Economics • Indian EconomyHard
Evaluate the long-term fiscal implications of the Sikkim government's universal basic income or targeted social welfare interventions on the state's revenue deficit trajectory. Which factor is most critical for maintaining fiscal sustainability under the Fiscal Responsibility and Budget Management framework?
A. Balancing welfare commitments with buoyant own-tax and non-tax revenue mobilization alongside prudent expenditure management✓ Correct Answer
B. Relying entirely on unlimited external commercial borrowings without repayment schedules
C. Abolishing all capital expenditure outlays on public infrastructure
D. Transferring all tax collection powers to local village panchayats
💡 Solution & Explanation
Maintaining fiscal sustainability under Fiscal Responsibility and Budget Management targets requires states implementing extensive welfare schemes to enhance internal revenue generation through hydropower royalties, tourism fees, and efficient tax administration while avoiding unproductive debt accumulation. Uncontrolled borrowing violates statutory fiscal limits. Prudent fiscal consolidation ensures long-term developmental solvency.
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