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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.
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
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
There has been a persistent deficit budget year after year. Which of t...
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 of t...
To reduce a persistent deficit budget, the government can take several actions. These actions include reducing revenue expenditure, rationalizing subsidies, and expanding industries. Introducing new welfare schemes, on the other hand, may actually increase the deficit. The correct answer is option A, which includes reducing revenue expenditure and rationalizing subsidies.
1. Reducing revenue expenditure:
By reducing revenue expenditure, the government can decrease its overall spending and bring the budget deficit under control. This can be achieved by cutting unnecessary expenses, avoiding wasteful spending, and prioritizing essential services. This might involve reducing the size of the government bureaucracy, cutting down on non-essential projects, and streamlining administrative processes. By controlling expenditure, the government can contribute towards reducing the budget deficit.
2. Introducing new welfare schemes:
Introducing new welfare schemes, although well-intentioned, can actually increase the budget deficit. Welfare schemes require funds for implementation and maintenance, which adds to government expenditure. While these schemes may be necessary for social welfare, they should be introduced with caution and with a comprehensive plan to cover their costs. Introducing new welfare schemes without considering their impact on the budget deficit can further worsen the fiscal situation.
3. Rationalizing subsidies:
Rationalizing subsidies can help reduce the budget deficit. Subsidies are a form of government expenditure aimed at providing support to specific sectors or groups. However, subsidies can often become a burden on the budget when they are not targeted efficiently or when they benefit those who do not genuinely need them. By evaluating and streamlining subsidies, the government can reduce unnecessary expenditure and allocate resources more effectively.
4. Expanding industries:
Expanding industries can have a positive impact on the budget deficit. When industries grow, they generate more revenue for the government through taxes and other forms of revenue. Additionally, expanding industries create employment opportunities, leading to increased incomes and consumption, which in turn contribute to economic growth. This growth can help alleviate the budget deficit by increasing the overall tax base and reducing the need for excessive borrowing.
In conclusion, to reduce a persistent deficit budget, the government should focus on reducing revenue expenditure, rationalizing subsidies, and expanding industries. These actions can help bring the budget deficit under control and contribute to a more sustainable fiscal situation.
1. Reducing revenue expenditure:
By reducing revenue expenditure, the government can decrease its overall spending and bring the budget deficit under control. This can be achieved by cutting unnecessary expenses, avoiding wasteful spending, and prioritizing essential services. This might involve reducing the size of the government bureaucracy, cutting down on non-essential projects, and streamlining administrative processes. By controlling expenditure, the government can contribute towards reducing the budget deficit.
2. Introducing new welfare schemes:
Introducing new welfare schemes, although well-intentioned, can actually increase the budget deficit. Welfare schemes require funds for implementation and maintenance, which adds to government expenditure. While these schemes may be necessary for social welfare, they should be introduced with caution and with a comprehensive plan to cover their costs. Introducing new welfare schemes without considering their impact on the budget deficit can further worsen the fiscal situation.
3. Rationalizing subsidies:
Rationalizing subsidies can help reduce the budget deficit. Subsidies are a form of government expenditure aimed at providing support to specific sectors or groups. However, subsidies can often become a burden on the budget when they are not targeted efficiently or when they benefit those who do not genuinely need them. By evaluating and streamlining subsidies, the government can reduce unnecessary expenditure and allocate resources more effectively.
4. Expanding industries:
Expanding industries can have a positive impact on the budget deficit. When industries grow, they generate more revenue for the government through taxes and other forms of revenue. Additionally, expanding industries create employment opportunities, leading to increased incomes and consumption, which in turn contribute to economic growth. This growth can help alleviate the budget deficit by increasing the overall tax base and reducing the need for excessive borrowing.
In conclusion, to reduce a persistent deficit budget, the government should focus on reducing revenue expenditure, rationalizing subsidies, and expanding industries. These actions can help bring the budget deficit under control and contribute to a more sustainable fiscal situation.
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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 expenditure2. Introducing new welfare schemes3. Rationalizing subsidies4. Expanding industriesSelect the correct answer using the code given below.a)1 and 3 onlyb)2 and 3 onlyc)1 onlyd)1,2,3 and 4Correct answer is option 'A'. Can you explain this answer?
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