Tax Revenue and Financial Deficit of Central and State Governments in India: A Study on Pre and Post Corona Pandemic Period
DOI:
https://doi.org/10.67224/ioasdjbms.2024.v01i04.003Keywords:
Central government, financial deficit, State government, and Tax revenueAbstract
The objective of this paper is to study the tax revenue and financial deficit of the central and state governments in India. It has found that direct and indirect tax revenues have increased since 1994-95, but direct tax has declined due to the corona pandemic. Indirect tax revenue and total tax revenue of the central government did not decline during or after the corona pandemic. The Corona pandemic negatively affected tax revenue of the state governments. Total tax revenue of state governments has increased more than 33 times in the last 28 years. Indirect tax revenue of the state government is higher than the direct tax revenue. The Corona pandemic did not affect the total receipts of the central government. Revenue receipts declined during the corona pandemic period, but recovered in post-corona pandemic period. Revenue receipts are higher than the capital receipts. Total capital receipts of the central government were increased due to the corona pandemic. Market borrowings had the highest contribution in total capital receipts, which was followed by small savings receipt, and disinvestment receipts. Gross fiscal deficit of states receipts and expenditures are increasing continuously, but gross fiscal deficit of states receipts decreased during the corona pandemic. Gross fiscal deficit, and financing of gross fiscal deficit are increased during the post-pandemic period. Gross fiscal deficit of the central government has been increasing since 1995-96. Gross fiscal deficit expenditure of the central government is higher than the gross fiscal deficit receipts. Central government collects funds from internal and external sources for financing the gross fiscal deficit. Gross fiscal deficit, gross primary deficit and revenue deficit of central and state governments were increased due to the corona pandemic. They increased during the post-pandemic period. Therefore, the central government and state government should implement policies for increasing tax revenue and reducing financial deficits.
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