The correct answer is: d) All of the above.
Meghalaya is a state in northeastern India. It is one of the poorest states in India, with a per capita income of just over â¹10,000 (US$140). The state faces a number of challenges in managing its public finances, including revenue constraints, expenditure pressures, and limited borrowing capacity.
Revenue constraints are a major challenge for Meghalaya. The state’s tax revenue is relatively low, and it relies heavily on central government transfers. This makes the state vulnerable to fluctuations in central government spending.
Expenditure pressures are also a major challenge for Meghalaya. The state has a large number of employees, and its pension and other social security obligations are growing rapidly. This is putting a strain on the state’s finances.
Meghalaya also has limited borrowing capacity. The state’s debt-to-GDP ratio is relatively high, and it is not eligible for central government debt relief. This means that the state has to rely on its own resources to finance its development projects.
The challenges in managing public finances in Meghalaya are significant. The state needs to find ways to increase its revenue, reduce its expenditure, and improve its borrowing capacity. This will require a concerted effort from the state government, the central government, and the private sector.
Here is a brief explanation of each option:
- Revenue constraints: Meghalaya’s tax revenue is relatively low, and it relies heavily on central government transfers. This makes the state vulnerable to fluctuations in central government spending.
- Expenditure pressures: Meghalaya has a large number of employees, and its pension and other social security obligations are growing rapidly. This is putting a strain on the state’s finances.
- Limited borrowing capacity: Meghalaya’s debt-to-GDP ratio is relatively high, and it is not eligible for central government debt relief. This means that the state has to rely on its own resources to finance its development projects.