Statement–Assumption — “The finance ministry reported a huge revenue deficit because customs and excise performed badly due to severe industrial slowdown.” Assumptions: I. Customs and excise form a significant part of government revenue. II. Collections from customs/excise are strongly linked to industrial performance.

Introduction / Context:
The statement attributes a “huge revenue deficit” to weak customs and excise receipts arising from an industrial slowdown. To make this causal chain plausible, two background conditions must hold.

Given Data / Assumptions:

• Customs and excise are material revenue heads for the exchequer.
• Industrial activity drives import/export volumes and manufacturing output, affecting these tax bases.

Concept / Approach:
Attribution requires both materiality and linkage. If either were false (insignificant head; no linkage), the deficit explanation would fail.

Step-by-Step Solution:
1) Assumption I: If customs/excise were minor, their underperformance could not cause a “huge” deficit. So I is necessary.2) Assumption II: If industrial slowdown did not affect these heads (e.g., collections fixed irrespective of output/flows), then the causal step would collapse. So II is necessary.

Verification / Alternative check:
In most tax structures, excise and trade taxes co-move with production and trade volumes; downturns depress collections.

Why Other Options Are Wrong:
I-only/II-only/Either/Neither each removes a link needed to sustain the ministry’s explanation.

Common Pitfalls:
Overlooking that causal attributions usually depend on both a significant base and a sensitivity channel.

Final Answer:
if both I and II is implicit.