Does government revenue converge across Indian states? Evidence from club convergence

While the bulk of the studies in India examine the convergence of per-capita income or expenditures, we investigate whether there is any evidence of convergence of government revenues and its various compositions by focusing a panel of 22 Indian states for the periods 1980-81 to 2014-15. To answer t...

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Bibliographic Details
Published inApplied economics letters Vol. 29; no. 10; pp. 915 - 919
Main Authors Akram, Vaseem, Rath, Badri Narayan
Format Journal Article
LanguageEnglish
Published London Routledge 07.06.2022
Taylor & Francis LLC
Subjects
capital receipts
Central government
club convergence
Convergence
Decentralization
Economic analysis
Economic theory
Economics
Grants
Grants-in-aid
Revenue
revenue receipts
state-owned tax-revenue
Tax revenues
Taxation
Total revenues
India
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Summary:While the bulk of the studies in India examine the convergence of per-capita income or expenditures, we investigate whether there is any evidence of convergence of government revenues and its various compositions by focusing a panel of 22 Indian states for the periods 1980-81 to 2014-15. To answer this question, the present study employs Phillips and Sul panel club convergence technique. The results find evidence of a single club convergence in the case of total revenues and revenues collected in the revenue account. Further, our results also reveal the presence of three-club convergence when we disaggregate the gross revenues into capital receipts and state-owned tax-revenue. From the policy perspective, it is important for the Central government to integrate all states in revenues collection through tax devolution formula and grants-in-aid.
ISSN:1350-4851
1466-4291
DOI:10.1080/13504851.2021.1897734