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

Question

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 scheme
3. Rationalizing subsidies
4. Reducing import duty
Select the correct answer using the code given below.

Accepted Answer

Reducing revenue expenditure directly cuts down government spending, thereby decreasing the deficit. Rationalizing subsidies means making them more targeted or reducing their overall quantum, which also lowers the fiscal burden on the government. Introducing new welfare schemes would invariably increase expenditure, thus widening the deficit. Reducing import duties can lead to lower government revenue, potentially increasing the deficit.