Causality Between Non-Tax Revenue and State Domestic Product: A Study of 20 States in India

The present study focuses on the cointegration between Non-Tax Revenue (NTR) and State Domestic Product (SDP) of 20 states in India. Time series data for NTR and SDP has been taken for the period 1974-1975 to 2006-2007. In the long run, for states like Kerala, Madhya Pradesh and Maharashtra, two-way causality with a positive direction has been found in between NTR and SDP. In the short run, through Error Correction Mechanism (ECM), it has been observed that enhancement in NTR led to enhancement in SDP and vice-versa for Jammu and Kashmir, Kerala, Madhya Pradesh, Maharashtra and Orissa.