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 expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty Select the correct answer using the code given below.

To reduce a persistent deficit budget, the government primarily needs to either increase its revenue or decrease its expenditure. Let's analyze the given options: Reducing revenue expenditure: Revenue expenditure includes expenses like salaries, pensions, subsidies, interest payments, etc., that do not create assets. Reducing these non-developmental or non-asset-creating expenditures directly lowers the government's overall expenditure, thereby helping to reduce the deficit. This statement is correct. Introducing new welfare schemes: Welfare schemes typically involve significant government expenditure (revenue or capital, often revenue in nature like direct benefit transfers or free services). Introducing new schemes would generally increase government expenditure, thus exacerbating the deficit rather than reducing it. This statement is incorrect. Rationalizing subsidies: Subsidies are a major component of revenue expenditure. Rationalizing them means making them more targeted, reducing their scope, or linking them to specific criteria to reduce the overall outflow. This directly leads to a reduction in government expenditure, helping to curtail the deficit. This statement is correct. Reducing import duty: Import duties (customs duties) are a source of tax revenue for the government. Reducing import duty would decrease the government's tax revenue. While it might have other economic benefits (like reducing import costs or increasing trade), its direct effect on the government's budget would be to decrease revenue, potentially increasing the deficit, not reducing it. This statement is incorrect. Therefore, options 1 and 3 are correct actions to reduce the deficit.