There has been a persistent deficit budget year after year. Which of t

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

1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Expanding industries

Select the correct answer using the code given below.

[amp_mcq option1=”1 and 3 only” option2=”2 and 3 only” option3=”1 only” option4=”1, 2, 3 and 4″ correct=”option1″]

This question was previously asked in

UPSC IAS – 2015

Download PDF Attempt Online

Actions 1 (Reducing revenue expenditure) and 3 (Rationalizing subsidies) can be taken by the government to reduce a persistent deficit budget.

A budget deficit occurs when a government’s total expenditures exceed its total revenues. To reduce the deficit, the government must either increase revenue or decrease expenditure.

Reducing revenue expenditure (e.g., on salaries, pensions, administrative costs) directly lowers government spending. Rationalizing subsidies (e.g., reducing their amount or targeting them better) also reduces expenditure. Introducing new welfare schemes typically increases government expenditure, thus increasing the deficit. Expanding industries is a long-term strategy for economic growth which *may* eventually lead to higher tax revenues, but it is not a direct or immediate action specifically aimed at *reducing* a persistent deficit through expenditure cuts or quick revenue increases; it might even require initial government investment.

More similar MCQ questions for Exam preparation:-