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

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  • Sacchidananda Mukherjee

Abstract

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

Suggested Citation

  • Sacchidananda Mukherjee, 2020. "Estimation and Projection of Petroleum Demand and Tax Collection from Petroleum Sector in India," Journal of Infrastructure Development, India Development Foundation, vol. 12(1), pages 39-68, June.
  • Handle: RePEc:sae:jouinf:v:12:y:2020:i:1:p:39-68
    DOI: 10.1177/0974930620903558
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    1. Mukherjee, Sacchidandanda, 2020. "Possible Impact of Withdrawal of GST Compensation Post GST Compensation Period on Indian State Finances," Working Papers 20/291, National Institute of Public Finance and Policy.
    2. Mukherjee, Sacchidananda & Badola, Shivani, 2021. "Public Finance Management in India in the time of COVID-19 Pandemic," Working Papers 21/337, National Institute of Public Finance and Policy.
    3. Chakraborty, Lekha & Chakraborty, Pinaki & Shrestha, Ruzel, 2019. "Budget Credibility of Subnational Governments: Analyzing the Fiscal Forecasting Errors of 28 States in India," Working Papers 19/280, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Petroleum demand; petroleum taxes; petroleum consumption; revenue projections; goods and service tax; econometric models; India;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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