TAX REFORM AND ECONOMIC GROWTH NEXUS IN INDIA: EVIDENCE FROM THE COINTEGRATION AND ROLLING-WINDOW CAUSALITY

This paper examines the impact of tax reform on the economic growth of India over the period 1975–2017. In order to measure the impact of tax reform on the economic growth, we have used various econometric tools like Maki and combined cointegration tests and the rolling-window causality test in this...

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Bibliographic Details
Published in:Singapore economic review 2020-12, Vol.65 (6), p.1699-1725
Main Authors: SETHI, NARAYAN, MOHANTY, SAILEJA, SUCHARITA, SANHITA, LOGANATHAN, NANTHAKUMAR
Format: Article
Language:English
Subjects:
Alcohol
Causality
Economic aspects
Economic growth
Economic theory
Electricity
Fiscal policy
Imbalance
Petroleum products
Policy making
Real estate
Tax law
Tax policy
Tax reform
Taxation
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Summary:This paper examines the impact of tax reform on the economic growth of India over the period 1975–2017. In order to measure the impact of tax reform on the economic growth, we have used various econometric tools like Maki and combined cointegration tests and the rolling-window causality test in this study. The study revealed that a stable long-run parameter stability relationship exists the series on tax reform but unable to obtain the short-run relationship. Results also revealed that growth-led taxation effects and tax-led-growth do not exist in India. Hence, India needs more policies which will help to remove inefficiencies created by the existing heterogeneous taxation system, revenue rate and inclusion of petroleum products, electricity, liquor and real estate and policymakers should adopt some policies for direct tax which reduce the imbalance in class.
ISSN:0217-5908
1793-6837
DOI:10.1142/S021759082050023X