The unsung hero

After five years, it seems GST has begun to show sustained growth even as it has many weaknesses and policy challenges

The government’s tax collection has maintained a decent growth rate in the last couple of years even as the economy has recovered from the Covid shock. Inflation has played a role in this by contributing to higher nominal economic growth, but there are also a few other factors at play, and they deserve closer scrutiny. More significantly, growth in collection from the different types of taxes is not uniform and this too needs to be examined to understand if the post-Covid trend of higher tax collection is sustainable.

Let us first look at direct taxes. After suffering a decline of almost