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 deficit budget means that government expenditure exceeds government revenue.

To reduce the deficit:

• Reducing revenue expenditure directly decreases government spending.

• Rationalizing subsidies also lowers government expenditure by making subsidies more efficient and targeted.

• Introducing new welfare schemes will likely increase expenditure.

• Expanding industries might indirectly affect the deficit in the long run but is not an immediate solution and may require initial investment, thus increasing the deficit in the short term.

Statement 1 is correct. Statement 2 is not correct. Statement 3 is correct. Statement 4 is not correct.

Hence, only statements 1 and 3 are correct.