Estimation and Projection of Petroleum Demand and Tax Collection from Petroleum Sector in India

Taxes from the petroleum sector constitute a significant share in indirect tax collection of the union as well as state governments in India. Understanding prospective revenue from petroleum taxes could help governments in better public finance management. The importance of revenue from the petroleu...

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Bibliographic Details
Published in:Journal of infrastructure development 2020-06, Vol.12 (1), p.39-68
Main Author: Mukherjee, Sacchidananda
Format: Article
Language:English
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Summary:Taxes from the petroleum sector constitute a significant share in indirect tax collection of the union as well as state governments in India. Understanding prospective revenue from petroleum taxes could help governments in better public finance management. The importance of revenue from the petroleum sector has increased after the introduction of Goods and Services Tax (GST) in India, as fiscal autonomy of the governments (both federal and provincial) to augment tax collection through unilateral policy changes has been curtailed with harmonisation of the tax system. Revenue mobilisation from petroleum taxes is dependent on consumption (sales) of petroleum products, and, therefore, understanding consumption of petroleum products is important to understand prospective revenue from the petroleum sector. The objective of this article is to estimate the petroleum consumption function and revenue (tax collection) function. Based on the estimated functions, we project the petroleum demand and tax collection for the period from 2017–18 to 2024–25. JEL Classification: H25, Q41, Q47
ISSN:0974-9306
0975-5969
DOI:10.1177/0974930620903558