In the context of governance, consider the following:

1. Encouraging Foreign Direct Investment inflows
2. Privatization of higher educational institutions
3. Down-sizing of bureaucracy
4. Selling or offloading the shares of Public Sector Undertakings

Which of the above can be used as measures to control the fiscal deficit in India?

1. 1, 2 and 3
2. 2, 3 and 4
3. 1, 2 and 4
4. 3 and 4 only

Explanation

Statement 1 is incorrect

• FDI flows primarily into the private sector, not directly into government accounts. Does not automatically increase government revenue or reduce expenditure. Hence, not a direct fiscal deficit control measure.

Statement 2 is incorrect

• Privatization of higher educational institutions is a structural reform, not a budgetary or fiscal instrument. It may reduce future public spending marginally, but not treated as a direct fiscal deficit control tool.

Statement 3 is correct

• Down-sizing of bureaucracy reduces recurring expenditure such as salaries and pensions. Lower recurring expenditure leads to reduction in fiscal deficit.

Statement 4 is correct

• Selling or offloading shares of Public Sector Undertakings generates non-debt capital receipts, directly lowering the fiscal deficit, without increasing government liabilities.

Answer: (d) 3 and 4 only