In between the lines: What Apr-Dec tax data tells us about the economy

Reading of tax collection numbers as signifiers of robust economic activity may be too optimistic

One of the most interesting questions in Indian macroeconomics today is: how are we faring since late 2016? In this article, I seek to analyse data on tax revenues and obtain some clues about the performance of the economy.

In a press release published on January 9, the central government reported the following increases in tax collections during April-December 2016, compared to the corresponding period of previous year:

1. Central excise duty: 43 per cent.
2. Service tax: 23.9 per cent.
3. Customs duty: 4.1 per cent.
4. Corporation tax: 4.4 per cent.
5. Income