A decrease in tax to GDP ratio of a country indicates which of the following?

  1. Slowing economic growth rate
  2. Less equitable distribution of national income

Select the correct answer using the code given below.

[UPSC Civil Services Exam – 2015 Prelims]

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither1 nor 2


Answer: (a)        

Explanation:

  • The tax-to-GDP ratio is an indicator that compares a nation’s tax revenue to the size of its economy, as measured by gross domestic product (GDP).
  • It serves as a measure of how effectively a nation’s government utilizes taxation to manage its economic resources.
  • Generally, developed nations have higher tax-to-GDP ratios compared to developing nations.
  • A low tax-to-GDP ratio indicates a slower economic growth rate, while a higher ratio suggests a stronger tax buoyancy in the economy.
  • This ratio also signifies the government’s ability to finance its expenditures. Conversely, a lower tax-to-GDP ratio creates pressure on the government to meet its fiscal deficit targets.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

Read More »
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