The fiscal responsibility target for Andhra Pradesh is usually set at 3% of GSDP. This means that the government of Andhra Pradesh should aim to keep its fiscal deficit (the difference between its revenue and expenditure) to 3% of its gross state domestic product (GSDP). This target is set by the state government in consultation with the Reserve Bank of India (RBI) and the Ministry of Finance. The target is designed to ensure that the government does not borrow too much money and that it can meet its financial obligations in the future.
There are a number of reasons why the government of Andhra Pradesh has set a fiscal responsibility target. First, it is important to ensure that the government does not borrow too much money. If the government borrows too much money, it will have to pay a lot of interest on its debt. This will reduce the amount of money that the government has available to spend on other things, such as education, healthcare, and infrastructure.
Second, it is important to ensure that the government can meet its financial obligations in the future. If the government does not have enough money to meet its financial obligations, it may have to default on its debt. This would have a number of negative consequences, such as a loss of confidence in the government and a rise in interest rates.
The fiscal responsibility target is a tool that the government of Andhra Pradesh can use to manage its finances. By setting a target and sticking to it, the government can ensure that it does not borrow too much money and that it can meet its financial obligations in the future.
Option a) 5% of GSDP is incorrect because the fiscal responsibility target for Andhra Pradesh is usually set at 3% of GSDP.
Option b) 3% of GSDP is correct because the fiscal responsibility target for Andhra Pradesh is usually set at 3% of GSDP.
Option c) 7% of GSDP is incorrect because the fiscal responsibility target for Andhra Pradesh is usually set at 3% of GSDP.
Option d) 1% of GSDP is incorrect because the fiscal responsibility target for Andhra Pradesh is usually set at 3% of GSDP.