Prioritising GDP or Tax Revenues: Indian Economists’ Dilemma

Abstract

An efficient tax administration with fair tax rates is likely to generate substantial revenues, reducing the fiscal deficit, creating employments, and taming inflation. Indian tax administration has used the power to levitate tax as if it has been taken for granted by adopting the fixed money value target per geographical area instead of any data analytics. The effective tax rate and the average statutory tax rates were the highest in 2017–2018. Focus on generating non-tax revenues by multiple ways and structural reforms for boosting investments and household savings for accelerating GDP should be preferred over maximising tax revenues.