UPSC Previous Year Question | Prelims GS | 2017

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?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Correct Answer

Neither 1 nor 2

Explanation

Neither tax revenue as a percentage of GDP nor fiscal deficit as a percentage of GDP showed a steady, uninterrupted rise over the preceding decade — both fluctuated due to policy changes and economic cycles, making both statements incorrect.

Topics: economy, fiscal policy and public finance, gdp ratios of tax revenue/fiscal deficit, tax revenue and fiscal deficit trends