India's tax-GDP ratio plunges to 9.88% in FY20, lowest in 10 years

While the ratio determines the extent to which the government is able to finance its expenditure, it is also an indicator of tax compliance

The ratio of central taxes -to-GDP slid further in FY20 to a 10-year low of 9.88 per cent, driven by a decline in collections from customs duties and corporation tax, while excise duty posted marginal growth. This was despite the fact that only a week was under lockdown in the year. The ratio stood at 10.97 per cent in FY19, and at 11.22 per cent in FY18. It is only estimated to decline further, with revenues falling on account of a slump in economic activity.

While the ratio determines the extent to which the government is able to finance its