Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267763 
Year of Publication: 
2022
Series/Report no.: 
ADBI Working Paper No. 1330
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
The COVID-19 pandemic highlights the importance of information and communications technology (ICT) not only for the economy but also for human well-being. However, the investment gap in ICT infrastructure has been growing and is expected to reach more than $30 billion by 2040. We argue that one of the ways to attract private sector involvement in ICT infrastructure is by creating a steady stream of income for the investors. We quantify the spillover effects of mobile network on tax revenues, using annual state-level data for 2005 to 2016 from India across all states. Using simple Fixed Effect (FE) as well as Fixed Effect (FE) Two-Stage Least-Squares (2SLS) estimations, we show that the rise in the number of mobile network subscribers is associated with an increase in the amount of regional tax revenues. On average, an increase in the number of The Global System for Mobile Communications (GSM) subscribers per capita by 1 percentage point is expected to raise annual state tax revenues per capita by ₹ 134 (3% of average annual state tax revenue per capita in 2016). The number of GSM subscribers affect tax revenues through increased economic activities, as shown by our 2SLS estimation results. The results of this study justify our proposal to share the increased tax revenues with the investors to create a steady stream of income for investors. The findings of this study also support the increased support for the development of digital and physical infrastructure in the national budget of India for 2022-2023.
Subjects: 
infrastructure
spillover effect
information and communication technology
tax revenue
Difference-in-Difference (DiD) method
2SLS
JEL: 
H20
H54
O18
Q48
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

Files in This Item:
File
Size
788.31 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.