Ankit K U M A R Suryawanshi

This article estimates the tax capacity and tax effort of 17 major states of India from 2001–2002 to 2016–2017 using the stochastic frontier panel data model. It is found that per capita income, agriculture activity, infrastructure, labour force and bank credit are the significant determinants of tax capacity, while social sector spending and central transfer to states are significant in determining tax effort. The Goods and Services Tax has reduced the states’ tax powers. Therefore, the states are highly dependent on their limited legislative taxes for revenue mobilization. However, there is little scope for the subnational governments to increase tax revenue as all states have achieved at least 90% of their tax potential.

This paper looks into fiscal consolidation in India's heartland states of Madhya Pradesh and Chhattisgarh following their separation from 2001 to 2019. The study examines the trends in states' budget deficits, public spending, debt, and revenue collection to meet FRBMA, 2003 fiscal targets. According to the analysis, both states achieved fiscal consolidation after an initial hiccup during the period. The states adhered to the fiscal targets established by the FRBM Act of 2003 and various finance commissions. In Madhya Pradesh and Chhattisgarh, the gap between revenue receipts and revenue expenditure has narrowed. The percentage of interest payments deducted from revenue has also been reduced. Madhya Pradesh and Chhattisgarh are backward states, despite their above-average economic growth. The deficit and debt levels and the states' interest payments have increased later in the study period. The States must generate revenue through legislative non-GST taxes and other non-tax sources.

Madhya Pradesh (MP) has made considerable growth in its agriculture sector and has emerged to be the largest producer of foodgrains. The state needs to investigate, whether this substantial growth of agriculture production was stable and evenly distributed among the various crops or if it was concentrated on a few crops only. Accordingly, this paper aims to study the growth trends and their association with the stability of major crops with respect to their output, area, and yield during 2001-02 to 2014-15. 1The paper also aims to analyze the shift in the growth of crops as well as the association between the growth of their area under cultivation and yield growth. This study uses semi-log regression to estimate the growth rate of major crops and a dummy regression model to analyze the shift in the crops, further, an index has also been constructed to measure the degree of instability. The results show that agriculture in Madhya Pradesh is in a comfortable state as most of the crops with a few exceptions grew substantially in all three aspects. The area doesn't seem to be influenced by the yield or technology, but by other market forces. Besides, some crops have observed significant shifts with respect to all three parameters. The crops like cotton, tur, mustard, jowar, and soybean were found to have lost their part in later years which needs special concern. These shifts have also led to instability in the crops, however, the crops with lower growth and high instability like jowar, maize and it should be a matter of concern.

The financial sector in India is going through a phase of rapid expansion, where, the government of India is making efforts to enhance to financial umbrella for those who are deprived of these services, especially banking'. Many studies in past have presented and explained the role of financial development in boosting economic growth. Accordingly, it is expected that financial development will lead to economic expansion. This paper aims to analyze the trend of financial development and its relationship with national output in India. The results of this study describe that financial development and economic development in India have a bi-directional causal relationship.

This paper aims to compare the pattern of own-tax collection and tax buoyancy of high and low-income states of India from 2001-02 to 2016-17. The study observed that the tax-to-GSDP ratio decreased in the high-income states. While it observed an increase in low-income states except for Rajasthan. The lower-income states observed the buoyant tax revenue collections. Whereas, the high-income states were not able to maintain the buoyant taxes. Thus, the states with lower tax buoyancies need to strengthen their administrative structure to increase their tax coverage.

The tax-to-GSDP ratios were found to increase in both of the states in the reference period. But there is a large gap between revenue mobilized from direct and indirect taxes in both the states. Revenue
mobilization from indirect taxes was far greater than that of direct taxes in Madhya Pradesh and Chhattisgarh both. The condition of direct tax
revenue mobilization was not at par in both states while having a comparatively better position than Madhya Pradesh. This can be attributed to the larger share of the service sector in MP’s economy and the lesser share of the same in CG’s economy. The revenue mobilized from indirect taxes was greater than 85 percent in both states, while Chhattisgarh had a comparatively greater share of the same in its own tax revenue than that of Madhya Pradesh. This can be attributed to a lesser share of the secondary sector in MP’s economy and a higher share of the same in CG’s economy. The gap between the share of direct and indirect taxes explains that these states are overly dependent on indirect tax revenue. Chhattisgarh was found to be a state highly dependent on its own resources for mobilizing revenues as an increase in the share funds transferred from the Centre in its GSDP was very nominal and insignificant. The compounded growth rate of tax and non-tax revenues was found to be significant in both states. The CAGR of Madhya Pradesh was superior in the case of Share in Centre tax and direct taxes only. While, Chhattisgarh was performing better in the case of overall own tax revenue (OTR), own non-tax revenue, and indirect taxes. Similarly, the response of tax revenue yields was found to be buoyant in both states while Madhya Pradesh had superior results to Chhattisgarh. Madhya Pradesh was found to be superior in absorbing tax revenues with increased GSDP.