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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 schemes
3. Rationalizing subsidies
4. Reducing import duty
Select the correct answer using the code given below.
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Reducing import duty
Select the correct answer using the code given below.
- a)1 only
- b)2 and 3 only
- c)1 and 3 only
- d)1,2,3 and 4
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
There has been a persistent deficit budget year after year. Which acti...
Budget deficit is used to define a status of financial health in which expenditures exceed revenue. Reducing the revenue expenditure will certainly help in bridging the gap. Subsidies are a part of expenditure and rationalizing them would reduce the deficit.
Introducing new welfare schemes will most likely result in increasing expenditure and so will expanding industries which would require capital infusion.
Most Upvoted Answer
There has been a persistent deficit budget year after year. Which acti...
Reducing the Deficit Budget
The Government can take the following actions to reduce the deficit budget:
1. Reducing Revenue Expenditure
The Government can reduce its revenue expenditure by cutting down on non-essential expenses. This can be achieved by reducing the number of government employees or by freezing their salaries for a certain period. The Government can also reduce its expenditure on non-essential services like travel expenses, office supplies, and other miscellaneous expenses.
2. Rationalizing Subsidies
The Government can rationalize subsidies by targeting them towards the needy and deserving sections of the society. It can also reduce the amount of subsidies given to certain sectors which are not performing well or are not contributing significantly to the economy.
3. Introducing New Welfare Schemes
Introducing new welfare schemes can increase the Government's expenditure, but if designed properly, can help reduce the deficit in the long run. These schemes can be targeted towards creating more job opportunities, promoting entrepreneurship, and providing vocational training to the youth.
4. Reducing Import Duty
Reducing import duty on certain goods can help reduce the cost of production and make the products more affordable for the consumers. This can increase the demand for these goods, which can ultimately lead to an increase in revenue for the Government.
Correct Answer: Option C (1 and 3 only)
The correct answer is option C because introducing new welfare schemes (option 2) and reducing import duty (option 4) can increase the Government's expenditure and may not necessarily help in reducing the deficit. Therefore, options 1 and 3, i.e., reducing revenue expenditure and rationalizing subsidies, are the most effective ways to reduce the deficit.
The Government can take the following actions to reduce the deficit budget:
1. Reducing Revenue Expenditure
The Government can reduce its revenue expenditure by cutting down on non-essential expenses. This can be achieved by reducing the number of government employees or by freezing their salaries for a certain period. The Government can also reduce its expenditure on non-essential services like travel expenses, office supplies, and other miscellaneous expenses.
2. Rationalizing Subsidies
The Government can rationalize subsidies by targeting them towards the needy and deserving sections of the society. It can also reduce the amount of subsidies given to certain sectors which are not performing well or are not contributing significantly to the economy.
3. Introducing New Welfare Schemes
Introducing new welfare schemes can increase the Government's expenditure, but if designed properly, can help reduce the deficit in the long run. These schemes can be targeted towards creating more job opportunities, promoting entrepreneurship, and providing vocational training to the youth.
4. Reducing Import Duty
Reducing import duty on certain goods can help reduce the cost of production and make the products more affordable for the consumers. This can increase the demand for these goods, which can ultimately lead to an increase in revenue for the Government.
Correct Answer: Option C (1 and 3 only)
The correct answer is option C because introducing new welfare schemes (option 2) and reducing import duty (option 4) can increase the Government's expenditure and may not necessarily help in reducing the deficit. Therefore, options 1 and 3, i.e., reducing revenue expenditure and rationalizing subsidies, are the most effective ways to reduce the deficit.
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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 expenditure2. Introducing new welfare schemes3. Rationalizing subsidies4. Reducing import dutySelect the correct answer using the code given below.a)1 onlyb)2 and 3 onlyc)1 and 3 onlyd)1,2,3 and 4Correct answer is option 'C'. Can you explain this answer?
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