India's Transport Sectors: Fiscal Issues and Allocative Efficiency

Abstract

The main objective of the study is to prepare a comprehensive documentation of taxes and user charges on transport sectors in India. The existing complex tax regime adds to the inefficient delivery of transport services, which suffer from other policy distortions. The second objective of this study is to evaluate gains to the economy when the delivery of transport services becomes relatively efficient through removing tax and other policy distortions. Such an analytical exercise is implemented using a general equilibrium model of the economy within the framework of input-output flow matrices. In the absence of any quantitative measure of inefficiency levels, this study computes their implicit values based on international and domestic databases on the usage of transport services and taxation thereon. Finally, the study sheds light on some indicative relationships between efficient provision of transport services and the greening of the economy.

Keywords: Transport sector, India

JEL Classification: H21