Tax Buoyancy and Revenue Mobilization in Emerging Economies: Empirical Insights from India

Revenue sustainability accompanied with economic transformation has been the major concerned for developing country like India over the last few decades. Government introduced structural changes, digitalisation of compliance, consolidation of different tax laws to increase the tax base and revenue mobilisation. However, external shocks like global financial crisis, the covid pandemic, etc. dilute the expected outcomes. The primary focus of this paper is to critically examine the trend of tax revenue over last two decade in India and to estimate the tax buoyancy across critical policy phases, including the post-GST period and the economic disruptions triggered by the COVID-19 pandemic. Further, India’s performance is benchmarked against select emerging economies to provide comparative insights into tax administration effectiveness and fiscal resilience. The study considers both direct and indirect tax revenue and GDP of India over 24 years ending with 2023–2024. Log-Log OLS with robust standard error regression, Structural break analysis and interrupted time series techniques are employed to assess the impact of major reforms and global economic events on tax responsiveness. A strong and positive relationship is found between tax revenue and economic growth of India. Across all three phases, the buoyancy coefficients remain well below unit, implying tax revenue has not been sufficiently responsive to GDP growth. GST showed delayed but positive effects on revenue growth, the pandemic led to an immediate shock, followed by a faster recovery trajectory, possibly aided by economic revival measures and tax reforms aimed at simplification and efficiency. The study contributes to global debates on taxation and development by offering empirical evidence from one of the world’s fastest-growing economies, providing actionable lessons for policymakers across emerging markets.