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An Econometric Analysis of Revenue Diversification Among Selected Indian States

Author

Listed:
  • J.S. Darshini
  • K. Gayithri

Abstract

The key objective of this article is to empirically examine the trends and determinants of revenue diversification with respect to 14 major Indian states. The findings highlight a gradual decrease in the level of revenue diversification, which has become more visible in recent years. This indicates an erratic pattern of growth in tax and non-tax revenue sources. The panel cross-sectional–autoregressive distributed lag model test results reveal a positive contribution of economic and institutional factors, as compared to political factors, toward the process of revenue diversification. Overall, it is evident that cyclical fluctuations in the major tax revenue sources, coupled with a lessened emphasis on rationalising the structure of non-tax revenue sources, seem to have had an adverse impact on the process of revenue diversification on the part of states. JEL Classifications: H0, H1, H2, H7

Suggested Citation

  • J.S. Darshini & K. Gayithri, 2023. "An Econometric Analysis of Revenue Diversification Among Selected Indian States," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 24(1), pages 41-63, March.
    • Handle: RePEc:sae:soueco:v:24:y:2023:i:1:p:41-63
    DOI: 10.1177/13915614231158438
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    References listed on IDEAS

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    More about this item

    Keywords

    Fiscal policy; revenue structure; revenue diversification; CS-ARDL;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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