Tamil Nadu can lead India on revenue reform

The article discusses Tamil Nadu's initiative to form a high-level Revenue Augmentation Committee, chaired by Montek Singh Ahluwalia, aimed at modernizing the definition and management of state revenue. It highlights the need for Tamil Nadu to strengthen its own-tax and non-tax revenues, improve fiscal buoyancy, and achieve greater fiscal self-reliance, given a decline in its own-tax revenue as a percentage of GSDP. The author advocates for adopting international standards, specifically the IMF's Government Finance Statistics Manual (GFSM 2014), to clearly distinguish genuine government revenue from financing activities like borrowing and asset sales. The article suggests that by improving tax administration, reviewing user charges, royalties, and returns from public assets, Tamil Nadu can establish a sustainable revenue base and set a benchmark for other Indian states and the Union government in public financial management reform.