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 ?
This questions was previously asked in
UPSC CSP Previous Year Paper (2017)
Both 1 and 2
Incorrect AnswerNeither 1 nor 2
Incorrect AnswerExplanation:
The Tax buoyancy which is calculated as a ratio of percentage growth in tax revenues to growth in nominal GDP for a given year has shown variations. Tax revenue as a percent of GDP of India has not increase steadily in the last decade. Hence statement 1 is not correct
Fiscal deficit as a percentage of GDP had increased rapidly in recession years after 2008 due the fiscal stimulus given by the government like reduced taxes such as Service tax, personal income tax, Corporation tax and Excise duty. Therefore statement 2 is incorrect.
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By: Abhipedia