UPSC Previous Year Question | Prelims GS | 2016

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.

  1. 1 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. 1, 2, 3 and 4

Answer

Correct Answer

1 and 3 only

Explanation

Reducing revenue expenditure and rationalizing subsidies both directly cut government spending and help reduce the deficit. New welfare schemes increase expenditure, and reducing import duty cuts revenue collection, both of which would worsen the deficit.

Topics: deficit reduction measures, fiscal deficit, indian economy, public finance