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?
Answer & explanation
Answer: (d) Neither 1 nor 2
Neither ratio rose steadily over the decade to 2016-17. The tax-to-GDP ratio hovered around 10 per cent from 2008-09 and crossed 11 per cent only in 2016-17, while the Centre's fiscal deficit jumped to 6.5 per cent of GDP in 2009-10 and then fell to 3.5 per cent by 2016-17.
- ✗ 1. The Union Budget documents for 2017-18 say the gross tax-to-GDP ratio had been stagnating in the range of 10 per cent since 2008-09; it was estimated to cross 11 per cent only in 2016-17, for the first time since 2007-08. That is stagnation and a late rise, not a steady increase.
- ✗ 2. The Centre's fiscal deficit was 6.0 per cent of GDP in 2008-09 and 6.5 per cent in 2009-10, then fell year after year to 3.5 per cent in 2016-17. The trend was downward consolidation, not a steady increase.
Remember · Tax-to-GDP stayed near 10 per cent for most of 2008-09 to 2015-16, and the Centre's fiscal deficit fell from 6.5 per cent (2009-10) to 3.5 per cent (2016-17).
Sources
- Union Budget 2017-18, Fiscal Policy Strategy Statement ↗ “For the first time since 2007-08, the gross tax to GDP ratio is estimated to cross the 11 per cent mark. … considering that the tax to GDP ratio had been stagnating in the range of 10 per cent since 2008-09”
- Economic Survey 2016-17, Volume 2, Chapter 2: Fiscal Developments ↗ “Gradual tilt in expenditure towards investment spending and consolidation of revenue expenditure that led to the progressive reduction in revenue and fiscal deficits, relative to GDP”
- Economic Survey 2016-17, Volume 2, Statistical Appendix, Table 2.8 B (Central Government, per cent of GDP) ↗ “8.Fiscal deficit [7-1-4(a)-4(b)] 6.0 6.5 4.8 5.9 4.9 4.5 4.1 3.9 3.5 3.5 3.5 3.2”
Question and answer: UPSC's official GS Paper I (2017, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·