In which of the following years the subsidy as percent of GDP was the highest ?

2010-11
2009-10
2008-09
2007-08

The correct answer is (c) 2008-09.

Subsidies are payments made by the government to support a particular industry or sector of the economy. They can be used to reduce the cost of goods and services, to encourage investment, or to protect jobs.

The percentage of GDP that is spent on subsidies varies from country to country. In India, subsidies have been a significant part of the government’s budget for many years. In 2008-09, subsidies accounted for 2.4% of GDP. This was the highest level of subsidies as a percentage of GDP since 1990-91.

There are a number of reasons why subsidies can be a problem. First, they can distort the market and lead to inefficient allocation of resources. Second, they can be costly to the government. Third, they can be regressive, meaning that they benefit the rich more than the poor.

In recent years, the Indian government has taken steps to reduce the level of subsidies. In 2014, the government announced a plan to reduce subsidies by 20% over the next five years. This plan has been met with some resistance from farmers and other groups that benefit from subsidies. However, the government is committed to reducing the level of subsidies in order to improve the efficiency of the economy.

The following are the four options in the question:

(a) 2010-11: In 2010-11, subsidies accounted for 2.2% of GDP. This was the second highest level of subsidies as a percentage of GDP since 1990-91.
(b) 2009-10: In 2009-10, subsidies accounted for 2.1% of GDP. This was the third highest level of subsidies as a percentage of GDP since 1990-91.
(c) 2008-09: In 2008-09, subsidies accounted for 2.4% of GDP. This was the highest level of subsidies as a percentage of GDP since 1990-91.
(d) 2007-08: In 2007-08, subsidies accounted for 2.0% of GDP. This was the fourth highest level of subsidies as a percentage of GDP since 1990-91.

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