India’s finance ministry said on Thursday that a focus on capital spending in its recently released budget for the current fiscal year would boost manufacturing and tax collection, putting India on track to become a $5 trillion economy. Tax receipts rose by a record 34% to Rs 2,707 crore in the last financial year, which the ministry said was a “remarkable testament to the rapid recovery” of the economy following successive waves of COVID-19.

“The central government’s commitment to making India a global economic powerhouse, and the series of measures to achieve this commitment, is directly reflected in India’s GDP growth in recent years.” “This has translated into increased revenue while keeping India on track to achieve a $5 trillion economy,” the ministry said. In 2019, Indian Prime Minister Narendra Modi envisioned making India a $5 trillion economy and a global economic powerhouse.

India’s GDP is estimated to be around $3 trillion by 2021-22. Barring a brief setback due to COVID-19, the government has kept nominal GDP growth above 10% in recent years, the ministry said. GST is a simplified form of indirect tax collection and is a revolutionary step in driving India’s GDP growth. “With the 2022-23 Federal Budget’s strong boost to capital spending, there will be a surge in domestic manufacturing and job growth in the coming years. These, in turn, will directly increase the tax contribution to the Treasury,” the ministry said.

The total corporate tax for 2021-22 is Rs 8.6 crore compared to Rs 6.5 crore in the previous year. The ministry said this shows that the new low tax rate and simplified tax regime with no exemptions have promised to improve the ease of doing business in the corporate sector, stimulate the Indian economy and increase the government’s tax revenue.

In the last fiscal year, direct tax revenue rose by 49% to Rs 1.41 lakh, while indirect tax increased by 20% to Rs 1.29 lakh – reflecting a booming economy and the impact of anti-tax evasion measures. Capital expenditure (Capex) is expected to rise 35.4% to Rs 750 crore in the current financial year to continue the pandemic-hit economic recovery led by public investment. Capital expenditure last year was fixed at Rs 5.5 crore.