Question

Read the below case and answer the questions that follow:

The Centre on Saturday increased the budgetary allocation for the environment ministry from last fiscal by nearly five percent for 2020-21 with no change in the amount allotted to pollution abatement and climate change action plan. Union Finance Minister, Nirmala Sitharaman, allocated ₹3,100 crores for the ministry out of which ₹460 crores were allotted to control pollution, which is the same as the money it received in the last budget. Control of pollution has been conceptualized to provide financial assistance to Pollution Control Boards/Committees and funding to National Clean Air Programme (NCAP). Similarly, the budget for pollution abatement, which was cut by 50 percent last year from 2018-to 19, remained unchanged at ₹10 crores. The minister also announced that states, which are formulating and implementing plans for ensuring cleaner air in cities above one million population should be encouraged.

- Budget 2020: Allocation for Environment Ministry up 5% to ₹3,100 crore - Business Standards, 1st February 2020

What type of externality will the increase in budget allocation create?

Options

• Negative

• Positive

• Neutral

• Can't be said

Answer 1

Positive

Explanation:

Externalities refer to the positive effects of economic activity on others that are not measured in terms of money.