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Government Budgeting & Public Finance

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Home/Indian Economy/Government Budgeting & Public Finance/Page 3

Mains Answer Writing Latest Questions

Kamini g
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Kamini gLearner
Asked: June 19, 2024In:
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What does the term “public debt” mean to you? Why is a high level of national debt seen as concerning? Talk about it in relation to India. (Answer in 200 words)

upsc: government budgeting & public finance
  1. Rujula Jelly
    Rujula Jelly Begginer

    Public debt, also known as government debt or national debt, refers to the total amount of money owed by a country's government to its citizens, businesses, and foreign investors. It is a cumulative result of budget deficits, borrowing for various purposes, and interest payments. High public debt isRead more

    Public debt, also known as government debt or national debt, refers to the total amount of money owed by a country’s government to its citizens, businesses, and foreign investors. It is a cumulative result of budget deficits, borrowing for various purposes, and interest payments.

    High public debt is a matter of concern for several reasons:

    1. Burden on future generations: High debt may lead to increased taxation and reduced government spending on essential services, affecting future generations.

    2. Inflation: Excessive borrowing can lead to inflation, reducing the purchasing power of citizens.

    3. Reduced credit rating: High debt may lower a country’s credit rating, increasing borrowing costs and reducing investor confidence.

    4. Reduced fiscal space: High debt limits a government’s ability to respond to economic downturns or fund development projects.

    In the context of India, high public debt is a concern due to:

    – Rising debt to GDP ratio (currently over 90%)

    – Large fiscal deficits

    – Increasing reliance on market borrowing

    – Pressure on interest payments (around 50% of tax revenue)

    – Limited fiscal space for development spending

    To address these concerns, India needs to focus on fiscal consolidation, improve tax compliance, and enhance economic growth through structural reforms.

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Anita Ratnam
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Anita RatnamLearner
Asked: January 20, 2025In:
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Roadmap for Answer Writing 1. Introduction Briefly introduce the significance of the Union Budget in shaping economic policies and its potential impact on women-led development. 2. Key Areas of Focus Identify and elaborate on specific areas where the budget can promote women-led development: Financial Allocation: ...

upsc: government budgeting & public finance
  1. Team
    Best Answer
    Team Supreme

    Model Answer 1. Increased Financial Allocation The budget allocates ₹2.23 lakh crore for women-centric projects, marking a 2.12% increase from the previous year and a 30% rise compared to last year's Budget Estimates of ₹1.71 lakh crore. This substantial financial commitment underscores the governmeRead more

    Model Answer

    1. Increased Financial Allocation

    The budget allocates ₹2.23 lakh crore for women-centric projects, marking a 2.12% increase from the previous year and a 30% rise compared to last year’s Budget Estimates of ₹1.71 lakh crore. This substantial financial commitment underscores the government’s focus on women’s empowerment as a key development agenda.

    2. Enhancing Women’s Safety

    A notable increase in funding for the ‘Safe City Project’ from ₹165 crores in 2022-23 to ₹1,300 crores in 2023-24 aims to improve safety for women in public spaces. This enhancement is crucial for encouraging women’s participation in economic activities and increasing the overall labor force participation rate.

    3. Strengthening Property Rights

    The budget also boosts the allocation for the Pradhan Mantri Awas Yojana by 66% to ₹79,000 crore, which will strengthen women’s property entitlements. Additionally, the introduction of differential tax rates for property registration is expected to improve women’s access to land and property, further empowering them economically.

    4. Promoting Financial Independence

    The Mahila Samman Savings Certificate scheme, offering up to ₹2 lakh for a two-year period at a fixed interest rate of 7.5%, is designed to foster financial independence among women. This initiative encourages savings and provides flexibility for partial withdrawals, which can be utilized for education and health needs.

    5. Support for Self-Help Groups (SHGs)

    The budget prioritizes the development of women-led self-help groups by providing them with essential resources such as raw materials, branding, and marketing support. This initiative aims to enhance rural income and promote financial independence among women.

    6. Health and Well-being Initiatives

    Increased funding for health-related schemes like Saksham Anganwadi, Poshan 2.0, and Mission Shakti will improve the quality of services available to women, particularly in areas such as sexual and reproductive healthcare and child health.

    Conclusion

    To maximize the impact of these initiatives, it is essential to establish a robust monitoring system to assess the effectiveness of budgetary allocations. Transparent auditing mechanisms should be implemented to enhance women’s participation in economic activities and improve their overall well-being. Each Ministry and Department should also develop a roadmap to address specific structural barriers faced by women, ensuring the effective utilization of funds aimed at achieving gender equality.

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Harsh Singh
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Harsh SinghBegginer
Asked: August 22, 2024In: , ,
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question
  1. Anita Dhruw
    Anita Dhruw Legend

    Gender Budgeting in India: A tool for womans empowerment Gender budgeting is an analytical instrument that guarantees the autonomy of gendered money resources in public sector financing. There is prioritizing of the budgets provided by governments based on the gender differences that come with partiRead more

    Gender Budgeting in India: A tool for womans empowerment

    Gender budgeting is an analytical instrument that guarantees the autonomy of gendered money resources in public sector financing. There is prioritizing of the budgets provided by governments based on the gender differences that come with particular budgets, and then the resources are provided to negate the affected gender differences.

    Requirements for Effective Gender Budgeting:

    1. Gender-Sensitive Budgeting: This consists in identifying of the quantitative sex needs and then distribution of the characteristics accordingly.
    2. Data Disaggregation: Aggregating the data by sex, and comprehending gender differences.
    3. Capacity Building: Implementing Gender Budgeting principles and Techniques for Head of Civil Service Trainers and other government officials.
    4. Institutional Mechanisms: Implementation of a process similar to or known as the establishment of gender budgeting cells or units in each and every governmental department.
    5. Public Awareness: Informing the public on the existence of gender budgeting and the reason for implementing this process.
    6. Monitoring and Evaluation: Conducted Periodic Reviews of the contextualization and general application of gendering budgeting measures.

    Status of Gender Budgeting in India:

    India too has gone some way in the direction of gender budgeting. Significant developments are:

    -Institutionalization: The gender budgeting cells have been created in ministries and departments.
    -Data Collection and Analysis: An attempt is being made to compile and study gender-break down data.
    -Policy Integration: Several of the government policies and programs are adopting gender budgeting factors and policies.
    -Public Awareness: Awareness can be initiated trough organizational and educational campaigns, where workshops are being carried out for the population.

    But a lot still has to be done to ensure that gender budgeting is optimally realised in India. These are:

    -Adequate Data: Absence of data about concrete requirements and consequencies of gender.
    -Capacity Constraints: Lack of capacity within government departments render the gender budgetary instruments ineffectual.
    -Political Will: The female budgeting exercise is most effective when there is long-term political support.

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Anil Bhargav
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Anil BhargavBegginer
Asked: July 20, 2024In:
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Describe what gender budgeting is. What relevance does this idea have in India? Has the government made any efforts to put this idea into effect?

upsc: government budgeting & public finance
  1. Rupali Sharma
    Rupali Sharma Begginer

    Gender Budgeting refers to integrating gender perspective in preparation, analysis and assessment of budgets and policies and translating gender commitments into budgetary operations. It is put into use by embedding gender-specific goals in fiscal policies by emphasizing on reprioritization rather tRead more

    Gender Budgeting refers to integrating gender perspective in preparation, analysis and assessment of budgets and policies and translating gender commitments into budgetary operations. It is put into use by embedding gender-specific goals in fiscal policies by emphasizing on reprioritization rather than an increase in overall public expenditure or creation of a separate budget. It aims to achieve gender mainstreaming in legislation, policies and programmes to ensure that benefits and development reach women.

    Significance of gender budgeting in India:

    • It increases transparency and accountability of the budgeting process, as it highlights the proportional expenditure on both genders and the method/process of the expenditure.
    • It will help in achieving SDG-5, related to achieving gender equality and empowering all women and girls.
    • Special attention would address female’s vulnerabilities and provide them access to resources and improve their performance on social indicators like health, education etc.
    • Conscious efforts to create economic opportunities for women can help increase the female workforce participation rate, which remains low and consequently boost GDP.
    • Integrating gender perspective into macroeconomic policy improves equity of the overall budget process.

    The Centre and states have taken various steps to adopt gender budgeting, such as:

    • The first significant attempt at making gender-sensitive resource allocation was the “Women’s Component Plan” (WCP) as a part of the Ninth Five-Year Plan (1997-2002), which earmarked 30% of developmental funds for women under various schemes of ministries/departments.
    • India adopted the WCP as a budgetary strategy in 2004-05 and since then it has been institutionalized in the annual budget by incorporating the gender budget statement. This statement highlights the annual budget allocation for welfare schemes for women by categorizing them as “Women-Specific Schemes” (100% fund allocation for women) and “Pro- Women Schemes” (where at least 30% of the allocation is for women).
    • A Gender Budgeting Secretariat has been placed in the Ministry of Finance, and central ministries and departments have been mandated to set up gender budgeting cells to initiate and take forward the gender budgetary strategy.
    • The Ministry of Women and Child Development has come up with guidelines for integrating gender budgeting into beneficiary-oriented schemes.
    • Many states and union territories such as Rajasthan, Gujarat, Karnataka, Kerala, Andaman and Nicobar islands, Dadra and Nagar Haveli etc. have taken significant steps to institutionalise gender budgeting.

    Apart from these, there is a need to significantly increase the budgetary allocation for women, as funds allocated for Gender Responsive Budgeting are approximately 5% of the public expenditure and less than 1% of GDP. Further, careful analysis of gender-oriented schemes before launching and post implementation would go a long way in curbing gender inequalities and contributing to the overall development.

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Dhanya J Nadig
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Dhanya J NadigBegginer
Asked: July 31, 2024In: , , , , , , , ,
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Considering the recent issues with collapsed infrastructure across India, including poorly maintained roads with potholes and inadequately operated government schools compared to their Western counterparts, it can feel like the working class’s tax contributions are not yielding proportional benefits. Additionally, ...

question
  1. Anita Dhruw
    Anita Dhruw Legend

    Factors driving skilled Indian emigration: -Better Compensation and Work-Life Balance: Estimations are that decentralized salaries, benefits, and work life favorable environment retain the best to the developed countries. -Access to Innovative and Technology Access: Innovate and the discoverers are,Read more

    Factors driving skilled Indian emigration:

    -Better Compensation and Work-Life Balance: Estimations are that decentralized salaries, benefits, and work life favorable environment retain the best to the developed countries.
    -Access to Innovative and Technology Access: Innovate and the discoverers are, by and large, located in the developed countries; those may have produced cutting-edge technology. That opportunity does not come at the flick of the switch in India, neither does it happen automatically.
    Quality of life: These kinds of aspects related to better infra, healthcare, better education facilities and safety pulls most of them back from immigration from their respective states.

    Systemic Issues End

    -Corruption: Corruption at all levels forms business and individual irritating contexts. This affects efficiency, introduces delays in cost and transparency issues, reduces entrepreneurship and innovation.

    -Poor Infrastructure: Lack of infrastructure to the extent of erratic electricity supply, poor transport networks, poor education and health provision impacts almost every aspect of quality life and can slow economic development beyond imagination.
    -Reservation System: Because of its capacity to bring about reverse discrimination and the meritocracy problem, the system that is currently in place is criticized although it was initially set to try to correct past perceptions. This just leaves those from more impoverished sections in the general category feeling that things are not really just and fairly treated.

    The following are necessary to address these issues and keep the best brains in India:

    -Good governance: The common goal in the model is to fight corruption, decrease bureaucracy, and attain merit-based environments.
    -Invest in infrastructure: Upgrade and enhance transport, power and communication networks in order to increase the investment friendliness of the region.
    -Reforming the education system: The second, concerns of improvement of quality education and skill as to produce a workforce that meets international standards.
    -Strengthening social safety nets: Accessibility to good quality health care, financial and medical facilities for social security to ensure all the citizens have a quality life.
    – Reservation system concerns: There should be a fair and effective depuration of the reservation policies and adjust to the complaints that come from any part of society.

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Meghalina Chakraborty
  • 1
Meghalina ChakrabortyLearner
Asked: July 20, 2024In: , , , , , , , , , , , , ,
  • 1

Analyze the challenges India faces in balancing its desire for strategic autonomy with the need for global cooperation on issues like climate change, trade, and terrorism.

developmentforeign policyglobal leaderindiainternational relations
  1. utteja shree
    utteja shree Begginer

    As India's role in the global order grows, it faces several challenges and opportunities in balancing its strategic autonomy with global cooperation. Challenges: 1. Climate Change: India needs to balance economic growth with reducing carbon emissions. This is hard because India relies on coal for enRead more

    As India’s role in the global order grows, it faces several challenges and opportunities in balancing its strategic autonomy with global cooperation.

    Challenges:

    1. Climate Change: India needs to balance economic growth with reducing carbon emissions. This is hard because India relies on coal for energy, which conflicts with global climate goals.

    2. Trade Policies: Protecting local industries while participating in global trade is tricky. India’s trade policies sometimes clash with international free trade standards.

    3. Terrorism: India must work with other countries to combat terrorism. Sharing intelligence and resources is essential, but India also needs to maintain its security independence.

     Opportunities:

    1. Global Leadership: India can lead on issues like climate change and sustainable development, influencing global policies while protecting its interests.

    2. Economic Growth: Engaging in global trade and investment can boost India’s economy, creating jobs and driving innovation.

    3. Diplomatic Influence: By strengthening ties with various countries, India can enhance its diplomatic influence and navigate complex international relations.

    In summary, India must balance its desire for strategic autonomy with the need for global cooperation by leveraging its growing influence, participating actively in international forums, and implementing smart domestic policies.

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Kamini g
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Kamini gLearner
Asked: June 19, 2024In:
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Gender budgeting: What is it? Talk about the difficulties it presents in the Indian setting. (Answer in 200 words)

upsc: government budgeting & public finance
  1. Sanya Dhir
    Sanya Dhir Begginer
    This answer was edited.
    What is gender budgeting? Discuss the challenges associated with it in the Indian context.

    .

    • .
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Adheesh Raman
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Adheesh RamanLearner
Asked: January 6, 2025In:
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Roadmap for Answer Writing 1. Introduction Define Public Debt: Briefly introduce the concept of public debt. Public debt refers to the total amount borrowed by the government to finance its budget deficit, often expressed as the debt-to-GDP ratio. Fact: The General Government ...

upsc: goverment budgeting & public finance
  1. Team
    Best Answer
    Team Supreme

    Model Answer How Rising Public Debt Burdens the Economy Rising public debt imposes significant pressures on an economy in various ways: Burden on Future Generations Public debt transfers the financial burden to future generations. Governments issue bonds to raise funds for current expenditures, whicRead more

    Model Answer

    How Rising Public Debt Burdens the Economy

    Rising public debt imposes significant pressures on an economy in various ways:

    1. Burden on Future Generations
      Public debt transfers the financial burden to future generations. Governments issue bonds to raise funds for current expenditures, which will need to be repaid in the future. This means that the next generation will bear the responsibility of repaying the debt, often through higher taxes or reduced government spending (Source: FRBM Act, 2003).
    2. Increased Interest Payments
      As public debt rises, the government must allocate a larger portion of its budget to pay interest on the debt. This reduces the funds available for essential services, like education, healthcare, and infrastructure. Over time, higher interest payments can crowd out other critical investments in the economy (Source: Government of India).
    3. Inflationary Pressures
      Excessive government borrowing can lead to inflation. Increased borrowing often raises interest rates, making it costlier for businesses and consumers to borrow. Moreover, higher government spending increases aggregate demand, which can drive up prices (Source: RBI reports).
    4. Crowding-Out Private Investment
      Public borrowing can lead to “crowding out” of private investment. When the government issues bonds to finance its deficits, it competes with private companies for available funds. This can lead to higher interest rates, making it more difficult for businesses to obtain credit for expansion (Source: Economic Survey, 2020).

    Measures Under the Fiscal Responsibility and Budget Management Act, 2003

    The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 was enacted to manage public debt and ensure fiscal discipline:

    1. Fiscal Deficit Target
      The Act mandates the government to reduce the fiscal deficit to below 3% of GDP. This limit ensures the government does not overspend beyond its means and curtails excessive borrowing (Source: FRBM Act, 2003).
    2. Revenue Deficit Elimination
      It also requires the government to eliminate the revenue deficit and work towards creating a revenue surplus. This enhances fiscal health by ensuring that the government’s recurring expenditures are covered by its regular income (Source: Ministry of Finance).
    3. Borrowing Constraints
      The Act restricts borrowing from the Reserve Bank of India, ensuring that the government does not excessively rely on the central bank for financing. This reduces inflationary pressures and ensures that monetary policy remains independent (Source: FRBM Act, 2003).

    In conclusion, the FRBM Act provides a structured framework for managing public debt, aiming for long-term macroeconomic stability by curbing excessive borrowing and promoting fiscal responsibility.

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sandeep kumar
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sandeep kumarBegginer
Asked: August 11, 2024In: ,
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  1. Guru
    Guru Enthusiast
    This answer was edited.

    It is the annual budget of the Republic of India set by Ministry of Finance for the following financial year, with the revenues to be gathered by Department of Revenue to identify planned government spending and expected government revenue and the expenditures gathered by Department of ExpendituresRead more

    It is the annual budget of the Republic of India set by Ministry of Finance for the following financial year, with the revenues to be gathered by Department of Revenue to identify planned government spending and expected government revenue and the expenditures gathered by Department of Expenditures of the public sector, to forecast economic conditions in compliance with government policy.

    For the Current Tax slab (2024) it’s:

    Rs 0 – Rs 3,00,000 – 0%,

    Rs 3,00,001 and Rs 7,00,000 – 5%,

    Rs 7,00,001 and Rs 10,00,000-10%,

    Rs 10,00,001 and Rs 12,00,000 – 15%,

    Rs 12,00,001 and Rs 15,00,000-20% and

    Rs 15,00,001 and above – 30%

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Bhavana Gadam
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Bhavana GadamBegginer
Asked: August 6, 2024In:
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public debt and fiscal sustainability
  1. Vihaan Choudhury
    Vihaan Choudhury Learner

    Balancing the need to reduce public debt with maintaining economic growth and stability is a complex task that requires careful consideration of various economic policies and their implications. Here are key strategies, their potential risks, and the trade-offs associated with them: Strategies for RRead more

    Balancing the need to reduce public debt with maintaining economic growth and stability is a complex task that requires careful consideration of various economic policies and their implications. Here are key strategies, their potential risks, and the trade-offs associated with them:

    Strategies for Reducing Public Debt
    1. Fiscal Consolidation
    Description: This involves reducing budget deficits through spending cuts and/or tax increases.
    Potential Risks and Trade-offs:
    Short-term Economic Contraction: Spending cuts and higher taxes can reduce aggregate demand, potentially leading to slower economic growth or even recession.
    Social Impact: Cuts in public spending, especially on social services, can affect the most vulnerable populations.
    Political Challenges: Fiscal consolidation can be politically unpopular, leading to resistance and instability.
    2. Economic Growth
    Description: Promoting economic growth increases government revenues without raising tax rates and reduces the debt-to-GDP ratio.
    Potential Risks and Trade-offs:
    Inflation: Rapid growth can lead to inflation, which, if uncontrolled, can harm the economy.
    Sustainability: Growth strategies need to be sustainable. Over-reliance on temporary growth spurts (e.g., from asset bubbles) can lead to future instability.
    3. Structural Reforms
    Description: Implementing reforms to improve economic efficiency and productivity (e.g., labor market reforms, regulatory simplifications).
    Potential Risks and Trade-offs:
    Implementation Challenges: Structural reforms can be difficult to implement and may face political resistance.
    Short-term Disruption: Reforms can cause short-term economic disruptions, especially if they involve significant changes to existing systems.
    4. Privatization of State Assets
    Description: Selling government-owned assets to raise funds.
    Potential Risks and Trade-offs:
    One-time Solution: Privatization provides a one-time boost to revenue but does not address underlying fiscal imbalances.
    Public Opposition: Selling state assets can face public and political opposition, particularly if it involves essential services.
    Long-term Revenue Loss: Future government revenues may decline if profitable state-owned enterprises are privatized.
    5. Debt Restructuring or Relief
    Description: Negotiating with creditors to reduce the debt burden, through measures like extending payment periods or reducing interest rates.
    Potential Risks and Trade-offs:
    Creditworthiness: Debt restructuring can damage a country’s credit rating, making future borrowing more expensive.
    Investor Confidence: It may undermine investor confidence, leading to capital flight or reduced investment.
    6. Inflation
    Description: Allowing moderate inflation can reduce the real value of debt.
    Potential Risks and Trade-offs:
    Uncontrolled Inflation: If not managed carefully, inflation can spiral out of control, leading to economic instability.
    Erosion of Savings: Inflation erodes the value of savings, potentially reducing consumer spending and investment.
    Balancing Debt Reduction with Growth and Stability
    Gradual Implementation:Phased Approach: Implementing fiscal consolidation gradually can help mitigate negative short-term impacts on growth.

     

    Stabilization Programs: Combining fiscal consolidation with measures to stabilize and stimulate the economy can help maintain growth.
    Targeted Spending:

    Protecting Investments: Ensuring that spending cuts do not affect critical investments in infrastructure, education, and health can support long-term growth.
    Efficiency Improvements: Focusing on improving the efficiency of public spending can reduce deficits without compromising essential services.
    Revenue Enhancement:

    Broadening the Tax Base: Enhancing revenue through tax reforms that broaden the tax base and improve compliance can increase revenues without raising rates.
    Progressive Taxation: Implementing progressive taxes can ensure that the burden of fiscal consolidation is shared more equitably.
    Promoting Private Sector Growth:

    Business Environment: Creating a favorable environment for private sector investment can drive growth.
    Innovation and Competitiveness: Supporting innovation and competitiveness can lead to sustainable economic expansion.
    Conclusion
    Balancing debt reduction with economic growth and stability requires a mix of strategies tailored to the specific economic context. Policymakers need to consider the potential risks and trade-offs associated with each strategy and aim for a balanced approach that maintains social equity, promotes sustainable growth, and ensures long-term fiscal health. Engaging with stakeholders and maintaining flexibility to adjust policies as circumstances change are crucial for achieving these goals.

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