Answer as per 1000 SC is A.
as per one of the explaination on net http://www.beatthegmat.com/state-s-budg ... 12655.html
In India, right now the rate of inflation is 11.05%. the highest is last 13yrs.
following r the main reasons, as cited by the experts:
1)high import oil prices.
2)big farm loan waiver by the government (close to Rs71000 crore - an election gimmick).
3)high GDP growth.
4)depreciting rupee .........etc.
so if the inflation is down, in some cases it will allow the government to have extra funds to spend on the states, if it wants to.in such cases A will actually strengthen the argument.
so u see it depends upon what the scenario is. there is nothing mentioned in the passage about the rate of inflation.
hence A is out of scope.
yeah i saw that in newpaper today ...... and reasons given by you are true....
BUT, you forgot to mention a very important reason .... India's growth .... In any economy one of the main reasons for hight inflation is high growth rate...
so coming back to our question..... if we take option A, some portion of less growth can be attributed to less infaltion (10 to 3). So its not entirley Mr Verdant's fault .....
BTW the question is from 1000CR and the OA is A.... 8)
Do u think Inflation has something to do with state spending ...???