Discuss the issue of deficit reduction.

Question

Philoid · Accepted Answer

The Government of India has been trying to reduce its deficit by

•Increase in taxes

•Reduction in its expenditure and

•Increase in its receipts through the sale of shares in Public Sector Units

However, these steps could result in deficit reduction, but the activities of government should be more efficient through proper planning of program along with better administration and implementation.

The alternative way of deficit reduction can be to change the scope of government by withdrawing it from some of the areas which were under its purview.

In discharging its fiscal responsibilities the government has to pursue prudent fiscal policy which is conducive to bring a high rate of economic growth in the economy.