Why Establishing a Taxation System is Essential for a Country’s Growth?

This research delves into the relationship between government tax revenue, the tax-to-GDP ratio, and education spending, and how they collectively influence India’s economic growth from 2014 to 2020. The study focuses on understanding the role these factors play in shaping the country’s economic performance, with the GDP growth rate serving as the key indicator of economic health. The central question the research seeks to answer is whether higher levels of tax collection and increased government spending on education have a positive impact on India’s economic growth. To explore this, the study uses several key measures: total tax revenue collected by the government, the tax-to-GDP ratio, and education spending as a percentage of GDP. These factors are considered as independent variables that might contribute to or hinder growth, while the GDP growth rate itself is the dependent variable, reflecting the country’s overall economic performance. Through regression analysis, the research examines the strength and nature of the relationship between these variables. By doing so, it aims to uncover whether an increase in tax revenue and education investments leads to more robust economic growth. This is particularly significant for India, a nation that faces the dual challenges of limited public resources and growing demands for government spending, especially in sectors like education and healthcare. Ultimately, the findings of this study will offer valuable insights for policymakers. They will help identify strategies for enhancing fiscal policies and education funding, ensuring that investments in these areas can help drive sustainable and inclusive economic development in India. The research hopes to contribute to the ongoing dialogue about how the government can best allocate its limited resources to achieve long-term growth and prosperity.