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 ✓ UPSC's answer
- (b) 2 and 3 only
- (c) 1 only
- (d) 1, 2, 3 and 4
Why the answer is (a)
• A budget deficit is reduced by cutting expenditure or raising revenue.
• Reducing revenue expenditure (1) and rationalising subsidies (3) directly lower government spending.
• New welfare schemes (2) raise spending; expanding industries (4) is a long-term growth measure that requires investment first and does not directly reduce the deficit.
• Hence 1 and 3 only, option (a).
Why the other options are wrong
- (b) 2 and 3 only
- New welfare schemes increase the deficit.
- (c) 1 only
- Rationalising subsidies also reduces the deficit.
- (d) 1, 2, 3 and 4
- New schemes and industrial expansion add to spending.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2015, held on 23 August 2015. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.