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Policies, Enforcement, and Customs Evasion :, Evidence from India, Prachi Mishra, Arvind Subramanian, Petia Topalova

We examine the effect of tariff policies on evasion of customs duties, in the context of the trade reform in India of the 1990s. We exploit the variation in tariff rates across time and products to identify the evasion elasticity, namely, the effect of tariffs on evasion, and relate this elasticity to factors related to customs enforcement or the quality of customs institutions. We find a positive and robust effect of tariffs on import tax evasion. We then show that the evasion elasticity is influenced by certain product characteristics that determine how easy it is to detect evasion (with more differentiated products exhibiting a higher evasion elasticity). This evasion elasticity, which we broadly interpret as reflecting the quality of customs administration, has not improved over the 1990s. Finally, our results suggest that the effectiveness of customs in addressing evasion may be better in India than China, although China appears to be catching up over time
Table Of Contents
Contents; I. Introduction; Figures; 1. Evolution of Tariffs in India; 2. Customs Seizures and Evasion Over Time, 1988-2004; II. Defining Evasion; III. Data; IV. Empirical Strategy; V. Results; A. Elasticity of Evasion with Respect to Tariff Rates; B. Enforcement and the Elasticity of Evasion with Respect to Tariff Rates; VI. Enforcement Quality Over Time; 3. Elasticity of Evasion wrt Tariffs Over Time, 1988-2001-95 Percent Confidence Bands; VII. Babu Versus Mandarin: Comparing Chinese and Indian Customs Enforcement; 4. Alternative Indices of Institutions, India; VIII. Concluding Remarks
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (41 p.)
Specific Material Designation
Form Of Item

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