There has been a persistent deficit budget year after year. Which action/actions of the following
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.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2, 3 and 4
1 Answers
(c) (i) In order to reduce the fiscal deficit, the government needs to increase its earnings and reduce its expenditure. This is done by following methods: Cut down the subsidies; reforms in tax structures; improve profit generated by Public Sector Enterprises and austerity measures.
(ii) Just by applying logic i.e. to reduce deficit, we’ve to increase income and reduce Expenditure.
| Option
|
Does it increase income
|
Does it reduce Expenditure
|
| 1. Reducing revenue expenditure
|
– | YES |
| 2. Introducing new welfare schemes
|
– | NO |
| 3. Rationalizing subsidies
|
– | YES |
| 4. Reducing import duty
|
NO | – |