India Needs to Push up Tax-GDP Ratio; Spend on Health, Education

Taxes and expenditures should be viewed not just from a fiscal but also from an institutional perspective, it added.

Published: 26th February 2016 02:29 PM  |   Last Updated: 26th February 2016 02:29 PM   |  A+A-


NEW DELHI: India needs to increase its tax-GDP ratio, and spend more on health and education, the Economic Survey 2015-16 said today.

Country's tax to GDP ratio is at 16.6 per cent and is well below the emerging market economy(EME)and OECD averages of about 21 per cent and 34 per cent respectively.

"India's overall tax to GDP is about 5.4 percentage points less than that of comparable countries. India spends on an average about 3.4 percentage points less vis-a-vis comparable countries on health and education," as per the report tabled by Finance Minister Arun Jaitley in Parliament today.

Pointing out that in India, roughly 5.5 per cent of earning individuals are in the tax net, Jaitley said the pre-Budget statistic gives an idea of the gap that the country needs to cover to become a full tax-paying democracy.

Taxes and expenditures should be viewed not just from a fiscal but also from an institutional perspective, it added.

For that reason, the survey noted that the implementation of the Goods and Services Tax (GST), while highly desirable and necessary, will have limited impact in furthering the broader objective of citizen participation, state building and democratic accountability.

In a separate chapter, the survey said till December 31, 2015, a total of 112.82 lakh subscribers inclusive of Atal Pension Yojana have been enrolled under National Pension Scheme.

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