15th Finance Commission Chairman NK Singh on Friday said India’s tax revenue potential is lower by 4 per cent of GDP and the country needs to bring in deep reforms in the revenue management system.
He also said an incentive mechanism for states needs to be worked out so that their policies are aligned to those of the central govt.Speaking at the CSEP-IMF event on “Securing Sustainable Finances and Medium-term Fiscal Frameworks: International Experience and Relevance for India”, Singh said there is a need to redo direct and indirect taxes and bring about deep reforms in the revenue system. “At least 4% of GDP is a lost potential in terms of India’s revenue and if some part of it could be realised it would help greatly in aligning not only inevitable expenditure needs, pandemic needs”.