Is India on the cusp of a fiscal revolution?
Income tax collection as a per cent of GDP tend to rise sharply once average incomes cross the $2,000 thresholdfrom 1% of GDP to around 5% of GDP. India is on the cusp of that threshold
Arun Jaitley will present the fifth budget of the Narendra Modi government this week. The budget will be announced against the backdrop of a strong economic revival combined with greater macro risks. This column had noted a fortnight ago that the Indian economy in 2018 would look very different from the one in 2017 because of these two factors, and would thus test the new macroeconomic policy framework.