Madhya Pradesh Tax and Economic Reforms
The economic Liberalization-2/”>Liberalization in India , initiated in 1991, of the country’s economic policies, with the goal of making the economy more market and service-oriented and expanding the role of private and foreign Investment. Specific changes include a reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. Liberalization has been credited by its proponents for the high economic Growth recorded by the country in the 1990s and 2000s. And it has positive impact on the state of Madhya Pradesh as seen from the following data,
India’s GDP has increased thereafter and also the GDSP of state as
Rate of Growth of Gross State Domestic Product (GSDP) of Madhya Pradesh
During 1980-81 to 1990-91 4.56 %
During 1990-91 to 1998-99 5.9 %
Madhya Pradesh which was included in the BIMARU states(Bihar , Madhya Pradesh Rajasthan and Uttar Pradesh) has performed reasonably well. Madhya Pradesh which had grown more slowly than the Average in the 1980s, accelerated significantly in the 1990s.
Madhya Pradesh Budget Analysis 2017-18
The Madhya Pradesh Finance Minister, Mr. Jayant Mallayya, presented the Budget for Madhya Pradesh for the financial year 2017-18 on March 1, 2017.
Budget Highlights
The Gross State Domestic Product of Madhya Pradesh at current prices for 2017-18 is estimated to be Rs. 7,35,246 crore. This is 13.9% higher than the revised estimate for 2016-17.
Total expenditure for 2017-18 is estimated to be Rs 1,69,954 crore, an 8.5% increase over the revised estimate of 2016-17. The revised estimate for 2016-17 is Rs 2,083 crore lower than the budgeted target.
Total receipts (excluding borrowings) for 2017-18 are estimated to be 11.4% higher, at Rs 1,45,111 crore. In 2016-17, they fell short of the budgeted target by Rs 4,111 crore.
Revenue surplus for the next financial year is targeted at Rs 4,596 crore, or 0.63% of the Gross State Domestic Product (GSDP). Fiscal Deficit is targeted at Rs 25,689 crore (3.49% of GSDP).
The Fiscal Responsibility and Budget Management Act, 2005 mandates a fiscal deficit ceiling of 3.5% of GSDP. Primary Deficit is targeted at Rs 14,148 crore (1.9% of GSDP).
Rs 33,564 crore has been allocated for the agriculture Budget in 2017-18. Rs 400 crore has been allocated to the Rashtriya Krishi Vikas Yojana, and Rs 305 crore has been allocated to the National Food Security Mission.
Allocations to the departments of Urban Administration and Development, School Education and Rural Development increased by 22%, 10% and 7% respectively, over the revised estimates of 2016-17. However, allocation to the Department of Energy has decreased by 21%.
Madhya Pradesh total tax revenue
Total tax revenue of Madhya Pradesh is estimated to be Rs 50,295 crore in 2017-18
Tax Revenue: Among all sources of Tax revenue, sales tax is the largest component. Sales tax is levied on the sale of goods in the state is expected to generate Rs 25,910 crore (52% of tax revenue).
The state is expected to generate Rs 8,600 crore (17%) through levy of state excise duty on the production of various forms of alcohol.
In addition, revenue will be generated through stamp duties, registration charges on real estate transactions, electricity duties, among others.
Non Tax Revenue: Madhya Pradesh has budgeted to generate Rs 11,680 crore through non-tax sources.
In 2016-17, the state expected to generate a revenue of Rs 4,143 crore from education (such as licensing and fees); however, the revised estimate is Rs 1,038 crore lower than the budgeted estimate. In 2017-18, Rs 3,310 crore is estimated to be generated from education.
Rs 3,700 crore is estimated to be generated from mining in 2017-18, compared to Rs 3,100 crore as per the revised estimate of 2016-17 (19% increase).
Deficits Debts and Targets of Madhya Pradesh for 2017-18
The Madhya Pradesh Fiscal Responsibility and Budget Management (FRBM) Act, 2005 provides annual targets to progressively reduce the outstanding debt, Revenue Deficit and fiscal deficit of the State Government.
Revenue deficit: It is the excess of Revenue Expenditure over Revenue Receipts. A revenue deficit implies that the recurring receipts of the government are unable to cover its recurring expenditures. The revenue surplus is expected at Rs 4,596 crore (or 0.63% of state GDP) in 2017-18. This is better than the target of eliminating revenue deficit prescribed by the state’s FRBM Act and by the 14th Finance Commission.
Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government, and leads to an increase in total liabilities of the government. In 2016-17, fiscal deficit increased from the budgeted target of Rs 24,914 crore to Rs 29,899 crore (4.63% of GSDP). This increase includes Rs 7,361 crore taken up as market borrowings on account of the UDAY scheme. The revised estimate in 2016-17 exceeded the 3.0% limit under the 14th Finance Commission, and the 3.5% limit under the FRBM Act. In 2017-18, fiscal deficit is estimated at Rs 25,689 crore (3.49% of GSDP).
Outstanding Liabilities: It is the accumulation of borrowings over the years. In 2017-18, the outstanding liabilities are expected at 24.9% of GSDP, an increase over the 24.6% as per revised estimates of 2016-17. They are estimated to further increase to 25.8% in 2018-19, 26.3% in 2019-20, and 26.5% in 2020-21. An increase in liabilities over time indicates that the state would be required to pay more in terms of interest payments as well as principle amount repayments over the coming years.
Tax Proposals during 2016-17
Value Added Tax (VAT): The budget proposes to remove 5% VAT payable on battery operated cars, battery operated rickshaw and battery operated vehicles.
Entry Tax: Imposition of 6% Entry tax on goods purchased using E-Commerce is proposed.
Entertainment Tax: Currently a 5 year tax holiday is available to land owners of cinemas and multiplexes. This is proposed to be extended to lease holders.
Goods and Service Tax in Madhya Pradesh
Goods and Service Tax: The Madhya Pradesh Legislative Assembly on Wednesday unanimously passed the Madhya Pradesh Goods and Services Tax (GST) Bill-2017 as the new tax regime is going to be a game changer for the state of Madhya Pradesh. It will increase the revenue of the state that will help in other useful purposes and schemes.
GST’s benefits to Less developed states like Madhya Pradesh get a lift as the current 2% inter-state levy means production is kept within a state. Under the GST national market, this can be dispersed, creating opportunities for others. Investment boost as for many Capital Goods, input tax credit is not available.
So overall GST has a positive impact on the state of Madhya Pradesh as it will increase the revenue of the state.,
Madhya Pradesh is one of the most populous states in India, with a Population of over 75 million people. The state has a diverse economy, with a strong focus on agriculture, manufacturing, and services. In recent years, Madhya Pradesh has implemented a number of tax and economic reforms in an effort to improve the state’s business Environment and attract investment.
One of the most significant Tax Reforms implemented in Madhya Pradesh is the Goods and Services Tax (GST). The GST is a comprehensive Indirect Tax reform that was implemented in India in July 2017. The GST replaced a number of different indirect taxes, such as the value-added tax (VAT), central excise duty, and service tax. The GST is a single tax that is levied on all goods and services supplied in India. The GST is a destination-based tax, which means that the tax is levied at the place where the goods or services are consumed. The GST is a major step towards simplifying the tax system in India and making it more efficient. The GST is expected to have a positive impact on the economy of Madhya Pradesh by making it easier for businesses to operate and by reducing the cost of doing business.
In addition to the GST, Madhya Pradesh has also implemented a number of other tax reforms. These reforms include the SIMPLIFICATION of the tax structure, the reduction of tax rates, and the introduction of new tax incentives. The tax reforms have been designed to improve the business environment in Madhya Pradesh and to attract investment.
The economic reforms implemented in Madhya Pradesh have also been significant. These reforms include the liberalization of the economy, the deregulation of industries, and the Privatization of state-owned enterprises. The economic reforms have been designed to improve the efficiency of the economy and to attract investment.
The tax and economic reforms implemented in Madhya Pradesh have had a positive impact on the state’s economy. The reforms have made it easier for businesses to operate in Madhya Pradesh and have reduced the cost of doing business. The reforms have also attracted investment to the state. The economic reforms have helped to improve the standard of living in Madhya Pradesh and have made the state a more attractive place to live and work.
The tax and economic reforms implemented in Madhya Pradesh are ongoing. The state government is constantly reviewing the reforms and making changes as needed. The reforms are designed to improve the business environment in Madhya Pradesh and to attract investment. The reforms are also designed to improve the standard of living in Madhya Pradesh and to make the state a more attractive place to live and work.
The following are some of the key benefits of the tax and economic reforms implemented in Madhya Pradesh:
- Improved business environment: The reforms have made it easier for businesses to operate in Madhya Pradesh. The reforms have reduced the cost of doing business and have made it easier for businesses to get the necessary approvals and licenses.
- Increased investment: The reforms have attracted investment to Madhya Pradesh. The reforms have made Madhya Pradesh a more attractive place to invest, and the state has seen a significant increase in investment in recent years.
- Improved standard of living: The reforms have helped to improve the standard of living in Madhya Pradesh. The reforms have created jobs and have helped to reduce POVERTY.
- More attractive place to live and work: The reforms have made Madhya Pradesh a more attractive place to live and work. The state has seen a significant increase in population in recent years, as people have moved to Madhya Pradesh in search of better opportunities.
The following are some of the challenges that Madhya Pradesh faces in implementing the tax and economic reforms:
- Corruption: Corruption is a major challenge in Madhya Pradesh. The state has a long history of corruption, and it is a major obstacle to Economic Development.
- Infrastructure-2/”>INFRASTRUCTURE: Madhya Pradesh has a poor infrastructure. The state has inadequate roads, power, and water supplies. This infrastructure deficit is a major obstacle to economic development.
- Education: The education system in Madhya Pradesh is poor. The state has a high dropout rate, and the quality of education is low. This education deficit is a major obstacle to economic development.
- Health: The health system in Madhya Pradesh is poor. The state has a high infant mortality rate, and the quality of healthcare is low. This health deficit is a major obstacle to economic development.
Despite these challenges, the tax and economic reforms implemented in Madhya Pradesh have had a positive impact on the state’s economy. The reforms have made it easier for businesses to operate in Madhya Pradesh and have reduced the cost of doing business. The reforms have also attracted investment to the state. The economic reforms have helped to improve the standard of living in Madhya Pradesh and have made the state a more attractive place to live and work.
What are the different Types of Taxes?
There are many different types of taxes, but some of the most common include Income tax, sales tax, property tax, and payroll tax.
What is income tax?
Income tax is a tax on the income that people earn from their jobs, investments, and other sources.
What is sales tax?
Sales tax is a tax on the sale of goods and services.
What is property tax?
Property tax is a tax on the value of real estate, such as homes and businesses.
What is payroll tax?
Payroll tax is a tax on the wages that employers pay their employees.
What are the benefits of tax reform?
Tax reform can have a number of benefits, including:
- Increased economic growth
- Increased government revenue
- Reduced tax rates
- Increased fairness in the tax system
What are the challenges of tax reform?
Tax reform can be a complex and challenging process. Some of the challenges include:
- Reaching agreement on the goals of tax reform
- Designing a tax system that is fair and efficient
- Implementing tax reform without causing economic disruption
What are the different types of economic reforms?
There are many different types of economic reforms, but some of the most common include:
- Fiscal reforms: These reforms focus on government spending and Taxation.
- Monetary reforms: These reforms focus on the Money-supply-2/”>Money Supply and interest rates.
- Structural reforms: These reforms focus on the economy’s structure, such as the role of government, the level of competition, and the openness of the economy.
What are the benefits of economic reform?
Economic reform can have a number of benefits, including:
- Increased economic growth
- Increased EMPLOYMENT
- Reduced poverty
- Improved living standards
What are the challenges of economic reform?
Economic reform can be a complex and challenging process. Some of the challenges include:
- Political opposition
- Institutional weaknesses
- Social unrest
- Economic shocks
Sure. Here are some MCQs on the topics of 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 taxWhich of the following is not a goal of economic reform?
(A) To increase economic growth
(B) To reduce poverty
(C) To improve the distribution of income
(D) To protect the environmentWhich of the following is not a tool of economic reform?
(A) Fiscal Policy
(B) Monetary Policy
(C) Trade Policy
(D) Environmental policyWhich of the following is not a benefit of economic reform?
(A) Increased economic growth
(B) Reduced poverty
(C) Improved distribution of income
(D) Improved environmental qualityWhich of the following is not a cost of economic reform?
(A) Job losses
(B) Inflation
(C) Inequality
(D) Environmental DegradationWhich of the following is not a criticism of economic reform?
(A) It can lead to job losses.
(B) It can lead to inflation.
(C) It can lead to inequality.
(D) It can lead to environmental degradation.Which of the following is not a defense of economic reform?
(A) It can lead to increased economic growth.
(B) It can lead to reduced poverty.
(C) It can lead to improved distribution of income.
(D) It can lead to improved environmental quality.Which of the following is not a reason why economic reform is often difficult to implement?
(A) There is often resistance to change from vested interests.
(B) It can be difficult to predict the consequences of reform.
(C) It can be difficult to coordinate reform across different sectors of the economy.
(D) It can be difficult to obtain the necessary financial Resources.Which of the following is not a lesson that can be learned from the experience of economic reform in other countries?
(A) It is important to have a clear vision of the desired outcome of reform.
(B) It is important to build consensus for reform among key stakeholders.
(C) It is important to implement reform gradually and carefully.
(D) It is important to provide support to those who are adversely affected by reform.Which of the following is not a challenge that India faces in implementing economic reform?
(A) There is often resistance to change from vested interests.
(B) It can be difficult to predict the consequences of reform.
(C) It can be difficult to coordinate reform across different sectors of the economy.
(D) It can be difficult to obtain the necessary financial resources.