Next month, during the budget time the deft hand of a tax reformer may well be missing. Parthasarathy Shome the advisor to the finance minister is set to move out of North Block to take up, what is believed to be, a new assignment abroad. Last year he was one of the key players in designing the tax policy as reflected in measures such as the fringe benefit tax and the cash withdrawal tax.
Speculation still abounds as to why he chose to quit when another budget is round the corner. But Mr Shome will miss out perhaps on implementing some of the recommendations that the tax reforms committee headed by him had pitched for.
Five years ago, Mr Shomes report on tax reforms laid down the blueprint for future fiscal reforms. The integration of services with VAT, a comprehensive restructuring of MAT, rationalisation of tax saving instruments and removal of exemptions formed part of his recommendations in the report commissioned by the Planning Commission in 1991.
Unlike Raja Chelliah, who authored a comprehensive report on tax reforms, Mr Shome had the good fortune to oversee the process of carrying out the recommendations he had made in his report. This happened after he was appointed as the advisor to the finance minister after the UPA government took over.
He came to the job with strong credentials. Mr Shome has analysed Indias taxation policies since 1991. With a long stint in IMF, he has had a ringside view of the workings of tax regimes in East Europe. Mr Shome was an integral member of a multilateral agency being associated with fiscal packages for economies in Latin America like Brazil and Argentina. In Brazil, he was honoured with one of the highest civilian awards.
Later, on his return to India, Mr Shome headed the National Institute of Public Finance and Policy. He then moved back to the IMF and he was attached to its regional training institute in Singapore.
Over the last three years after his return to the government in 2004, his friends felt that he had managed to hold his own against career bureaucrats who mark their turf out clearly. There is a fair amount of speculation that it may not have been the case. That will be a pity especially at a time when one of the most significant measures on the fiscal reforms front has to be pushed now.
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