Correct option is A
The fiscal deficit as a percentage of GDP was indeed higher in the financial year 2017-18 than what was projected in the budget estimates. This rise was mainly due to two key factors:
Lower-than-expected indirect tax revenue collection: The introduction of the Goods and Services Tax (GST) in July 2017 caused initial disruptions in tax collection. As businesses adapted to the new tax regime, indirect tax revenues such as excise duties and service tax (now subsumed under GST) grew at a slower pace than expected.
Expenditure pressures: Higher spending, especially in rural development and social sector schemes, also contributed to the fiscal deficit exceeding initial estimates.
The Reason (R) provided is also accurate. The GST rollout, though significant for long-term tax reforms, initially resulted in teething issues such as compliance challenges and delayed filings, which affected the growth of indirect tax revenues. Therefore, both (A) and (R) are correct, and (R) correctly explains (A).
