Question
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
Answer:
D
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Explanation:
Statement 1 is incorrect. Tax revenue as a percentage of GDP refers to the total tax collections by the government in relation to the country's gross domestic product (GDP). In the last decade, India has witnessed fluctuations in tax revenue as a percent of GDP. It has not shown a consistent and steady increase. Factors such as economic growth, tax policy changes, and other economic factors can impact tax revenue, leading to fluctuations over time.
Statement 2 is incorrect. Fiscal deficit refers to the gap between the government's total expenditure and its total revenue. It is usually expressed as a percentage of GDP. In the last decade, India has made efforts to reduce its fiscal deficit. While there have been fluctuations in fiscal deficit, there have been periods of both increase and decrease. It has not shown a consistent and steady increase over the entire decade.