Discuss the issue of deficit reduction.
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The deficit in a government budget can be reduced by the following steps:
- 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.
- Reduction in Government Expenditures, It can be done through making government activities more efficient through better planning of programmes and better administration.
- The government can raise receipts through the sale of shares in PSUs (Public Sector Undertaking).
- Changing the scope and role of government by withdrawing from same areas where it operated before.
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In the Government of India's budget for the year 2013 - 14, the Finance Minister proposed to raise the Goods and Services Tax (GST) on cigarettes. He also proposed to increase income tax on individual earning more than rupee one crore per annum.- Identify the taxes proposed to be increased by the Budget 2013 - 14. The taxes proposed are:
- Goods and Services tax on cigarettes.
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- Both [a] and [b]
- None of the above
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- Revenue generation
- Social welfare
- Both [a] and [b]
- None of these
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- This will discourage their cigarettes
- This will encourage their cigarettes
- Both [a] and [b]
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- What would be the effect of increase in direct tax on the rich?
- It will reduce the gap between rich and the poor, thereby reducing inequalities in income
- It will increase the gap between rich and the poor
- Both [a] and [b]
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