Recently, the government is taking various fiscal policy measures to tackle the slowdown in the economy. In this context, which of the following may be termed as ‘counter-cyclical fiscal policy’ measures? 1. Reduction in corporate tax rates 2. Bank recapitalisation 3. Setting up of alternate investment fund in the real estate sector 4. Strategic disinvestment of Central Public Sector Enterprises Select the correct answer using the code given below:

• Counter-cyclical fiscal policy refers to fiscal policy measures adopted by the government in order to balance the slowdown or overheating (boom) of the economy according to the time.

• During the time of slowdown, the government’s fiscal policy measures to arrest the slowdown and to increase the aggregate demand in the economy may be termed as counter-cyclical fiscal policy measures.

• Corporate tax cuts are aimed to reduce the tax burden on the industry and to improve investor sentiment, which will, in turn, improve employment status and, thus, aggregate demand.

• Bank recapitalisation is a step towards offsetting the effects of rising Non Performing Assets (NPAs) in Public Sector Banks (PSBs). This step is taken in order to improve credit growth boosting investments.

• Stimulus package to the real estate sector is said to have windfall gains in backward and forward linked sectors, thereby boosting demand in the economy.

• Strategic disinvestment is done to keep fiscal deficit targets in check and, thus, preventing crowding out of investments in the private sector.