There has been a persistent deficit budget year after year. Which action/actions of the following can-be taken by the Government to reduce the deficit? 1. Reducing revenue expenditure 2. Introducing new welfare schemes 3. Rationalizing subsidies 4. Reducing import duty Select the correct answer using the code given below.

1. A budget deficit occurs when total government expenditure exceeds total revenue. To reduce the deficit, the government must either decrease its expenditure or increase its revenue. 2. Statement 1: Reducing revenue expenditure directly lowers the government's overall spending, which helps in reducing the deficit. (Correct action) 3. Statement 2: Introducing new welfare schemes typically increases government expenditure, which would likely worsen the deficit, not reduce it. (Incorrect action) 4. Statement 3: Rationalizing subsidies generally implies making them more targeted and efficient, often leading to a reduction in the total subsidy bill (a major component of revenue expenditure). This reduction in expenditure helps reduce the deficit. (Correct action) 5. Statement 4: Reducing import duty lowers the government's tax revenue. A decrease in revenue would tend to increase the deficit, not reduce it. (Incorrect action) 6. Therefore, the actions that can be taken by the Government to reduce the deficit are reducing revenue expenditure and rationalizing subsidies (1 and 3).