Which of the following are the ways to reduce revenue deficit without creating liabilities 1 Printin...........

Economic Affairs Public Finance and Debt Management

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Which of the following are the ways to reduce revenue deficit without creating liabilities?

1. Printing more money by RBI

2. Low rate interest loans from World bank

3. Increasing direct taxes

4. Rationalisation of Subsidies

Select the correct answer using the code given below

1, 3 and 4 only

3 and 4 only

2, 3 and 4 only

1 and 2 only

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Explanation:

Revenue deficit is the difference between revenue expenditure and revenue receipts. To reduce revenue deficit, either we need to increase the revenue receipts or reduce the revenue expenditure.

Statement 1 is incorrect. Printing more money is inflationary and also creates liability on government.
Statement 2 is incorrect. Any loan would not be part of revenue receipt.
Statement 3 is correct. Increasing direct taxes is always a prudent method to increase revenue of government.
Statement 4 is correct. Rationalizing subsidies would reduce revenue expenditure.