Consider the following statements :
- Tax revenue as a percent of GDP of India has steadily increased in the last decade.
- 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?
Detailed Explanation:
Answer: Option 4 — Neither 1 nor 2
Both statements are incorrect because neither tax revenue nor fiscal deficit as a percent of GDP has shown a steady increase over the last decade. Instead, both indicators have fluctuated significantly based on economic cycles, policy changes, and external shocks like the COVID-19 pandemic.
❌ Statement 1 – Incorrect: Tax revenue as a percent of GDP has fluctuated over the last decade rather than steadily increasing. While there were periods of growth, years like 2019–20 and 2020–21 saw declines due to economic slowdown and pandemic-related disruptions, making the overall trend non-linear.
❌ Statement 2 – Incorrect: Fiscal deficit as a percent of GDP has not steadily increased either. It actually narrowed from around 4.5% in 2013–14 to about 3.4% in 2018–19, then spiked dramatically to 9.2% in 2020–21 due to COVID-19, and has since been declining, showing a fluctuating rather than steadily increasing pattern.
Question 6 of 10 Fiscal Deficit, Revenue Deficit and Public Debt
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