UPSC Prelims 1996 · General Studies

Question 2: Economy and Social Development

A redistribution of income in a country can be best brought about through

aprogressive taxation combined with progressive expenditure

bprogressive taxation combined with regressive expenditure

cregressive taxation combined with regressive expenditure

dregressive taxation combined with progressive expenditure

AnswerThe answer is (a).

Redistribution needs both sides of the budget to favour the poor: taxes that take a larger share from higher incomes (progressive taxation) and spending that benefits the poorer more, such as subsidised food, health, education and rural works (progressive expenditure). Taxing the rich but spending mostly on the better-off, or taxing the poor, leaves the gap unchanged or wider. Remember: progressive tax plus pro-poor spending narrows income inequality.

Why each option is right or wrong

(a) Right: taxes rise with ability to pay and spending favours the poor, so both narrow the gap.
(b) Progressive taxes help, but spending that favours the better-off gives back what the tax took.
(c) Regressive taxes burden the poor and regressive spending favours the rich, so inequality would widen.
(d) Regressive taxes take proportionally more from the poor; pro-poor spending only partly offsets that.

Explanation: written by UPSC Grade, not by UPSC.

Practise this paper timedPrevious question Next question

Source: UPSC, Civil Services (Preliminary) Examination 1996, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.