1 Tax to GDP Ratio :
- Taxes are related to economic activity.
- Tax revenues fall drastically during the period of the global financial crisis
Rising Tax/GDP ratio indicates the growth in the Economic activity
- Example : GDP of a nation is $10 Trillion
- Tax revenue is $2 Trillion
- Hence Tax GDP Ratio is 2/10 = 20%
2 Debt to GDP Ratio : Indicates the economy that produces the and sells goods and services sufficient to payback the debts without incurring the further debts
- Debt: In crores of rupees (unit of currency)
- GDP per annum time units of years
- This indicates the number of years required to pay off the debt * if all of the GDP is devoted to the Debt payment
- 90% refers to the debt that can be cleared from the 90% of year’s GDP to pay off
3 Market Cap to GDP Ratio