As part of the wider economic reforms process, massive reforms in direct/indirect taxes have been made in India at the centre/state level, over the period of last more than one decade. Introduction of VAT (value added tax) replacing the cascading type of Sales Tax was one of main reforms in taxation arena. Present study begins with a descriptive introduction to economic reforms in India alongwith an analysis of tax structure and tax reforms evolution process at the centre as well as state level. The crux of the work however lies in an indepth empirical investigation into the economic effect of the fiscal reforms undertaken, particularly the implementation of VAT, in the specific context of the state of Orissa, but in a comparative perspective in respect of other major states of the country. Extensive statistical data for the period 1981-2009 has been used for the purpose. It is observed that Post-VAT period has been more stable in the economy of Orissa as it has helped in the generation of higher revenue for the state. On the basis of its analysis, the study suggests areas for further reforms.
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