There has been a persistent deficit budget year after year Which action actions of the following can...........

Economic Affairs Public Finance and Debt Management

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.

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Explanation:

A budget deficit occurs when expenses exceed revenue and indicate the financial health of a country. Reducing the revenue expenditure will certainly help in bridging the gap. Subsidies are a part of expenditure and rationalizing them would reduce the deficit.

Introducing new welfare schemes will most likely result in increasing expenditure and so will expanding industries which would require capital infusion.

Reducing import duty will reduces tax revenue and thus increases fiscal deficit.

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