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

1. A

   1 only

   Reducing revenue expenditure only. Cutting salaries, interest-unrelated running costs and poorly targeted transfers does shrink the deficit, but rationalising subsidies (statement 3) is also a standard consolidation tool. 1 alone is incomplete.

2. B

   2 and 3 only

   New welfare schemes and rationalising subsidies. Fresh welfare outlays raise revenue expenditure and widen the gap unless fully funded. Statement 2 works against deficit reduction, so 2 and 3 only is not the key.

3. C

   1 and 3 only

   1 and 3 only. A persistent deficit is narrowed by spending less on revenue account and by targeting or pruning subsidies. New schemes add outgo; cutting import duty usually cuts customs revenue and can worsen the fiscal gap. That stored letter is the official key.

4. D

   1, 2, 3 and 4

   All four. Introducing new welfare schemes and reducing import duty do not, by themselves, reduce a deficit. All four cannot be the key.

Summary. Official key is (c) 1 and 3 only. Deficit control means lower revenue spending and smarter subsidies. New welfare schemes increase committed expenditure. Lower import duties typically reduce tax receipts and may raise the import bill. Honour the stored letter (c).