Journal Press India®

Revenue-Expenditure Nexus for India

Vol 3, Issue 1, January - June 2016 | Pages: 1-15 | Research Paper  

 
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https://doi.org/10.17492/vision.v3i1.7068


Author Details ( * ) denotes Corresponding author

1. * Sanhita Sucharita, Assistant Professor , Centre for Humanities and Social Sciences, School of Humanities and Social Sciences, Central University of Jharkhand, Ranchi, Jharkhand, India (sanhita.sucharita@gmail.com)

This paper attempts to find out the inter-temporal relationship between government expenditures and revenues in India. It tries to find out if the variations in revenues cause variations in expenditures or the variation in expenditure cause variation in revenue. It also analyses the trend and composition of rising public expenditure in India. This paper has used vector error correction mechanism to find out the causality between the governments total expenditure and revenue receipt. The empirical analysis suggests long run causality from Government revenue receipts to Government total expenditure. It supports the tax-spend hypothesis that means over time, expenditure decisions are not made in isolation of revenue receipts.

Keywords

Government revenue, Government expenditure, Tax spend hypothesis, Cointegration, VECM

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