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ISSN 2063-5346
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IMPACT OF AREA BASED TAX INCENTIVE POLICY ON INDUSTRIAL DEVELOPMENT OF NORTH EAST REGION OF INDIA

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Piyush Kolhe, Dr. T. J. Vidyasagar
» doi: 10.31838/ecb/2023.12.s3.239

Abstract

North East Region of India (NER) consists of eight states andit comprises of 262 thousand sq km area and 45.6 millionpopulation, as per 2011 census records.Nearly two decades ago, Government of India announced industrial policy consisting of area based tax incentives to boost industrial development in these states which resulted in tax expenditure of Rs 1.48 trillion in 12 years (1.13% of tax revenue). The purpose of this study, is toanalyse impact of the policy on industrial development of NER and the eight statesand offer alternative approach. The data published in Annual Survey of Industries by Ministry of Statistics and Programme Implementation under the Government of India onseven selected performance indicatorsfor 22 years from Financial Year 1998-99 to Financial Year 2019-20 has been analysed.We found that the tax incentive policycontributed towards accelerated industrial development, however, the benefits were not spatially widespread but were monopolised by the states which had industrial clusters. Targeted policy of rapid infrastructure development and establishment of heavy industries backed by production linked incentivesmay be a better way forward for industrial development of NER.

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