Consider the following statements:Tax revenue as a percent of GDP of India has steadily increased in

Question

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?

Accepted Answer

Service tax, personal income tax, and corporation tax have been reduced in the recent past to boost aggregate demand, so as to protect the economy from global recession. Excise duty rates have been reduced in the recent past to boost aggregate demand, so as to protect the economy from global recession; hence tax revenue as a percent of GDP of India has not steadily increased in the last decade. Hence, statement 1 is not correct.Fiscal deficit as a percent of GDP of India has not steadily increased in the last decade. Hence, statement 2 is not correct.Source: Economic Survey