Reducing Budget Deficit

Budget deficit occurs when government expenditure exceeds revenue. To reduce deficit: (1) Reducing revenue expenditure directly decreases government spending and reduces deficit - CORRECT. (2) Introducing new welfare schemes increases expenditure, worsening the deficit - INCORRECT. (3) Rationalizing subsidies means reducing unnecessary subsidies, thereby decreasing expenditure and reducing deficit - CORRECT. (4) Expanding industries is an investment activity that increases expenditure and doesn't directly reduce deficit - INCORRECT. While expanding industries might increase tax revenue in the long term, it is not a direct fiscal measure to reduce deficit. > KEY: Budget Deficit Reduction = Cut expenditure (reduce revenue spending, rationalize subsidies) + Increase revenue. Don't expand schemes or spending. Answer: (a).