Poonam Sharma and Jaspal Singh
Determinants of tax-revenue in India: a principal component analysis approach
International Journal of Economics and Business Research, Vol. 10, No. 1, 2015
The present study seeks to explore the various important determinants of tax-revenue in India besides suggesting measures to improve the tax generation in India. The data has been collect over a period of 13 years,i.e., from 1999–2000 to 2011–2012. The findings of the principal component analysis revealed that three factors influence tax revenue performance in India namely; ‘Core Developmental Indicators’,‘Growth Boosters’, and ‘Sustainable Development Indicators’. Further, results of multiple regression analysis reveal that all the three factors play a positive role towards tax-revenue generation in India. The results suggest that there is an urgent need to control inflation, population growth rate and non-developmental expenditure, besides improving the growth rates of GDP, exports and allied sectors; as all these parameters have an important bearing on the tax-revenue generation in India.