Presenting the Union Budget in the Parliament today, the Finance Minister Shri P.Chidambaram underlined the need for increasing the Tax GDP ratio. The Finance Minister said that in FY 2011-12, the Tax GDP ratio was 5.5 percent for direct taxes and 4.4 percent for indirect taxes. These ratios are one of the lowest for any large developing country and will not garner adequate resources for inclusive and sustainable development.

Shri P.Chidambaram further added that in 2007-08, the Tax GDP ratio touched a peak of 11.9 percent and in the short term, we must reclaim that peak.

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DSM/RC/nb/41

(Release ID :92755)

Tax to GDP ratio: policy focus on restoring prior tax buoyancy to strengthen revenue mobilisation and fund development. Increasing the Tax to GDP ratio is identified as a central fiscal objective, with the Budget emphasising that current tax buoyancy is insufficient to finance inclusive and sustainable development; the statement records a previously higher peak for the aggregate tax ratio and asserts a short term aim to restore that level by strengthening tax policy and administration to improve revenue mobilisation.