Thursday, July 6, 2017

14 July 2017: Place-based Preferential Tax Policy and its Spatial Effects: Evidence from India’s Program on Industrially Backward Districts

Yi Jiang and Rana Hasan
Asian Development Bank

Indian government initiated a program in 1994 to promote manufacturing in districts designated “backwards”. The way the backwards districts were identified enables us to employ a regression discontinuity design to evaluate the impacts of the program. We find that the program’s 5-year tax exemption to manufacturers led to a significant increase in firm entry and employment in relatively better-off backward districts, particularly in light manufacturing industries. However, the program also resulted in negative spillover effects on districts which were neighbouring these backward districts and relatively weaker in economic activity. The findings emphasise that the spatial effects of place-based policies deserve greater attention from policy makers.

Date: July 14, 2017
Time: 03:30 P.M.

Conference Hall
Centre for Policy Research,
Dharma Marg, Chanakyapuri,
New Delhi–110021(INDIA)


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