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

2015

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.

(a)

1 and 3 only

(b)

2 and 3 only

(c)

1 only

(d)

1, 2, 3 and 4

Answer:

(a)

Core Books/NCERT

Explanation

Introducing new welfare scheme will further inflate the budget. Expanding industries by budgetary support will not add anything in the short-run to the tax revenues of the government, and thus will increase the budget deficit. Rationalizing subsidies and reducing revenue expenditure are two direct ways of reducing the fiscal burden of the government of India.Tikdam: