Discuss the issue of deficit reduction.

1.	Discuss the issue of deficit reduction.
Answer» if the government increases taxes or decreases expenditure then the fiscal deficit gets reduced. Indian government is trying to reduce the fiscal deficit by increasing tax revenue by selling the share of PSUs and by reducing the government expenditure. The deficit reduction influences the different sectors of an economy in different ways. The government is trying to fill the gap of reduced fiscal deficit by making government activities more efficient through better planning of programmes and better administration. The cutting back government programmes in vital areas like agriculture, education, health, poverty alleviation has adverse effect on the economy. The same fiscal measures can lead to a large or small deficit government by the state of the economy. During recession period GDP falls which reduces tax revenue which increase the fiscal deficit.

Answer»

if the government increases taxes or decreases expenditure then the fiscal deficit gets reduced. Indian government is trying to reduce the fiscal deficit by increasing tax revenue by selling the share of PSUs and by reducing the government expenditure.

The deficit reduction influences the different sectors of an economy in different ways. The government is trying to fill the gap of reduced fiscal deficit by making government activities more efficient through better planning of programmes and better administration.

The cutting back government programmes in vital areas like agriculture, education, health, poverty alleviation has adverse effect on the economy. The same fiscal measures can lead to a large or small deficit government by the state of the economy. During recession period GDP falls which reduces tax revenue which increase the fiscal deficit.

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