Fiscal policy is that part of government policy which is concerned with raising revenue through taxation and other means and deciding on the level and pattern of expenditure with a view to correct the situations of excess demand or deficient demand in the economy.
Role of Fiscal Policy in development of Economy Definition: Fiscal policy means the use of taxation, public borrowing & public expenditure by the government for purpose of ‘stabilization’ or ‘Development’
Role of Fiscal Policy in development of Economy
Increase the rate of investment
Encourage socially optimal investment
Increase employment opportunity
Economic stability in face of international instability
A balanced budget in the public sector is achieved when the government has enough fiscal discipline to be able to equate the revenues with expenditure over the business cycles. In other words, a government's budget is balanced if its income is equal to its expenditure. This allows for a deficit in periods of low economic prospects that however needs to be matched by a surplus in periods of high economic activity.
Sector Wise Allocation Of Budget Last year Present year Sector Agriculture 7391 8558 Industry & Mineral 12588 20434 Social Services 59143 80315 Rural Development 18268 20342 Irrigation & Flood Control 462 507 Transport 49819 71589 General Economic Services 2566 3632 Communication 17851 25812 General Services 542 829 Energy 68825 79158 Science, Technology & Environment 6774 8816 Total 244229 319992