The correct option of "1 and 3 only" is pertinent as reducing revenue expenditure and rationalizing subsidies are direct strategies to curtail government spending, a key factor in addressing persistent budget deficits. Reducing revenue expenditure minimizes unnecessary expenditures, while rationalizing subsidies ensures that financial support is targeted and efficient, thereby reducing wasteful spending. In contrast, introducing new welfare schemes (option 2) would likely increase expenditure, and expanding industries (option 4) typically requires significant investment without immediate returns, which could worsen the deficit in the short term. This understanding aligns with the fiscal policy principles outlined in standard economic texts used in UPSC preparation.