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Which of the following would be advisable to curb the revenue deficit

June 1, 2025 by rawan239

Which of the following would be advisable to curb the revenue deficit ?

1. Cutting expenditures on subsidy

2. Cutting social expenditures

3. Imposing import controls

Select the correct answer using the code given below :

1 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 3

This question was previously asked in

UPSC Combined Section Officer – 2024

Download PDF Attempt Online

The correct answer is 1 and 2 only (A).

Revenue deficit is the excess of total revenue expenditure of the government over its total revenue receipts. To reduce the revenue deficit, the government must either increase its revenue receipts (e.g., through taxes) or decrease its revenue expenditure. Cutting expenditures on subsidies (1) and cutting social expenditures (2) are both measures that reduce government revenue expenditure, and are therefore advisable steps to curb the revenue deficit.

Imposing import controls (3), such as tariffs or quotas, is primarily a trade policy tool aimed at influencing the balance of trade, protecting domestic industries, or potentially generating customs revenue (which is part of revenue receipts). While higher customs duty can increase revenue receipts, import controls are not a primary or direct measure focused on managing the balance between general revenue expenditure and revenue receipts. Cutting expenditure is a more direct way to address a revenue deficit.

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