In this presentation some key information of fiscal policy.

1. Submitted BY : Amanpreet Kaur

2. Fiscal Policy
• Policy related to government income and
expenditure called Fiscal Policy. It Plays a
major role in both developed and developing
nations.
It Includes The Following Components :
1. Expenditure Policy
2. Taxation Policy
3. Public Debt Policy
4. Deficit financing

3. Objectives of Fiscal Policy
1. To reduce poverty and unemployment
2. To reduce economic inequalities
3. Rapid Economic Development
4. Capital Formation
5. Control on Inflation
6. Balanced Economic Development
7. Economic Stability
8. Optimum utilization of Resources

4. Tools of Fiscal Policy
Following are the tools of fiscal policy
1. Public Expenditure Policy: Bradly we grouped the
tools of fiscal policy in two groups
(A)Government Expenditure
1. Public Expenditure Policy
(B)Financial Resources
1.Taxation Policy
2.Public Debt Policy
3.Deficit Financing

5. Public Expenditure
Policy
• Public expenditure is spending
made by the government of a
country on collective needs and
wants such as pension,
provision, infrastructure, etc.
Until the 19th century, public
expenditure was limited as
laissez faire philosophies
believed that money left in
private hands could bring
better returns.

6. Taxation Policy
• Tax policy is the choice by a government as to what
taxes to levy, in what amounts, and on whom. ...
The microeconomic aspects concern issues of
fairness (who to tax) and allocative efficiency (i.e.,
which taxes will have how much of a distorting
effect on the amounts of various types of economic
activity).

7. Public Debt Policy
• in India, public debt refers to a part of the
total borrowings by the Union Government
which includes such items as market loans,
special bearer bonds, treasury bills and special
loans and securities issued by the Reserve
Bank. It also includes the outstanding
external debt.

8. Deficit Financing
• Deficit financing in India is said
to occur when the Union
Government's current
budget deficit is covered by the
withdrawal of cash balances of
the government and by
borrowing money from the
Reserve Bank of India. When the
government draws its cash
balances, these become active
and come into circulation.

9. Advantages of Fiscal Policy of India
1. Control Inflation
2. Predicts mistakes
3. Capital formation
4. Resource Mobilization
5. Incentives to private sector
6. Encourages savings
7. Employment generation
8. Reduction in inequality of Income and Wealth

10. Disadvantages of Fiscal Policy
1. Lack of Elasticity
2. Inadequate Statistics
3. Illiteracy
4. Limited Sector
5. Delay in Decision
6. Limitations regarding Full Employment
7. Defective Tax Structure
8. Inflation
9. Huge investment with negative return in public sector

11. fiscal deficit
• A fiscal deficit occurs when a
government's total
expenditures exceed the
revenue that it generates,
excluding money from
borrowings. Deficit differs
from debt, which is an
accumulation of yearly
deficits.

12. Definition of Fiscal deficit
• Definition Fiscal deficit is the
difference between the
governments total expenditure
and its total receipts(excluding
borrowing).If the Government
spends more than it earns we
have a situation which is called a
fiscal deficit .
• Fiscal deficit =government
spending – government revenue

13. • Fiscal deficit as a percentage of GDP . GDP is
the market value of all final goods and
services produced in a country in a year. The
GDP number includes both government
spending and private consumption of goods
and services.

14. • India's April-February fiscal deficit
touched 8.51 trillion rupees
($123.07 billion), or 134.2 percent
of the budgeted target for the
current fiscal year, government
data showed on Friday.
• Earlier in February, while
presenting the annual budget for
2019/20, the government had
revised upward its fiscal deficit
target to 3.4 percent of GDP for
the current fiscal year from the
previously estimated 3.3 percent
budgeted target

15. Causes of increase In Fiscal Deficit
Increase in interest on Debt
Increase in subsidies
Increase in Defense Expenditure
Disinvestment of Public sector
unit
Efforts to Reduce Government
Admistrative expenses
Enactment of fiscal
responsibility and budget
Management Act

16. Reduction in Central sales Tax
Introduction of Goods and Service Tax
New Direct Tax code
Inefficient Tax collection

17.  The fiscal deficit for FY20 has been pegged at 3.4 per cent
of the GDP, finance minister Piyush Goyal said in his Budget
speech.
 The fiscal deficit for the current fiscal has been revised
upward to 3.4 per cent from the Budgeted target of 3.3 per
cent. Fiscal deficit for FY21 has been pegged at 3 per cent.
 Finance minister Piyush Goyal said that the government
would have kept its fiscal deficit target below the Budgeted
target of 3.3 per cent had it not been for the allocation of
Rs 20,000 crore for the darner's income support scheme in
the current fiscal.
 Piyush Goyal on Friday unveiled a modest farm support
scheme, under which the government plans to offer
income support for marginal farmers at Rs 6,000 per year
under a scheme called Kisan Samman Nidhi
Budget 2019: Fiscal deficit for FY20 pegged
at 3.4%

18. Initiatives in Public Expenditure
Management
1. Central Plan Scheme Monitoring
System (CPSMS)
2. Public Financial Management
System
3. Quarterly exchequer control
based cash and expenditure
management system

19. Review of Indian Fiscal Policy
Fiscal Policy For 2015-2016
1. Fiscal correction Process
2. Revised Roadmap
3. Fourteen Finance commission
4. Transition Phase
5. Fiscal Trends
6. Non- debt capital receipts

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