A Study of Co Integration Between Government Tax Revenues and Government Expenditures in India

Abstract

Purpose: The study focal point is to analyse the relationship between Government Tax Revenues (GTR) and Government Expenditures (GE) in India. It also aims to identify the impact of factors influencing Government Tax Revenues (GTR) and Expenditures (GE) in India and to examine the perception of respondents as regard to Government Tax Revenues and Expenditures. newlineMethodology: For the purpose of the study a sample size of India is the sole focus in order to analyse the relationship between Governments Tax Revenues and Expenditures in India for a period of 16 years commencing from F.Y 2000-2001 to 2016-2017 has been taken into consideration. For the purpose of primary data, questionnaire has been prepared and administered to 220 respondents out of which only 151 positive responses have been collected and analysed by factor analysis. For Secondary data Econometrics tools like ADF, Johansen Co-integration test and Granger Causality test have been used to examine the relationship between variables and further hypotheses have been tested through Analysis of variances (ANOVA). newlineFindings: After examined and analyzed the co-integration between government tax revenues and expenditures in India researcher has found that GTR and GE variables are stationary at I (1) tested by ADF t- statistics, further Johansen Co- integration Model and VCEM test have applied and found that all the series are integrated an order I (1) means GTR and GE variables have long run association. At last, Granger Causality Test found that GE granger cause GTR (Spend-Tax) Hypothesis. The Granger causality result indicates a unidirectional causality spends and tax hypothesis exists in India. newlineResearch Implications: In the last, researcher feels that this study will consent to more fruitful and objective assessment of co-integration between government tax revenues and government expenditures in India help to know the relationship and contribution share of various taxes and expenditures towards society at large. newlineOriginality/Value: This study is the one of few studies which has examined and analyse the co-integration between government tax revenues and expenditures in India. newline newline