Which of the following can help to reduce the Fiscal Deficit?

The correct answer is Option (2) → Increasing proceeds from the sale of PSUs.

• Fiscal Deficit is the difference between the government's total expenditure and its total receipts (excluding borrowings).

• To reduce fiscal deficit, the government can either reduce expenditure or increase non-debt receipts.

Option-wise analysis:

• Increasing Subsidies → Incorrect.  Increases government expenditure → Worsens fiscal deficit.

• Increasing proceeds from the sale of PSUs → Correct. Brings more non-tax revenue → Helps reduce fiscal deficit.

• Investing in improving public goods → Incorrect. Increases capital expenditure → May improve long-term growth but not reduce immediate deficit.

• Decreasing the burden and incidence of tax → Incorrect. Reduces tax revenue → Increases fiscal deficit.