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Question -

Discuss the issue of deficit reduction.



Answer -

The deficit in a government budget can be reduced by the following steps:

  1. Taxes should be increased. Government can make a plan for rising direct taxes to increase its receipts can also be raised by increasing rates of taxes or by imposing new taxes.
  2. Reduction in Government Expenditures: It can be done through making government activities more efficient through better planning of programmes and better administration.
  3. ┬аThe government can raise Receipts through the sale of shares in PSUs (Public Sector Undertaking).
  4. Changing the scope and role of government by withdrawing from same areas where it operated before.

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