International Journal For Multidisciplinary Research

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Volume 8 Issue 5
September-October 2026

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GST Revenue and Regional Economic Development in India: Evidence from a State-Level Panel Data Analysis, 2020–2025

Author(s) Dr. NAVNEETKUMAR J SHAH
Country India
Abstract This study investigates the relationship between Goods and Services Tax (GST) revenue mobilisation and regional economic development across 16 major Indian states. The analysis is based exclusively on official data published by the Government of India and the Reserve Bank of India (RBI). The empirical dataset comprises a balanced panel of 64 state-year observations covering FY 2020–21 to FY 2023–24. Gross state-level GST collections are obtained from Government of India records, while real per-capita Net State Domestic Product (NSDP) is drawn from the RBI’s Handbook of Statistics on Indian Economy.

To minimise the influence of differences in population and economic size across states, GST revenue is converted into a per-capita measure. The principal empirical model is a log-log panel regression incorporating both state and year fixed effects. The preferred specification produces an estimated elasticity of approximately 0.141 between GST revenue per capita and real per-capita NSDP, with a p-value of approximately 0.059. This indicates a positive within-state association between GST mobilisation and regional economic development, although the estimate falls slightly outside the conventional 5 percent significance threshold. A separate growth-rate robustness specification does not identify a statistically significant contemporaneous relationship. The findings therefore suggest a positive association rather than a causal effect.

The analysis highlights the importance of distinguishing between aggregate tax collections, tax mobilisation per capita, economic scale, and tax intensity when assessing differences in fiscal performance across Indian states. The results also suggest that stronger revenue mobilisation should be considered alongside the effectiveness of public expenditure and broader structural characteristics of regional economies.
Keywords Goods and Services Tax; GST revenue; regional development; state taxation; per-capita NSDP; panel data; fixed effects; India.
Field Sociology > Economics
Published In Volume 8, Issue 5, September-October 2026
Published On 2026-09-11
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CrossRef DOI prefix of IJFMR is 10.36948/ijfmr

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