrowings to the exchequer, improve inflation outlook and increase India’s gross domestic product (GDP).
Second, it will revive investment opportunities and give a fillip to Infrastructure-2/”>INFRASTRUCTURE and the manufacturing sector.
Third, it will help reduce interest rates and lower Income tax rate.
Real estate cleansing: An unexpected dip in land and property prices.
On Higher Education: will become more reachable as the black money from ‘high capitation fees’ is discouraged.
On security:
Terror financing: Terror financing is sourced through counterfeit currency and hawala transactions.
Kashmir unrest: The four-month-long unrest in Kashmir valley is on a backburner
North-East insurgency and Maoists: Black money is the Oxygen for Maoists collected through donations, levy and extortions. The illicit money is used to purchase arms and ammunition.

Kerala is a state in India with a Population of over 33 million people. It is one of the most literate and developed states in India. The state has a long history of taxation, dating back to the 18th century. The current tax system in Kerala is based on the Indian Income Tax Act, 1961. The state government has implemented a number of tax reforms in recent years, in an effort to improve the efficiency of the tax system and to increase revenue collection.

The history of taxation in Kerala can be traced back to the 18th century. The first recorded tax in Kerala was the land revenue tax, which was introduced by the British East India Company in 1792. The land revenue tax was a major source of revenue for the British government. In the 19th century, the British government introduced a number of other taxes, including the income tax, the sales tax, and the excise duty. These taxes were designed to raise revenue for the British government and to control the economy of Kerala.

After India gained independence in 1947, the state government of Kerala took over the responsibility of taxation. The state government introduced a number of new taxes, including the motor vehicle tax, the entertainment tax, and the professional tax. These taxes were designed to raise revenue for the state government and to provide essential services to the people of Kerala.

The current tax system in Kerala is based on the Indian Income Tax Act, 1961. The state government has the power to levy a number of taxes, including the income tax, the sales tax, the excise duty, and the motor vehicle tax. The state government also has the power to levy taxes on property, on goods and services, and on professions.

The income tax is a Direct Tax that is levied on the income of individuals and companies. The sales tax is an indirect tax that is levied on the sale of goods and services. The excise duty is an indirect tax that is levied on the manufacture and sale of certain goods, such as alcohol and tobacco. The motor vehicle tax is a tax that is levied on the ownership of motor vehicles.

The state government of Kerala has implemented a number of tax reforms in recent years. These reforms have been designed to improve the efficiency of the tax system and to increase revenue collection.

One of the most important tax reforms was the introduction of the Value Added Tax (VAT) in 2005. The VAT is a consumption tax that is levied on the value added at each stage of the production and distribution of goods and services. The VAT has replaced a number of other indirect taxes, such as the sales tax and the excise duty.

The state government has also implemented a number of other tax reforms, such as the introduction of the Self-Assessment Scheme (SAS) and the Taxpayers Charter. The SAS is a scheme that allows taxpayers to file their tax returns online. The Taxpayers Charter is a document that outlines the rights and responsibilities of taxpayers.

The tax reforms in Kerala have had a positive impact on the state’s economy. The reforms have helped to improve the efficiency of the tax system and to increase revenue collection. The reforms have also helped to reduce the tax burden on businesses and individuals.

The tax reforms have also helped to improve the state’s fiscal position. The state government has been able to reduce its Fiscal Deficit and to improve its debt-to-GDP ratio. The reforms have also helped to improve the state’s credit rating.

In conclusion, the tax reforms in Kerala have been successful in improving the efficiency of the tax system and in increasing revenue collection. The reforms have also helped to reduce the tax burden on businesses and individuals. The reforms have had a positive impact on the state’s economy and on its fiscal position.

What are the main economic reforms that have been implemented in Kerala?

The main economic reforms that have been implemented in Kerala include:

Deregulation of the economy: The government has deregulated the economy by reducing the number of controls and regulations on businesses. This has made it easier for businesses to operate and has led to increased investment and economic growth.
Privatization of state-owned enterprises: The government has privatized some state-owned enterprises, which has led to increased efficiency and productivity.
Fiscal reforms: The government has implemented fiscal reforms, such as reducing the fiscal deficit and improving tax collection. This has helped to improve the state’s finances and has made it more attractive to investors.
Investment in infrastructure: The government has invested in infrastructure, such as roads, bridges, and power Plants. This has helped to improve the state’s infrastructure and has made it more attractive to businesses.
Education reforms: The government has implemented education reforms, such as increasing the number of schools and improving the quality of education. This has helped to improve the state’s Human Capital and has made it more attractive to businesses.
Healthcare reforms: The government has implemented healthcare reforms, such as increasing the number of hospitals and improving the quality of healthcare. This has helped to improve the state’s healthcare system and has made it more attractive to businesses.

What are the benefits of these reforms?

The benefits of these reforms include:

Increased economic growth: The reforms have led to increased economic growth, which has created jobs and improved the standard of living.
Improved infrastructure: The reforms have led to improved infrastructure, which has made it easier for businesses to operate and has improved the Quality Of Life.
Improved human capital: The reforms have led to improved human capital, which has made the state more attractive to businesses.
Improved healthcare system: The reforms have led to improved healthcare system, which has improved the quality of life.

What are the challenges of these reforms?

The challenges of these reforms include:

Social unrest: The reforms have led to social unrest, as some people have been adversely affected by them.
Corruption: The reforms have led to corruption, as some people have taken advantage of the situation to enrich themselves.
Environmental Degradation: The reforms have led to environmental degradation, as some businesses have not taken the necessary steps to protect the Environment.
Inequality: The reforms have led to inequality, as some people have benefited more from them than others.

What are the future prospects of these reforms?

The future prospects of these reforms are uncertain. The reforms have had some positive effects, but they have also had some negative effects. It is too early to say whether the reforms will be successful in the long run.

Sure, here are some MCQs without mentioning the topic Kerala Tax and Economic Reforms:

Which of the following is not a type of tax?
(A) Income tax
(B) Sales tax
(C) Property tax
(D) Wealth tax
Which of the following is not a government revenue?
(A) Taxes
(B) Borrowings
(C) Grants
(D) Profits from state-owned enterprises
Which of the following is not a government expenditure?
(A) Salaries and wages
(B) Interest payments
(C) Subsidies
(D) Transfer Payments
Which of the following is not a macroeconomic objective?
(A) Economic growth
(B) Price stability
(C) Full employment
(D) Environmental protection
Which of the following is not a microeconomic objective?
(A) Efficiency
(B) Equity
(C) Sustainability
(D) Stability
Which of the following is not a market failure?
(A) Externalities
(B) Public goods
(C) Monopoly power
(D) Asymmetric information
Which of the following is not a government intervention?
(A) Regulation
(B) Taxation
(C) Spending
(D) Price controls
Which of the following is not a Fiscal Policy tool?
(A) Taxes
(B) Spending
(C) Borrowing
(D) Monetary Policy
Which of the following is not a monetary policy tool?
(A) Open market operations
(B) DISCOUNT rate
(C) Reserve requirements
(D) Exchange rate policy
Which of the following is not a Trade Policy tool?
(A) Tariffs
(B) Quotas
(C) Subsidies
(D) Exchange rate policy

I hope these MCQs are helpful!