Question

How did the LPG reforms impact India's fiscal policies and government spending?

• A. Implementation of stringent austerity measures and reduced government spending on social welfare programs.
• B. Introduction of a more transparent and simplified tax system, promoting ease of compliance.
• C. Adoption of expansionary fiscal policies, including increased government spending and borrowing.
• D. Shift towards a more regressive taxation system, with increased direct tax rates.

Answer 1

Answer:

B. Introduction of a more transparent and simplified tax system, promoting ease of compliance.

Introduction of a more transparent and simplified tax system, promoting ease of compliance.

• The LPG (Liberalisation, Privatisation, and Globalisation) reforms had a significant impact on India's fiscal policies and government spending, leading to changes in the tax system and allocation of funds.
• The introduction of a more transparent and simplified tax system was one of the key aspects of the reforms.
• The reforms aimed to streamline the tax structure, making it easier for individuals and businesses to comply with taxation requirements.
• This move was essential in promoting greater tax compliance and improving the overall efficiency of the tax collection process.
• By implementing a simpler tax system, the government intended to reduce tax evasion and promote a more equitable distribution of the tax burden among different sections of society.