Government of India wants to reduce Revenue deficit without creating liabilities For this it asked g...........

Economic Affairs Public Finance and Debt Management

Government of India wants to reduce Revenue deficit without creating liabilities. For this it asked general public to provide viable solutions. As a concerned citizen which of the following will be your advice.

1. Printing more money by RBI.

2. Borrowing from Foreign Countries.

3. Increasing Direct taxes.

4. Rationalisation of Subsidies.

Choose the correct option.

1, 2 and 4 only

2 and 4 only

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. Printing more money creates liability on government. Any loan would not be part of revenue receipt. Increasing direct taxes is always a prudent method to increase revenue of government. Rationalizing subsidies would reduce revenue expenditure.