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?

Correct Answer: Neither 1 nor 2

Let us analyze both statements to understand why neither of them is correct.

Statement 1 Analysis:

"Tax revenue as a percent of GDP of India has steadily increased in the last decade."

In economics and public finance, the phrase "steadily increased" means that the ratio increased continuously every single year without any drop or fluctuation over the specified 10-year period.

Looking at India's tax-to-GDP ratio over the last decade, the ratio has experienced fluctuations due to changes in economic growth rates, tax policy reforms (such as the introduction of GST), and macroeconomic shocks (such as the COVID-19 pandemic). Since the tax-to-GDP ratio went up in some years and came down in others, it did not show a monotonic or "steady" increase.

Therefore, Statement 1 is incorrect.

Statement 2 Analysis:

"Fiscal deficit as a percent of GDP of India has steadily increased in the last decade."

The Fiscal Deficit as a percentage of GDP measures the gap between the government's total expenditure and total non-borrowed receipts relative to the size of the economy.

Over the last decade, India's fiscal policy generally focused on fiscal consolidation (reducing the fiscal deficit ratio), except during unprecedented events like the COVID-19 pandemic where spending surged dramatically, temporarily elevating the deficit before consolidation resumed. Because the fiscal deficit ratio fluctuated—decreasing during consolidation phases and spiking during crisis years—it did not steadily increase.

Therefore, Statement 2 is also incorrect.

Conclusion:

Since both Statement 1 and Statement 2 are incorrect, the correct choice is Neither 1 nor 2.