Tax structure and economic growth in general category states in India: A panel auto regressive distributed lag approach

Dillip Kumar Muduli and Nityasundar Manik
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Dillip Kumar Muduli: University of Hyderabad, Hyderabad, India
Nityasundar Manik: University of Hyderabad, Hyderabad, India

Theoretical and Applied Economics, 2020, vol. XXVII, issue 2(623), Summer, 225-240

Abstract: The study empirically investigates the impact of tax structure on economic growth in fourteen general category states in India using panel data covering the period from 1980 to 2016. The use of panel ARDL model and different residual cross dependence tests confirms the distortionary effect of State’s Own Direct Tax Revenue on economic growth. And also the study finds positive relationship between State’s Own Indirect Taxes and economic growth. Therefore, it is suggested that the states should collect more revenue from indirect taxes with due consideration to its regressive nature, and reduce revenue collection from direct taxes in order to achieve higher growth.

Keywords: tax structure; state taxation; state expenditure; economic growth; panel ARDL. (search for similar items in EconPapers)
Date: 2020
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