| 1. Reducing revenue expenditure |
| 2. Introducing new welfare schemes |
| 3. Rationalizing subsidies |
| 4. Reducing import duty |
A) 1 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, 3 and 4
Correct Answer: C
Solution :
(i) In order to reduce the fiscal deficit, the government needs to increase its earnings and reduce its expenditure. This is done by following methods: Cut down the subsidies; reforms in tax structures; improve profit generated by Public Sector Enterprises and austerity measures. (ii) Just by applying logic i.e. to reduce deficit, we?ve to increase income and reduce Expenditure.| Option | Does it in- crease income | Does it reduce Ex- penditure | |
| 1. | Reducing revenue expenditure | _ | YES |
| 2. | Introducing new welfare schemes | _ | NO |
| 3. | Rationalizing subsidies | _ | YES |
| 4. | Reducing import duty | NO | _ |
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