question_answer

Direction: Q. 1 to 2

Read the following case study and answer the questions.

Prime Minister Narendra Modi's second budget in seven months disappointed investors who were hoping for big-bang stimulus to revive growth in Asia's third-largest economy. The fiscal plan delivered by Finance Minister Nirmala Sitharaman proposed tax reductions for individuals and wider deficit targets, but failed to provide specific steps to fix a struggling financial sector, improve infrastructure and create jobs. Stocks slumped, reflecting the subdued sentiment.

"Far from being a game changer, the budget provides little in terms of short-term growth stimulus," said Priyanka Kishore, head of India and South-East AsiaECONOMICS-At Oxford Economics Ltd. in Singapore. "While income tax cuts will provide some relief on the consumption front, the multiplier effect is low and the overall stance of the budget is not expansionary."

The focus now shifts to the Reserve Bank of India's interest rate decision on February 6, 2020. However, having already cut interest rates five times last year and with inflation exceeding 7 per cent, well above the central bank's target, there's limited scope for Governor Shaktikanta Das to ease more.

A direct tax cut in government budget helps to stimulate economic growth by

A) increasing disposable income

B) increasing production activity

C) increasing demand .

D) Both [a] and [c]