In 1997, FE had the privilege of presenting Dr Raja Chelliah with the Financial Express Award for Economics. That the economist followed Manmohan Singh, KN Raj, CH Hanumantha Rao and PR Brahmananda in the list said it all. Prof Chelliah belonged to that set of economists who had changed the course of Indian public policy through their work.

In the team that Manmohan Singh assembled in 1991 to set India off towards liberalisation, Chelliah was the architect of the tax reform agenda. Looking back from 2009, it seems almost impossible to believe the complex tax jungle that his three volume report cut through. Sure, Chelliah was helped by the fact that about two decades earlier, he had been a member of the LK Jha Indirect Taxes Enquiry Committee that gave its report in 1978.

Chelliah?s report was the base on which Manmohan Singh built up the momentum of tax reforms. The peak customs duty was slashed from 200% and taxes which begged economic logic like those on investments were eliminated. In the five Singh budgets, the number of income tax slabs was reduced to three with a peak rate of 40%, basic corporate tax rate was aligned to the same 40%, wealth tax was abolished and the base of the current value added tax regime at the states and centre was set up. Singh extended Modvat to the entire manufacturing sector and also introduced the brand new concept of service tax that has gone on to become the largest revenue earner among indirect taxes.

But then Chelliah was extremely familiar with the terrain to deliver his report. Manmohan Singh for instance was fully familiar with his work because Chelliah was a member in the Planning Commission till January 1990 under Singh who was the deputy chairman. That level of trust continued. From 1993 till 1995, he was also fiscal adviser in the finance ministry.

The zeal to put order into public finance in India probably shaped his other contribution. In 1976, he became the founder-director of the National Institute of Public Finance and Policy in New Delhi. In that continuum the expected launch of the Goods and Services Tax in the next fiscal will be a fitting epilogue.

sandip.das@expressindia.com