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. Rationalising subsidies 4. Expanding industries Select the correct answer using the code given below.

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YESPYQ · Accepted Answer

Correct answer: 1 and 3 only. Statement 1 is correct : Budget deficit is used to define a status of financial health in which expenditures ex- ceed revenue. Revenue Expenditure is the part of government spending that does not result in the production of assets such as Salaries, wages, pensions, subsidies, and interest payments etc. Reducing Revenue Expenditure involves cutting down on the government’s routine expenses, such as salaries, subsidies, and administrative costs. By streamlining operations and elimi- nating wasteful spending, the government can lower its rev- enue expenditure and reduce the budget deficit. Statement 3 is correct : Rationalizing Subsidies entails re- viewing and possibly reducing subsidies that are inefficient or benefit higher-income groups disproportionately. By targeting subsidies more effectively, the government can decrease un- necessary spending, aiding in deficit reduction. Statements 2 and 4 are incorrect :  Introducing New Welfare Schemes without corresponding revenue sources can increase government expenditure, potentially widening the budget defi

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