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.

1. A budget deficit occurs when government expenditure exceeds its revenue. To reduce the deficit, the government must either increase revenue or decrease expenditure. 2. Statement 1: Reducing revenue expenditure directly cuts down on the government's day-to-day spending (like salaries, interest payments, non-capital subsidies), thus decreasing overall expenditure and helping to reduce the deficit. This is a valid action. 3. Statement 2: Introducing new welfare schemes would increase government expenditure, thereby widening the deficit rather than reducing it. This action is counterproductive to reducing the deficit. 4. Statement 3: Rationalizing subsidies involves making them more efficient and targeted, often leading to a reduction in the overall subsidy bill (a component of revenue expenditure). This reduction in expenditure helps reduce the deficit. This is a valid action. 5. Statement 4: Expanding industries aims at long-term economic growth, which might eventually increase tax revenue. However, the process of expansion might require initial government support (like infrastructure spending or tax breaks), which could increase the deficit in the short term. It's not a direct measure to immediately reduce the deficit. 6. Therefore, the appropriate actions to reduce the deficit from the given options are reducing revenue expenditure (1) and rationalizing subsidies (3). The correct option is (A).