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

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  • Dillip Kumar MUDULI

    (University of Hyderabad, Hyderabad, India)

  • Nityasundar MANIK

    (University of Hyderabad, Hyderabad, India)

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.

Suggested Citation

  • Dillip Kumar MUDULI & Nityasundar MANIK, 2020. "Tax structure and economic growth in general category states in India: A panel auto regressive distributed lag approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(623), S), pages 225-240, Summer.
    • Handle: RePEc:agr:journl:v:2(623):y:2020:i:2(623):p:225-240
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