01 Why are funds necessary for local governments?
Answer and explanation
Correct answer: A. To run local services and do development works
Explanation: The governing concept is financial capacity in decentralised governance. Local governments must pay for practical responsibilities such as water supply, sanitation, roads, street lighting and community development. These activities require regular revenue and planned expenditure, so option A is correct. Creating a foreign army, dissolving Parliament and closing courts are not legitimate purposes of local-government funds; B, C and D are therefore unrelated distractors.