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 ✓ UPSC's answer
Why the answer is (d)
• Statement 1 is wrong: India's tax-to-GDP ratio has hovered around 10–11% (Centre) or 16–17% (combined) with dips (e.g. 2008–10, 2019–20), not a steady rise.
• Statement 2 is wrong: the Centre's fiscal deficit fell from 6.5% of GDP in 2009–10 to about 3.5% by 2016–17 under FRBM targets, rising again only during COVID (9.2% in 2020–21) — so it has not steadily increased.
• Hence neither 1 nor 2, option (d).
Why the other options are wrong
- (a) 1 only
- Statement 1 is wrong: tax-GDP ratio has fluctuated.
- (b) 2 only
- Statement 2 is wrong: fiscal deficit fell over the decade.
- (c) Both 1 and 2
- Both statements are wrong.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2017, held on 18 June 2017. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.