New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    Which of the following policies is aimed at reducing the

    fiscal deficit in India?
    A Expansionary Monetary Policy Correct Answer Incorrect Answer
    B Decreasing Direct Taxes Correct Answer Incorrect Answer
    C Increasing Public Expenditure Correct Answer Incorrect Answer
    D Disinvestment of Public Sector Enterprises Correct Answer Incorrect Answer

    Solution

    Fiscal deficit refers to the gap between the government's total expenditure and its total revenue. One of the ways to reduce the fiscal deficit is through disinvestment of public sector enterprises. Disinvestment involves selling a part or the whole of government's equity in public sector enterprises to private investors. This can inject funds into the government's coffers, helping to bridge the deficit. Option A, expansionary monetary policy, is a measure taken by the central bank to stimulate economic growth, which may not directly address fiscal deficits. Decreasing direct taxes (Option B) and increasing public expenditure (Option C) could lead to an increase in the fiscal deficit, not its reduction.

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