The correct answer is C) Social sector spending.
Kerala is a state in India that is known for its high social spending. In 2020-21, the state’s budget allocated 25.5% of its expenditure to the social sector, which includes education, health, and social welfare. This is significantly higher than the national average of 14.3%.
Kerala’s high social spending has been credited with its high human development index, which is the highest in India. The state also has a low infant mortality rate and a high literacy rate.
However, Kerala’s high social spending has also led to a large fiscal deficit. In 2020-21, the state’s fiscal deficit was 3.5% of its GDP, which is higher than the national average of 3.3%.
Despite its fiscal deficit, Kerala has continued to invest heavily in the social sector. The state’s high social spending has helped to improve the lives of its people and has made it a model for other states in India.
Here is a brief explanation of each option:
- A) Defense spending: Defense spending is the amount of money that a government spends on its military. In 2020-21, India’s defense budget was $71.1 billion, which is the second highest in the world after the United States. Kerala’s defense spending is a small fraction of this amount.
- B) Infrastructure development: Infrastructure development is the construction and maintenance of public works such as roads, bridges, and airports. In 2020-21, Kerala’s infrastructure development budget was $10.2 billion. This is a significant amount of money, but it is still less than the state’s social sector spending.
- C) Social sector spending: Social sector spending is the amount of money that a government spends on social programs such as education, health, and social welfare. In 2020-21, Kerala’s social sector spending was $25.5 billion. This is the largest area of expenditure in Kerala’s budget.
- D) Debt servicing: Debt servicing is the amount of money that a government pays on its outstanding debts. In 2020-21, Kerala’s debt servicing was $6.1 billion. This is a significant amount of money, but it is still less than the state’s social sector spending.