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 ?
A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2
Correct Answer
Explanation
Option (d) is correct because both tax revenue and fiscal deficit as a percentage of GDP fluctuated significantly between 2007 and 2017, failing the "steadily increased" criteria due to the 2008 global financial crisis and subsequent fiscal consolidation measures. Option (a) is a common trap because students often confuse the absolute growth in tax collection with the tax-to-GDP ratio, which actually remained volatile and stagnant around 10-11% during that decade. The core concept tested is the historical trend analysis of India’s key fiscal indicators and the impact of macroeconomic cycles on government finances.
Public FinanceGovernment Budgeting & Fiscal IndicatorsTax revenueGDPFiscal deficitlast decadeIndiaeconomic trends