India has recorded a record revenue collection of Rs 27.07 lakh crore in 2021-22, which is around Rs 5 lakh crore above the budgetary estimates of Union Budget 2021-22.
The budget estimates for Union Budget 2021-22 were Rs 22.17 lakh crore. This shows a growth of 34 per cent over last year’s revenue collection of Rs 20.27 lakh crore.
In addition to this, according to official estimates, there is a 49 per cent growth in direct taxes and 20 per cent growth in indirect taxes.
What does all this signify? According to the government, rise in tax collections indicates a rebound in economy in the wake of the Coronavirus pandemic and it has been propelled by Covid immunisation and growth in commercial and manufacturing activities.
This is all the more significant as the Union Budget 2021-22 was presented on February 1, 2021, when the economy was recovering from the first wave of Coronavirus pandemic and Covid vaccine had just arrived.
Boost in tax collections despite Second Wave
Therefore revenue collections having witnessed a huge jump especially when the country was hit badly by the second wave of the pandemic as the Delta variant resulted in lakhs of deaths across the country between April and June 2021, is being described by the government as a sign of economic recovery.
Official sources say that the growth revenue collections has also boosted country’s tax-GDP ratio for 2021-22 to 11.7 per cent.
Good days ahead
Beginning of the immunisation programme in January 2021 and rise in revenue collections has led the economy to the path of recovery, government has said.
GDP growth is boosted by tax collections and Finance Ministry has said that tax buoyancy (which
is a measure of growth in tax revenues as compared to GDP growth) is at a very
healthy figure of 1.9, with 2.8 for direct taxes and 1.1 for indirect taxes.
The ratio of direct to indirect taxes recovered from 0.9 in 2020-21 back to 1.1 in 2021-22.
Tax collections in the coming years will also be boosted by increasing domestic manufacturing activities, which in turn will give rise to employment opportunities, official sources said.