The following Table shows the percentage distribution of revenue expenditure of Government of India in 1989-90 and 1994-95 .Based on this table, it can be said that the Indian economy is in poor shape because the Central Government continues to be under p

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Q: 21 (IAS/1996)
The following Table shows the percentage distribution of revenue expenditure of Government of India in 1989-90 and 1994-95 .Based on this table, it can be said that the Indian economy is in poor shape because the Central Government continues to be under pressure to
YearsDefenceInterest PaymentsSubsidiesGrants to States/UtsOthers
1989-901.5.12.7.71.6.31.3.62.7.4
1994-951.3.63.8.781.6.72.3

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,67,74,16,67,41,17

keywords: 

{'indian economy': [0, 3, 3, 5], 'revenue expenditure': [0, 1, 0, 4], 'expenditure': [2, 0, 2, 4], 'india': [8, 1, 7, 13], 'central government': [1, 0, 0, 1], 'poor shape': [0, 1, 0, 0], 'government': [5, 0, 0, 1], 'subsidies': [1, 0, 0, 1], 'state governments': [3, 4, 3, 22], 'percentage distribution': [0, 1, 0, 0], 'interest payments': [1, 2, 3, 2]}

The correct answer is 2: `spend more and more on interest payments`.

Here`s a run-down of each option:

Option 1: `Reduce expenditure of defence`: The data shows that defence expenditure decreased from 1989-90 to 1994-95. But it doesn`t necessarily mean that the economy is in poor shape due to this decrease; hence, this option is not correct.

Option 2: `Spend more and more on interest payments`: This choice correctly implies the country`s economy is under strain. The information shows a significant increase of interest payments from 1989-90 to 1994-95. This reflects the government`s borrowing, which is usually an indicator of economic stress, making this the correct option.

Option 3: `Reduce expenditure on subsidies`: The data shows that subsidies actually increased over the period. However, subsidies are a form of support to sectors, not a sign of the economy`s poor health, making this option incorrect.

Option 4: `Spend more and more as grants-in-aid to State Governments/Union Territories`: This data remained relatively stable over the period in question. Hence, it doesn`t support the assertion that the economy is in bad shape, making this option incorrect.