The expenditure of Sudha is 175%

Step 1: Represent the given information

Let Sudha's savings be $S$.

Her expenditure is 175% more than her savings, so:
$E = 2.75S$

Her income is:
$I = E + S = 2.75S + S = 3.75S$

Step 2: Adjust expenditure and savings

Expenditure decreases by 12%:
$E_{\text{new}} = 2.75S \times 0.88 = 2.42S$

Savings increase by 40.5%:
$S_{\text{new}} = S \times 1.405 = 1.405S$

Step 3: Find new income

$I_{\text{new}} = E_{\text{new}} + S_{\text{new}} = 2.42S + 1.405S = 3.825S$

Step 4: Find percentage increase in income

Percentage increase = $\frac{I_{\text{new}} - I}{I} \times 100 = \frac{3.825S - 3.75S}{3.75S} \times 100 = 2%$