Reflecting these measures, the tax-GDP ratio of the Centre has steadily risen from 8.8 per cent in 2002-03 to 11.3 per cent in 2006-07(RE) and 11.8 per cent in 2007-08 (BE). The entire increase in tax revenues was mainly on account of the buoyancy in direct taxes.
On the expenditure front, while the total expenditure of the Centre declined from 16.8 per cent of GDP in 2002-03 to 14.1 per cent in 2006-07 (RE), the capital outlay rose from 1.2 per cent to 1.6 per cent of GDP. The movement in key deficit indicators reflects the progress made so far in fiscal consolidation.