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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



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To reduce a persistent deficit budget, the government can take the following actions:

Reducing revenue expenditure: This refers to the government's spending on day-to-day operations, maintenance, and administration. By reducing unnecessary expenses and improving expenditure efficiency, the government can lower the deficit.

Introducing new welfare schemes: Introducing new welfare schemes, which involve increased government spending, can further contribute to the deficit. Therefore, this option would not be effective in reducing the deficit.

Rationalizing subsidies: Subsidies are provided by the government to support certain sectors or individuals. However, inefficient or excessive subsidies can contribute to the budget deficit. By rationalizing subsidies, the government can reduce spending and improve fiscal health.

Expanding industries: While expanding industries can contribute to economic growth and potentially increase revenue through taxes, it may not directly address the budget deficit. The impact on the deficit would depend on various factors such as the taxation policy, investment costs, and time frame for returns.


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