On the manu-kautilya norms of taxation: An interpretation using laffer curve analytics.

High tax-rates erode their own bases, and thereby adversely affect tax-revenues. This general idea, which is referred to as the Laffer Curve, can be traced back to Kautilya's famous treatise on economics, Arthasastra, and even before that, to the ancient Indian book of laws called the Manusmriti. This paper considers the basic tenets of taxation prescribed in these texts and attempts to interpret the tax-rates proposed for different economic activities using Laffer Curve analytics. In particular, an attempt is made to interpret the core rate of taxation proposed in these works, viz., one-sixth of the tax-base. The implicit assumption in prescribing moderate tax-rates appears to indicate the value judgement that in most economic activities, the negative substitution effect of increasing taxation overpowers the positive income effect, if any, at rather low tax-rates.Taxation

Fiscal deficits and government debt in India: Implications for growth and stabilisation.

This paper examines the long term profile of fiscal deficit and debt relative to GDP in India, with a view to analysing debt-deficit sustainability issues along with the considerations relevant for determining suitable medium and short-term fiscal policy stance. The impact of debt and fiscal deficit on growth and interest rates that arises from their effect on saving and investment are critical in any examination of sustainability of debt and deficit. It is argued that large structural primary deficits and interest payments relative to GDP have had an adverse effect on growth in recent years. The Fiscal Responsibility and Budget management Act (FRBMA) of the central government has certain positive features. While the fiscal deficit target has been defined, it should be considered in conjunction with a target debt-GDP ratio. Further, the central FRBMA should be supplemented by state level fiscal responsibility legislations and an effective hard budget constraint on subnational borrowing. There is a clear need to bring down the combined debt-GDP ratio from its current level, which is in excess of 80 percent of GDP. The process of adjustment can be considered in two phases: adjustment phase and stabilisation phase. In the adjustment phase, fiscal deficit should be reduced in each successive year until revenue deficit, and correspondingly, government dissaving, is eliminated. In the second phase, fiscal deficit could be stabilised at 6 percent of GDP. The debt-GDP ratio would eventually stabilise at 56 percent. In this process, the ratio of interest payments to revenue receipts will fall, enabling a progressively larger amount of primary revenue expenditure to be incurred on the social sectors.Fiscal deficit ; Economic growth

Fiscal transfer in Australia: Review and relevance to India.

This paper examines the working of Australia's fiscal transfer system in the context of its long term evolution, paying particular attention to salient changes that have occurred since the introduction of a comprehensive Goods and Services Tax (GST). The GST has served to increase the vertical imbalance in the system, which was high even prior to this change, by placing more revenue resources with the commonwealth government in Australia. In spite of a high degree of expenditure centralisation, considerable emphasis is placed in Australia for achieving horizontal fiscal equalisation through an elaborate mechanism of equalisation transfers, which looks into both revenue and expenditure sides of the state budgets and calculates revenue and expenditure `disabilities' that account for departures from a pure equal per capita distribution of the shareable amounts. This paper looks at the equity and efficiency implications of the Australian equalisation transfers and considers its relevance for the Indian system, which has many comparable features. Apart from the need for making equalising features of the Indian transfer system more transparent, there is need for emphasising some cost disabilities, particularly those that are structural and exogenous in nature.Fiscal transfer ; Australia

Are direct photons a clean signal of a thermalized quark gluon plasma?

Direct photon production from a quark gluon plasma (QGP) in thermal equilibrium is studied directly in real time. In contrast to the usual S-matrix calculations, the real time approach is valid for a QGP that formed and reached LTE a short time after a collision and of finite lifetime ($\sim 10-20 \mathrm{fm}/c$ as expected at RHIC or LHC). We point out that during such finite QGP lifetime the spectrum of emitted photons carries information on the initial state. There is an inherent ambiguity in separating the virtual from the observable photons during the transient evolution of the QGP. We propose a real time formulation to extract the photon yield which includes the initial stage of formation of the QGP parametrized by an effective time scale of formation $\Gamma^{-1}$. This formulation coincides with the S-matrix approach in the infinite lifetime limit. It allows to separate the virtual cloud as well as the observable photons emitted during the pre- equilibrium stage from the yield during the QGP lifetime. We find that the lowest order contribution $\mathcal{O}(\alpha_{em})$ which does \emph{not} contribute to the S-matrix approach, is of the same order of or larger than the S-matrix contribution during the lifetime of the QGP for a typical formation time $\sim 1 \mathrm{fm}/c$. The yield for momenta $\gtrsim 3 \mathrm{Gev}/c$ features a power law fall-off $\sim T^3 \Gamma^2/k^{5}$ and is larger than that obtained with the S-matrix for momenta $\geq 4 \mathrm{Gev}/c$. We provide a comprehensive numerical comparison between the real time and S-matrix yields and study the dynamics of the build-up of the photon cloud and the different contributions to the radiative energy loss. The reliability of the current estimates on photon emission is discussed.Comment: 31 pages, 12 eps figures, version to appear in PR