2015 GS Paper I, all questions

UPSC Prelims 2015 · GS Paper I

Question 98: Economy and Social Development

There has been a persistent deficit budget year after year. Which of the following actions can be taken by the government to reduce the deficit?

  1. 1.Reducing revenue expenditure
  2. 2.Introducing new welfare schemes
  3. 3.Rationalizing subsidies
  4. 4.Expanding industries

Select the correct answer using the code given below.

a1 and 3 only
b2 and 3 only
c1 only
d1, 2, 3 and 4

AnswerUPSC’s answer is (a).

A budget deficit is cut by lowering spending or raising revenue. Reducing revenue expenditure and rationalising subsidies both lower government spending, so they reduce the deficit. Introducing new welfare schemes raises expenditure and widens it. Expanding industries does not by itself cut the deficit in the short run, so UPSC leaves it out.

  • 1. Lower revenue expenditure reduces the deficit.
  • 2. New welfare schemes add to spending.
  • 3. Rationalising subsidies cuts spending.
  • 4. Expanding industries is not a direct, short-run deficit-reducing action, on UPSC's key.

How you could have got this

  1. If you were sure statement 2 is not correct, (b) and (d) go: each of them includes 2.

    What you needed to know: New welfare schemes add to spending.

  2. Then, if you were sure statement 3 is correct, (c) goes: it leaves 3 out.

    What you needed to know: Rationalising subsidies cuts spending.

Only (a) is left. You didn’t need statements 1 or 4.

Which options go is worked out from UPSC’s key and the options, not by a model.

Why each option is right or wrong
  • (a) Correct: cutting revenue expenditure and rationalising subsidies reduce the deficit.
  • (b) New welfare schemes increase spending and widen the deficit.
  • (c) Incomplete: rationalising subsidies also reduces the deficit.
  • (d) Wrong: new welfare schemes increase the deficit.

Worth knowing: Expanding industries can raise tax revenue over time, so statement 4 is arguable; UPSC's key excludes it.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2015, General Studies Paper I, Series A. The paper on upsc.gov.in.