IDEAS home Printed from https://ideas.repec.org/p/npf/wpaper/20-313.html
   My bibliography  Save this paper

Natural Resources Revenue Buoyancy in India: Empirical Evidence From State-specific Mining Regime

Author

Listed:
  • Chakraborty, Lekha S.

    (National Institute of Public Finance and Policy)

  • Thomas, Emmanuel

    (JNU)

  • Gandhi, Piyush

    (Oxford University)

Abstract

The dynamics of natural resources revenue-the payment due to the sovereign owner (government) in exchange for the right to extract the mineral substance-is complex, how it is fixed and paid. It is controversial and significant, as it is a revenue that is unique to the resources sector and also that has been fixed and paid in multiple extractive tax regimes, sometimes on the measures of profitability, but more often based on ad valorem (value based) or the unit of the mineral extracted. We try to analyse how dynamic revenue from natural resources across the States in India , within a comparative framework with other (direct and indirect) taxes. Using the ARDL methodology, we have tried to estimate the revenue buoyancy within States and between the States in a panel, and analysed the short run and long run coefficients and their speed of adjustment. Using HP filter, we tried to estimate the potential GDP, and also analysed the cyclicality of revenue buoyancy using output gap variable across states. Our findings revealed that revenue from natural resources is a buoyant source of revenue, though there is distinct State-specific differentials. The policy implication of our study for the natural resources sector is the rate rationalisation as higher rates revised upward every three years through Royalty Study Group by Government of India can affect the revenue augmentation if Laffer Curve starts operating and in turn it affects the firm level competitiveness. The decision of shifting the mining regime from tonnage regime to ad-valorem regime for non-atomic non-ferrous is welcome, as it is market-linked.

Suggested Citation

  • Chakraborty, Lekha S. & Thomas, Emmanuel & Gandhi, Piyush, 2020. "Natural Resources Revenue Buoyancy in India: Empirical Evidence From State-specific Mining Regime," Working Papers 20/313, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:20/313
    Note: Working Paper 313, 2020
    as

    Download full text from publisher

    File URL: https://www.nipfp.org.in/media/medialibrary/2020/07/WP_313_2020.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sacchidananda Mukherjee, 2020. "Goods and Services Tax efficiency across Indian States: panel stochastic frontier analysis," Indian Economic Review, Springer, vol. 55(2), pages 225-251, December.
    2. Charles Adams & David T. Coe, 1990. "A Systems Approach to Estimating the Natural Rate of Unemployment and Potential Output for the United States," IMF Staff Papers, Palgrave Macmillan, vol. 37(2), pages 232-293, June.
    3. Honey Karun & Hrishikesh Vinod & Chakraborty, Lekha S., 2020. "Did public investment crowd out private investment in India?," Working Papers 20/312, National Institute of Public Finance and Policy.
    4. Paolo Dudine & Joao Tovar Jalles, 2018. "How Buoyant Is the Tax System? New Evidence from a Large Heterogeneous Panel," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(6), pages 961-991, August.
    5. Peter Clarke, 1998. "The Keynesian Revolution and its Economic Consequences," Books, Edward Elgar Publishing, number 1257.
    6. Pandey, Rita & Gupta, Manish & Sachdeva, Paavani & Singh, Abhishek, 2020. "Biodiversity Conservation in India: Mapping Key Sources and Quantum of Funds," Working Papers 20/311, National Institute of Public Finance and Policy.
    7. Vincent Belinga & Ms. Dora Benedek & Ruud A. de Mooij & Mr. John Norregaard, 2014. "Tax Buoyancy in OECD Countries," IMF Working Papers 2014/110, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patnaik, Ila & Pandey, Radhika, 2020. "Moving to Inflation Targeting," Working Papers 20/316, National Institute of Public Finance and Policy.
    2. Choudhury, Mita & Dubey, Jay Dev, 2020. "Equity in Intra-State Distribution of Public Spending on Health: The Case of Bihar and Tamil Nadu," Working Papers 20/315, National Institute of Public Finance and Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chakraborty, Lekha S & Thomas, Emmanuel & Gandhi, Piyush, 2019. "Natural Resources Revenue Buoyancy in India: Empirical Evidence From State-specific Mining Regime," MPRA Paper 99293, University Library of Munich, Germany, revised 2020.
    2. Fulgence Dominick Waryoba, 2018. "Import Base and Revenue Improvement Possibilities in Tanzania," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(1), pages 21-28, March.
    3. Martina Yakova, 2019. "Tax buoyancy of the EU-28 countries – a comparative analysis," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 59-73.
    4. Audi, Marc & Ali, Amjad & Roussel, Yannick, 2021. "Measuring the Tax Buoyancy: Empirics from South Asian Association for Regional Cooperation (SAARC)," MPRA Paper 109567, University Library of Munich, Germany.
    5. Lagravinese, Raffaele & Liberati, Paolo & Sacchi, Agnese, 2020. "Tax buoyancy in OECD countries: New empirical evidence," Journal of Macroeconomics, Elsevier, vol. 63(C).
    6. Honey Karun & Hrishikesh Vinod & Chakraborty, Lekha S., 2020. "Did public investment crowd out private investment in India?," Working Papers 20/312, National Institute of Public Finance and Policy.
    7. Olivier Passet & Christine Rifflart & Henri Sterdyniak, 1997. "Ralentissement de la croissance potentielle et hausse du chômage," Revue de l'OFCE, Programme National Persée, vol. 60(1), pages 109-146.
    8. Skare, Marinko, 2010. "Can there be a 'golden triangle' of internal equilibrium?," Journal of Policy Modeling, Elsevier, vol. 32(4), pages 562-573, July.
    9. Michael White, 2009. "Hunting a precursor: The limits of Mountifort Longfield on utility and value," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 16(1), pages 65-96.
    10. Sadananda Prusty & Anubha & Saurabh Gupta, 2021. "On the Road to Recovery: The Role of Post-Lockdown Stimulus Package," FIIB Business Review, , vol. 11(2), pages 206-224, June.
    11. Sean Dougherty & Pietrangelo Biase, 2021. "Who absorbs the shock? An analysis of the fiscal impact of the COVID-19 crisis on different levels of government," International Economics and Economic Policy, Springer, vol. 18(3), pages 517-540, July.
    12. Melisso Boschi & Stefano d'Addona, 2019. "The Stability of Tax Elasticities over the Business Cycle in European Countries," Fiscal Studies, John Wiley & Sons, vol. 40(2), pages 175-210, June.
    13. Céline Piton, 2022. "The labour market performance of vulnerable groups: towards a better understanding of the main driving forces," ULB Institutional Repository 2013/352519, ULB -- Universite Libre de Bruxelles.
    14. Bernd Hayo & Sascha Mierzwa & Umut Unal, 2021. "Estimating Policy-Corrected Long-Term and Short-Term Tax Elasticities for the United States, Germany, and the United Kingdom," MAGKS Papers on Economics 202112, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    15. Stephen S. Poloz, 1995. "The Causes of Unemployment in Canada: A Review of the Evidence," Macroeconomics 9502002, University Library of Munich, Germany.
    16. Mukherjee, Sacchidananda, 2021. "Revenue Shortfall and GST Compensation: An Assessment," Working Papers 21/356, National Institute of Public Finance and Policy.
    17. Nazila Alinaghi & W. Robert Reed, 2021. "Taxes and Economic Growth in OECD Countries: A Meta-analysis," Public Finance Review, , vol. 49(1), pages 3-40, January.
    18. Direye, Eli, 2017. "An empirical study on the dynamic effects of fiscal shock on the economy of Papua New Guinea," MPRA Paper 113917, University Library of Munich, Germany.
    19. Piton Céline & Rycx François, 2019. "Unemployment Impact of Product and Labor Market Regulation: Evidence from European Countries," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-32, June.
    20. Bassey Okon Ebi & Oluwafemi Ayodele, 2017. "Tax Reforms and Tax Yield in Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 768-778.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:npf:wpaper:20/313. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: S.Siva Chidambaram (email available below). General contact details of provider: http://www.nipfp.org.in .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.