The correct answer is: d) All of the above
The Budget Stabilization Fund (BSF) is a reserve fund that the Odisha government uses to manage revenue volatility, finance disaster relief, and reduce borrowing costs.
The BSF helps to manage revenue volatility by providing a buffer against unexpected changes in revenue. This can be helpful in times of economic downturn, when tax revenue may decline. The BSF can also be used to finance disaster relief, such as after a cyclone or flood. This can help to ensure that the government has the resources it needs to respond to these events. Finally, the BSF can be used to reduce borrowing costs. This is because the government can use the BSF to repay debt, which can improve its credit rating.
The BSF is a valuable tool that the Odisha government uses to manage its finances. It helps to protect the state from economic shocks, finance disaster relief, and reduce borrowing costs.
Here is a brief explanation of each option:
- a) Manage revenue volatility
The BSF helps to manage revenue volatility by providing a buffer against unexpected changes in revenue. This can be helpful in times of economic downturn, when tax revenue may decline. The BSF can also be used to finance disaster relief, such as after a cyclone or flood. This can help to ensure that the government has the resources it needs to respond to these events.
- b) Finance disaster relief
The BSF can be used to finance disaster relief, such as after a cyclone or flood. This can help to ensure that the government has the resources it needs to respond to these events.
- c) Reduce borrowing costs
The BSF can be used to reduce borrowing costs. This is because the government can use the BSF to repay debt, which can improve its credit rating.