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

Correct Option: 1 and 3 only

To reduce a persistent fiscal deficit, the government needs to implement contractionary fiscal measures that lower non-developmental expenditures or increase revenues. Reducing revenue expenditure and rationalizing subsidies (cutting down inefficient subsidies) directly help in curbing government spending, whereas introducing new welfare schemes or expanding industries would increase fiscal outlays in the short term.