Consider the following statements :
- 1.Tax revenue as a percent of GDP of India has steadily increased in the last decade.
- 2.Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Which of the statements given above is/are correct ?
Show answer
Answer: D. Statement 1 is wrong: the Centre's tax-GDP ratio did not rise steadily; it fell sharply after 2008-09 because of the global crisis and stimulus tax cuts, then recovered slowly. Statement 2 is wrong: the fiscal deficit jumped to about 6.5 percent of GDP in 2009-10 and then came down to about 3.5 percent by 2016-17 under fiscal consolidation. Neither ratio moved steadily in one direction. So neither is correct.
Watch for: Watch for the word 'steadily'; both ratios went up and down during the decade.
Why the other options are wrong
- A. Wrong because tax-GDP fell after 2008 before recovering.
- B. Wrong because the fiscal deficit fell after 2009-10.
- C. Wrong because both statements are false.
Source to check: Economic Survey 2016-17, Volume 2, Chapter 'Fiscal Developments'; Union Budget documents, 'Budget at a Glance' (indiabudget.gov.in)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.