{"id":38953,"date":"2024-04-24T10:58:30","date_gmt":"2024-04-24T10:58:30","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=38953"},"modified":"2024-04-26T05:40:16","modified_gmt":"2024-04-26T05:40:16","slug":"upsc-prelims-2016-question-28","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/upsc-prelims-2016-question-28\/","title":{"rendered":"UPSC Prelims 2016 &#8211; Question 28"},"content":{"rendered":"\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_73 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-69d2f4820ae7d\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d2f4820ae7d\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/upsc-prelims-2016-question-28\/#Q_There_has_been_a_persistent_deficit_budget_year_after_year_Which_actionactions_of_the_following_can_be_taken_by_the_Government_to_reduce_the_deficit\" title=\"Q: 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?\">Q: 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?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/edukemy.com\/blog\/upsc-prelims-2016-question-28\/#The_correct_answer_is_1_and_3_only\" title=\"The correct answer is&nbsp;1 and 3 only.\">The correct answer is&nbsp;1 and 3 only.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/edukemy.com\/blog\/upsc-prelims-2016-question-28\/#In_case_you_still_have_your_doubts_contact_us_on_9811333901\" title=\"In case you still have your doubts, contact us on 9811333901.&nbsp;\">In case you still have your doubts, contact us on 9811333901.&nbsp;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/edukemy.com\/blog\/upsc-prelims-2016-question-28\/#Visit_our_YouTube_Channel_%E2%80%93_here\" title=\"Visit our YouTube Channel &#8211;&nbsp;here\">Visit our YouTube Channel &#8211;&nbsp;here<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q_There_has_been_a_persistent_deficit_budget_year_after_year_Which_actionactions_of_the_following_can_be_taken_by_the_Government_to_reduce_the_deficit\"><\/span>Q: There has been a persistent deficit budget year after<br>year. Which action\/actions of the following can be<br>taken by the Government to reduce the deficit?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>a) Reducing revenue expenditure<\/p>\n\n\n\n<p>b) Introducing new welfare schemes<\/p>\n\n\n\n<p>c) Rationalizing subsidies<\/p>\n\n\n\n<p>d) Reducing import duty<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_correct_answer_is_1_and_3_only\"><\/span>The correct answer is&nbsp;<strong><u>1 and 3 only<\/u><\/strong>.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>The fiscal deficit<\/strong><\/li><\/ul>\n\n\n\n<p>It is defined as the difference between total revenue and total expenditure.<\/p>\n\n\n\n<p><strong>Subsidies are a significant component of government expenditures, and reducing them reduces the fiscal deficit.<\/strong> <strong>Hence, statement 3 is correct.<\/strong><\/p>\n\n\n\n<p>Revenue expenditure&nbsp;neither creates assets nor&nbsp;reduces&nbsp;the liability of the government. Unnecessary revenue expenditure increases the fiscal deficit.&nbsp;<strong>Therefore, reducing revenue expenditure has&nbsp;a very large effect on the fiscal deficit.<\/strong>&nbsp;<strong>Hence, statement 1 is correct.<\/strong><\/p>\n\n\n\n<p>Introducing new welfare schemes neither creates assets nor&nbsp;reduces&nbsp;the liability of the government and will further enhance the fiscal deficit.&nbsp;<strong>Hence, statement 2 is not correct.<\/strong><\/p>\n\n\n\n<p>Reducing import duty will reduce tax revenue and thus increases the fiscal deficit.<strong>&nbsp;Hence, statement 4 is not correct.<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-essay?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Essay\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/UPSC-Essay-Course-1280\u00d7300-1-3.svg\" alt=\"\" class=\"wp-image-42688\" width=\"781\" height=\"182\"\/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"block-c6ab63ae-7083-4831-b519-cb89dacafb18\"><span class=\"ez-toc-section\" id=\"In_case_you_still_have_your_doubts_contact_us_on_9811333901\"><\/span><strong>In case you still have your doubts, contact us on 9811333901.<\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p id=\"block-52c5a91b-6ed6-46e3-b781-7cc0c63a0b76\">For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p id=\"block-d014fe86-d628-49d8-82ce-6c60dc6e7a73\">For Daily Updates and Study Material:<\/p>\n\n\n\n<p id=\"block-38177954-e668-4d8d-b250-d0fbd5a09390\">Join our Telegram Channel &#8211;&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\" id=\"block-49ca2fe3-109f-4a88-b72e-9df49c3d328e\"><li>1. 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