Soumita Ghosh wrote:

OA D


I am confused with D and E?? but why D is better than E??

The correct inference is WHAT MUST BE TRUE.
According to the passage, the government has been SPENDING MONEY on the transportation system.
At the same time, because of the 0% tax rate, the government has had NO REVENUE.
The result must be a budget SHORTFALL.
To BALANCE THE BUDGET, answer choice D must be true:
The government will have to find a new source of revenue or raise taxes.

The correct answer is D.

Answer choice E: The government will use its reserves to finance operations.
It does not have to be true that the government will USE ITS RESERVES.
The government could find ANOTHER WAY to finance operations.
Since E does not have to be true, eliminate E.

Well thanks GMATguru for this explanation.

But guyzzz, one thing that can be deduced or concluded from this inference question is the following:

The concept of causal reasoning or conditional reasoning cannot apply to the inference question;

Eg: X causes Y. is the premise given, and we have to infer something:

Then we cannot infer that if not x then not y.

The same goes for the conditional sentences.

Eg: If X then Y.

Can the following be inferred that is:

If not X then not Y or If not Y then not X can be inferred.

This is very important.

Could anyone really help in here...