Nobel laureate James A Mirrlees on Thursday asked India to extend its tax base from salaried class to agriculture and unorganised sectors in order to keep its burgeoning fiscal deficit under control.

Mirrlees, who received the coveted Noble Prize for his work on 'Economics of Uncertainty' in 1996, said that India's fiscal deficit stood at nearly 5 per cent of GDP in comparision to China's 2.5 per cent (FY 2003).

"India needs to widen its tax base as its tax rate per national income lags behind of its neighbour. China has managed to raise its tax rate per national income to 12.9 per cent as against India's 7.8 per cent," he said, addressing an international tax conference here organised by FICCI.

From 1998 to 2003, tax revenue grew by 12.6 per cent in India, while it was 17.3 per cent in China, he said.

The government should bring some sort of reforms in farm sector to calculate its total income, he said, adding Indian agriculture output was still measured by crop cutting expenditure.

"In developing economies, the informal sector -- small firms and individual producers -- is large. Transaction among them are poorly recorded which is difficult for a tax authority to observe," he said.

Expressing concern over the trend of tax evasion and corruption in society, he said: "Evasion makes a system more expensive. If enforcement is introduced, the tax rate should be somewhat lower, but net revenue should increase."