1.
Lalita K. Sharma
– Research Scholar, University School of Management, Kurukshetra University, Haryana, India
2.
Jai Kishan Chandel
– Institute of Management Studies, Kurukshetra University, Haryana, India.
Abstract
The focus of this paper is on the tax-growth nexus. An effort has been made to find out the impact of indirect taxes on the economic growth in India. A comprehensive dataset of 31 years (1991–92 to 2021–22) has been gathered from the Database on Indian Economy (DBIE) maintained by the Reserve Bank of India (RBI). Empirical investigation has been done using the ARDL (Autoregressive Distributed Lag) cointegration approach. The findings uncovered that, in the long run, economic growth in India had a significant inducement from indirect taxes. The economy grew by 0.64% in response to 1% increase in indirect taxes. However, the impact has been insignificant in the short run, which turned significantly negative (0.28%) at first lag. The findings facilitate useful insights for policymakers in India that they should focus on a stable and growth-oriented tax framework, prioritising long-term efficiencies compared with short-term revenue adjustments.
Keywords ARDL, Economic Growth, Indirect Taxes, India
