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Discuss the issue of deficit reduction.
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The following are methods for reducing the government's budget deficit:

 (i) Decrease in expenditures:

(a) Government expenditures should be reduced by making government activities more planned and effective. It should reduce inefficient and unnecessary administrative tasks.

 (b) The government can encourage the private sector to invest in capital projects that will reduce government spending.

(ii) Revenue growth / increased revenue generation:

 (a) Higher taxes imply that the government earns more money. Furthermore, imposing new taxes or raising the rates of existing taxes may increase the government's revenue.

 (b) To increase revenue, the government can sell shares in Public Sector Undertakings (PSU disinvestment)
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