UPSC Prelims 2017 · GS Paper I
Question 94: Economy and Social Development
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 ?
AnswerUPSC’s answer is (d).
Neither trend was steady. Tax revenue as a share of GDP peaked in 2007-08, fell after the global financial crisis and recovered only partly afterwards, so Statement 1 is wrong. The fiscal deficit rose to about 6.5 per cent of GDP in 2009-10 because of the crisis stimulus, and was then brought down in later years to roughly 3.5 per cent in 2016-17, so it did not steadily increase and Statement 2 is wrong.
- 1. The tax-GDP ratio dipped after 2007-08 and recovered only partly.
- 2. The fiscal deficit peaked in 2009-10 and was brought down afterwards.
How you could have got this
- If you were sure statement 1 is not correct, (a) and (c) go: each of them includes 1.
What you needed to know: The tax-GDP ratio dipped after 2007-08 and recovered only partly.
- Then, if you were sure statement 2 is not correct, (b) goes: it includes 2.
What you needed to know: The fiscal deficit peaked in 2009-10 and was brought down afterwards.
Only (d) is left. This one needs every statement.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Wrong: the tax-GDP ratio did not rise steadily.
- (b) Wrong: the fiscal deficit fell in later years.
- (c) Wrong: both trends fluctuated and did not rise steadily.
- (d) Right: neither statement is correct.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2017, General Studies Paper I, Series A. The paper on upsc.gov.in.