With the Indian Economy sputtering, there is a growing demand for a cut in taxes. There is also a section clamouring in favour of boosting the demand and opposing the tax cuts. Evaluate the effects both the option could have on the economy. (15 Marks)

Mentor’s Comment:

  • In the intro briefly describe the phase the Indian economy is going through and decreasing growth rate
  • In the main body of the answer explain the benefit of each option and site some facts in favour of argument. Like tax cut only increases the spending power of a few who might not be interested in spending more. While government spending can put the money in the hands of people who are more eager to spend.
  • Explain the consequences of both the options.
  • In the concluding remark, lay more emphasis on the spending by the government instead of the tax cut which increases extra money with only those who pay taxes.
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