{"id":91336,"date":"2025-06-01T10:53:40","date_gmt":"2025-06-01T10:53:40","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91336"},"modified":"2025-06-01T10:53:40","modified_gmt":"2025-06-01T10:53:40","slug":"there-has-been-a-persistent-deficit-budget-year-after-year-which-acti","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/","title":{"rendered":"There has been a persistent deficit budget year after year. Which acti"},"content":{"rendered":"<p>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?<\/p>\n<ul>\n<li>Reducing revenue expenditure<\/li>\n<li>Introducing new welfare schemes<\/li>\n<li>Rationalizing subsidies<\/li>\n<li>Reducing import duty<\/li>\n<\/ul>\n<p>Select the correct answer using the code given below.<\/p>\n<p>[amp_mcq option1=&#8221;1 and 2&#8243; option2=&#8221;1 and 3&#8243; option3=&#8221;2 only&#8221; option4=&#8221;1, 2 and 4&#8243; correct=&#8221;option2&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC IAS &#8211; 2016<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-ias-2016.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-ias-2016\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\">\nA persistent deficit budget means that the government&#8217;s total expenditure exceeds its total receipts (excluding borrowings) year after year, leading to an increase in public debt. To reduce this deficit, the government needs to either increase its revenue or decrease its expenditure.<br \/>\n<\/section>\n<section id=\"pyq-key-points\">\nLet&#8217;s analyze each action:<br \/>\n1.  **Reducing revenue expenditure:** Revenue expenditure includes government spending on salaries, pensions, interest payments, subsidies, etc., which do not create assets. Reducing these items directly lowers total government expenditure, thus helping to reduce the fiscal deficit. This action is correct.<br \/>\n2.  **Introducing new welfare schemes:** Welfare schemes involve government spending, typically revenue expenditure (e.g., subsidies, direct benefit transfers). Introducing new schemes increases government expenditure, which would likely increase the fiscal deficit, not reduce it. This action is incorrect.<br \/>\n3.  **Rationalizing subsidies:** Subsidies are a significant part of government expenditure. Rationalizing subsidies (e.g., by targeting them better, reducing their amount, or phasing them out) reduces government expenditure, thus helping to reduce the fiscal deficit. This action is correct.<br \/>\n4.  **Reducing import duty:** Import duties (customs duties) are a source of tax revenue for the government. Reducing import duties would decrease government revenue (unless the reduction stimulates imports so much that the volume effect outweighs the rate reduction, which is not guaranteed), thus increasing the fiscal deficit. This action is incorrect.<br \/>\n<\/section>\n<section id=\"pyq-additional-information\">\nTherefore, actions 1 (Reducing revenue expenditure) and 3 (Rationalizing subsidies) are effective ways for the government to reduce a budget deficit. Other measures to reduce the deficit could include increasing tax rates, improving tax collection efficiency, divesting from public sector undertakings, etc.<br \/>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>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? Reducing revenue expenditure Introducing new welfare schemes Rationalizing subsidies Reducing import duty Select the correct answer using the code given below. [amp_mcq option1=&#8221;1 and 2&#8243; option2=&#8221;1 and 3&#8243; option3=&#8221;2 only&#8221; &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"There has been a persistent deficit budget year after year. Which acti\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/#more-91336\">Detailed Solution<span class=\"screen-reader-text\">There has been a persistent deficit budget year after year. Which acti<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1092],"tags":[1098,1120,1196],"class_list":["post-91336","post","type-post","status-publish","format-standard","hentry","category-upsc-ias","tag-1098","tag-economic-development","tag-fiscal-policy-revenue","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>There has been a persistent deficit budget year after year. Which acti<\/title>\n<meta name=\"description\" content=\"A persistent deficit budget means that the government&#039;s total expenditure exceeds its total receipts (excluding borrowings) year after year, leading to an increase in public debt. To reduce this deficit, the government needs to either increase its revenue or decrease its expenditure. Let&#039;s analyze each action: 1. **Reducing revenue expenditure:** Revenue expenditure includes government spending on salaries, pensions, interest payments, subsidies, etc., which do not create assets. Reducing these items directly lowers total government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 2. **Introducing new welfare schemes:** Welfare schemes involve government spending, typically revenue expenditure (e.g., subsidies, direct benefit transfers). Introducing new schemes increases government expenditure, which would likely increase the fiscal deficit, not reduce it. This action is incorrect. 3. **Rationalizing subsidies:** Subsidies are a significant part of government expenditure. Rationalizing subsidies (e.g., by targeting them better, reducing their amount, or phasing them out) reduces government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 4. **Reducing import duty:** Import duties (customs duties) are a source of tax revenue for the government. Reducing import duties would decrease government revenue (unless the reduction stimulates imports so much that the volume effect outweighs the rate reduction, which is not guaranteed), thus increasing the fiscal deficit. This action is incorrect.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"There has been a persistent deficit budget year after year. Which acti\" \/>\n<meta property=\"og:description\" content=\"A persistent deficit budget means that the government&#039;s total expenditure exceeds its total receipts (excluding borrowings) year after year, leading to an increase in public debt. To reduce this deficit, the government needs to either increase its revenue or decrease its expenditure. Let&#039;s analyze each action: 1. **Reducing revenue expenditure:** Revenue expenditure includes government spending on salaries, pensions, interest payments, subsidies, etc., which do not create assets. Reducing these items directly lowers total government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 2. **Introducing new welfare schemes:** Welfare schemes involve government spending, typically revenue expenditure (e.g., subsidies, direct benefit transfers). Introducing new schemes increases government expenditure, which would likely increase the fiscal deficit, not reduce it. This action is incorrect. 3. **Rationalizing subsidies:** Subsidies are a significant part of government expenditure. Rationalizing subsidies (e.g., by targeting them better, reducing their amount, or phasing them out) reduces government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 4. **Reducing import duty:** Import duties (customs duties) are a source of tax revenue for the government. Reducing import duties would decrease government revenue (unless the reduction stimulates imports so much that the volume effect outweighs the rate reduction, which is not guaranteed), thus increasing the fiscal deficit. This action is incorrect.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2025-06-01T10:53:40+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"There has been a persistent deficit budget year after year. Which acti","description":"A persistent deficit budget means that the government's total expenditure exceeds its total receipts (excluding borrowings) year after year, leading to an increase in public debt. To reduce this deficit, the government needs to either increase its revenue or decrease its expenditure. Let's analyze each action: 1. **Reducing revenue expenditure:** Revenue expenditure includes government spending on salaries, pensions, interest payments, subsidies, etc., which do not create assets. Reducing these items directly lowers total government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 2. **Introducing new welfare schemes:** Welfare schemes involve government spending, typically revenue expenditure (e.g., subsidies, direct benefit transfers). Introducing new schemes increases government expenditure, which would likely increase the fiscal deficit, not reduce it. This action is incorrect. 3. **Rationalizing subsidies:** Subsidies are a significant part of government expenditure. Rationalizing subsidies (e.g., by targeting them better, reducing their amount, or phasing them out) reduces government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 4. **Reducing import duty:** Import duties (customs duties) are a source of tax revenue for the government. Reducing import duties would decrease government revenue (unless the reduction stimulates imports so much that the volume effect outweighs the rate reduction, which is not guaranteed), thus increasing the fiscal deficit. This action is incorrect.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/","og_locale":"en_US","og_type":"article","og_title":"There has been a persistent deficit budget year after year. Which acti","og_description":"A persistent deficit budget means that the government's total expenditure exceeds its total receipts (excluding borrowings) year after year, leading to an increase in public debt. To reduce this deficit, the government needs to either increase its revenue or decrease its expenditure. Let's analyze each action: 1. **Reducing revenue expenditure:** Revenue expenditure includes government spending on salaries, pensions, interest payments, subsidies, etc., which do not create assets. Reducing these items directly lowers total government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 2. **Introducing new welfare schemes:** Welfare schemes involve government spending, typically revenue expenditure (e.g., subsidies, direct benefit transfers). Introducing new schemes increases government expenditure, which would likely increase the fiscal deficit, not reduce it. This action is incorrect. 3. **Rationalizing subsidies:** Subsidies are a significant part of government expenditure. Rationalizing subsidies (e.g., by targeting them better, reducing their amount, or phasing them out) reduces government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 4. **Reducing import duty:** Import duties (customs duties) are a source of tax revenue for the government. Reducing import duties would decrease government revenue (unless the reduction stimulates imports so much that the volume effect outweighs the rate reduction, which is not guaranteed), thus increasing the fiscal deficit. This action is incorrect.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T10:53:40+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/","url":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/","name":"There has been a persistent deficit budget year after year. Which acti","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T10:53:40+00:00","dateModified":"2025-06-01T10:53:40+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"A persistent deficit budget means that the government's total expenditure exceeds its total receipts (excluding borrowings) year after year, leading to an increase in public debt. To reduce this deficit, the government needs to either increase its revenue or decrease its expenditure. Let's analyze each action: 1. **Reducing revenue expenditure:** Revenue expenditure includes government spending on salaries, pensions, interest payments, subsidies, etc., which do not create assets. Reducing these items directly lowers total government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 2. **Introducing new welfare schemes:** Welfare schemes involve government spending, typically revenue expenditure (e.g., subsidies, direct benefit transfers). Introducing new schemes increases government expenditure, which would likely increase the fiscal deficit, not reduce it. This action is incorrect. 3. **Rationalizing subsidies:** Subsidies are a significant part of government expenditure. Rationalizing subsidies (e.g., by targeting them better, reducing their amount, or phasing them out) reduces government expenditure, thus helping to reduce the fiscal deficit. This action is correct. 4. **Reducing import duty:** Import duties (customs duties) are a source of tax revenue for the government. Reducing import duties would decrease government revenue (unless the reduction stimulates imports so much that the volume effect outweighs the rate reduction, which is not guaranteed), thus increasing the fiscal deficit. This action is incorrect.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/there-has-been-a-persistent-deficit-budget-year-after-year-which-acti\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC IAS","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-ias\/"},{"@type":"ListItem","position":3,"name":"There has been a persistent deficit budget year after year. 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