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?

[UPSC Civil Services Exam – 2017 Prelims]

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither I nor 2

Answer: (d)        

Explanation:

Tax to GDP

• Decade 2001-2011: Steady fall after sub-prime crisis (2007-2010) and then recovery.
• Decade 2006-2016: Except for the fall in 2008 to 2010, there is steady growth. Hence statement 1 is incorrect.

​​Fiscal Deficit to GDP

• Decade 2001-2011: Decline between 2009-11.
• Decade 2006-2016: Steadily declining from 2011 to 2016. Hence statement 2 is also incorrect.