India's Tax and Fiscal Trends
Question
Consider the following statements:
Which of the statements given above is/are correct?
- 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.
Options
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Explanation
Statement 1 is correct. India's tax revenue as a percentage of GDP has shown a gradual upward trend over the last decade due to improved tax collection mechanisms, GST implementation, and increased compliance. However, Statement 2 is incorrect. India's fiscal deficit as a percentage of GDP has not steadily increased; in fact, the government has been working to reduce the fiscal deficit through various fiscal consolidation measures. The fiscal deficit was brought down from higher levels in the early 2010s. Therefore, only statement 1 is correct. > Tax-to-GDP improved; Fiscal Deficit-to-GDP reduced (not increased). Answer: a.
Question details
Year
2017
Paper
GS Paper 1
Question
Q94
Subject
Economy
Sub-topic
Government Finances and Taxation
Type
Statement-based
Difficulty
Medium
Nature
Current-affairs-linked
Source hint
Economic Survey 2016-17
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