Tax-GDP ratio may touch 10% in 2004-05: Chidambaram

New Delhi, Oct 28 | Updated: Oct 29 2004, 05:44am hrs
A robust revenue collection would help in achieving a higher tax-GDP ratio, which could even touch 10% in 2004-05 after a gap of 20 years, finance minister P Chidambaram said. In 2003-04, due to a healthy revenue collection and impressive economic growth, the tax:GDP ratio was at 9.2%, the minister pointed out.

This fiscal, if all goes well and all of you pay your taxes by October 31 and continue to pay taxes in the remaining part of the year, we can even cross tax-GDP ratio of 10% once again, the finance minister said, underlining the need to increase the tax-GDP ratio, an important parameter to assess the financial health of the government.

He pointed out that Indias tax-GDP ratio, during the second half of 1980s was above the 10% level. However, it dropped to 8.2% in 1990s due to sharp cuts in tax rates he added.

He also mentioned that the Fiscal Responsibility and Budget Management Act, which imposes self-discipline upon the government in managing its resources, was notified only by the UPA government.

We walked the talk by notifying FRBMA three days before the Budget. We did that to signal to the world that we are serious about fiscal discipline and responsibility, he said.