This text highlights and addresses the challenges faced in formulating fiscal and trade policies for India post-WTO entry. It covers developments in trade theory, public finance and computable general equilibrium modelling and its implementation in India's context.

India's tax revenues depend on manufacturing while agriculture and services generate employment. WTO's Uruguay and Doha rounds imply large tariff cuts. This affects the competitiveness of the Indian manufacturing sector and has implications for government deficits. Excessive dependence on indirect taxes and subsidies to regulate markets introduces distortions and is incompatible with free market principles. The book analyses welfare implications of fiscal and trade policies for India. To put the results in perspective, developments in trade theory, public finance and Computable General Equilibrium (CGE) modelling are covered. Theoretical results are juxtaposed with empirical findings from these models. Methodology to construct CGE models is also covered. The trade model covers tariff cuts under various assumptions besides incorporating "new trade theory". As tax reforms and tariff cuts are independent, past tax reforms like MODVAT (MODified VAT) and proposed reforms like VAT, elimination/reduction of subsidies are covered using a separate tax model.

Literature survey
Tax and trade models
Results from trade model
Results from the tax model
Summary and conclusion. Appendices: Mathematical appendix
Data set
Calibration and parameters
Programming appendix
India - a brief background.