Robust economic growth and improved performance of the manufacturing and services sectors have helped the government keep tax revenues buoyant during the last five years, says Economic Survey 2007-08. Average annual growth of revenue receipts of the Central Government between 2003-04 and 2007-08 (BE) was 16.2 per cent.

Improved growth of tax revenue at 20.7 per cent during the same period generated an overall high growth of revenue receipt. Gross tax revenue of the government recorded an average annual growth of 20.5 per cent, higher than the 13.8 per cent rate of growth of GDP (at market prices) during this period. The survey further states that the gross tax GDP ratio, which had stagnated at 8-10 per cent for more than a decade, increased to 11.4 per cent in 2006-07 and is expected to improve further to 11.8 per cent in 2007-08 (BE).

The Economic Survey, however, points out that the revenue expenditure in 2006-07 (actual) grew by 17 per cent and was higher than the budgeted expenditure by 5.4 per cent. Capital expenditure on the other hand recorded a moderate growth of 3.6 per cent and was lower than the budgeted expenditure by 9.3 per cent.