Official Answer Key & Detailed Solution
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Correct Answer: Option (D) — Neither 1 nor 2
Concept & Option Breakdown
Standard Reference VerifiedStatement 1 is incorrect: India's Tax-to-GDP ratio has not increased monotonically or steadily over the decade (2007–2017); it experienced fluctuations due to the 2008 global economic crisis and shifting growth dynamics.
Statement 2 is incorrect: The fiscal deficit as a percentage of GDP rose post-2008 due to stimulus measures and subsequently declined following fiscal consolidation paths under the FRBM framework; hence it did not steadily increase.
Extreme qualifiers such as 'steadily increased' or 'continuously declined' spanning an entire decade are classic UPSC traps. Macroeconomic variables like fiscal deficit and tax ratios are subject to business cycles and policy shifts, making steady one-directional movement over a decade improbable.
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