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highest in the Tenth Plan and low in the Seventh Plan (Table 2.2). The Groupconsidered that a buoyancy of 1.30 in direct taxes to be a reasonable level thatcould be considered.Table 2.2:Buoyancy in Tax RevenuePlan PeriodTax BuoyancyCorporate Income Tax Personal Income TaxSeventh Plan 0.96 1.27Eighth Plan 1.29 1.45Ninth Plan 1.62 1.73Tenth Plan 1.94 1.23Eleventh Plan 1.04 0.80The third option was using elasticities for direct taxes. Details of the alternativeapproaches for buoyancies and elasticities are in Annexure-IV.Here, it is instructive to first look at the relative merits of the various methods.The moving averages used essentially smoothens volatilities in the annual dataon taxes that were affected by the crisis and resultant demand slowdown in theeconomy. However, the use of moving averages on tax-GDP ratio, which is acomposite variable, may not be fully appropriate given that large part of thevolatility post-crisis is also in the nominal GDP and that is what has suppressedthe actual tax-GDP ratio than what the assumed ‘GDP growth’ in the EleventhPlan would indicate. GDP is a proxy for tax base; the base itself is dependent onincome distribution across deciles, sectors or sub-sectors of the yearly growth.An egalitarian distribution of GDP growth would moderate the tax growth,Corporate taxes would moderate if their pricing power and hence profitability ishampered.The demerits of buoyancy and elasticity approach are known as they seek toreflect the trend, which has been affected by the crisis. But it is here that ajudgmental mix could be useful. While it may not be reasonable to expect theWorking Group Report on Centre’s Financial ResourcesPage-18
uoyancy of 2003-04 to 2007-08 to be repeated in 2012-13 to 2016-17, aminimum buoyancy of 1.20 has been achieved across three plans needs to bekept in mind. Therefore, a buoyancy of 1.3 for direct tax has been used to arriveat the revenues therefrom (Table 2.3).Table 2.3:Net Tax Revenue and Direct Tax(` crore)Items/Year 2012-13 2013-14 2014-15 2015-16 2016-17Tax Revenue (Net to 808867 990921 1191581 1369353 1591425Centre)(TR)Direct Tax 480487 605083 740769 844794 982474For Indirect Taxes, the use of buoyancies may not be appropriate given thatearlier these tended to estimate revenues incorrectly. Revenues from customsduty are essentially a function of the value of dutiable imports and weightedaverage duties thereon. Given the levels of computerization in customs, itshould be possible at least in the future to project revenues in a detaileddisaggregate manner down to the level of at least major Customs Tariff heads.For the present, it would be useful to stick to the proxy estimation method oftreating customs duty as a function of the value of imports and the collectionrate assuming that composition does not change. The Group, therefore,endorsed the indirect tax forecast detailed earlier. The final projections aredetailed in the Table 2.4.Table 2.4:Tax Revenue Projections(` crore)Financial year 2011-12Projection(BE) 2012-13 2013-14 2014-15 2015-16 2016-17Centre’s tax revenue808867 990921 1191581 1369353 1591425(Net to Centre)Centre’s gross tax 10.3 10.92 11.69 12.81 12.86 13.05GDP ratioCentre’s net taxGDP ratio7.40 7.87 8.42 8.84 8.87 9.00Working Group Report on Centre’s Financial ResourcesPage-19
Page 1 and 2: Reportof theWorking Group onCentre
Page 3 and 4: Loans to States and UTs…………
Page 5 and 6: Chapter-1IntroductionThe Working Gr
Page 7 and 8: forecasts and, for that matter, all
Page 9 and 10: the distinction of having the highe
Page 11 and 12: disintermediation of the Central lo
Page 13 and 14: 10 per cent in the first year and r
Page 15 and 16: Report of HLEC Chaired by Dr. C. Ra
Page 17 and 18: Chapter-2Tax RevenueEstimating tax
Page 19 and 20: in the projections is to first proj
Page 21: Service Tax: For estimation of serv
Page 25 and 26: Chapter-3Non-Tax Revenue and Non-De
Page 27 and 28: Interest ReceiptsInterest Receipts
Page 29 and 30: (GoI) is assumed to increase by 5 p
Page 31 and 32: towards Pension and other Retiremen
Page 33 and 34: S.N.Table 3.6:Total Non-Tax Revenue
Page 35 and 36: Chapter-4Non-Plan ExpenditureThe pr
Page 37 and 38: payments as a proportion of non-pla
Page 39 and 40: As per the MTFPS (2011-12), Defence
Page 41 and 42: provision for fertilizer subsidy ha
Page 43 and 44: The Thirteenth Finance Commission h
Page 45 and 46: 5 per cent growth thereon from 2011
Page 47 and 48: Other Subsidies: For each of their
Page 49 and 50: Plan by 113.91 per cent from `13,92
Page 51 and 52: This figure for 2010-11 and 2011-12
Page 53 and 54: Table 4.5:Revised Base Line Project
Page 55 and 56: Chapter-5Internal and Extra Budgeta
Page 57 and 58: Table 5.3:Projected IEBR for the 12
Page 59 and 60: (e) In several economic and even in
Page 61 and 62: private sector. This would imply th
Page 63 and 64: Annexure-IComposition and Terms of
Page 65 and 66: Annexure-IIComposition of Sub Group
Page 67 and 68: Nomination of Official/Academician
Page 69 and 70: Annexure - IV(A)Log Values of CIT,

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