There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit? 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty Select the correct answer using the code given below.

QUESTION

Medium

Economy

Prelims 2016

There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit?

Reducing revenue expenditure
Introducing new welfare schemes
Rationalizing subsidies
Reducing import duty

Select the correct answer using the code given below.

Select an option to attempt

Explanation

Actions that can help reduce the deficit

Reducing revenue expenditure (Correct) This involves cutting back on non-essential government spending. Examples include reducing administrative costs, curtailing travel expenses, or postponing discretionary infrastructure projects.
Rationalizing subsidies (Correct) This means making subsidies more targeted and efficient. The government can identify and eliminate wasteful subsidies or ensure they reach the intended beneficiaries.

Actions that will likely increase the deficit

Introducing new welfare schemes (Incorrect) This would increase government spending and contribute to the deficit.
Reducing import duty (Incorrect) Lower import duties can lead to a decrease in government revenue collected from customs duties. This can worsen the deficit.

Therefore, the correct answer is 1 and 3 only (Reducing revenue expenditure and Rationalizing subsidies)

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