This document discusses fiscal policy in India. It defines fiscal policy as how a government adjusts spending and tax rates to influence the economy, based on Keynesian economics. The main objectives of fiscal policy are outlined as development, reducing inequality, price stability, employment generation, balanced regional development, and increasing national income through infrastructure development and foreign exchange earnings. The key instruments of fiscal policy are the budget, public expenditure, public debt, and taxation. Fiscal policy types include expansionary policy through tax cuts and spending increases and contractionary policy through tax hikes and spending decreases. The current situation notes India aims to achieve a 3.3% fiscal deficit target through boosting direct and indirect tax collection rates.
3. ▪ Introduction
1. Fiscal policy is the means by which a government adjusts its
spending levels and tax rate to monitor and influence a
nation's economy
2. Fiscal policy is based on the theories of British economist
"JHON MAYNARD KEYNES" whose "KEYNESIAN
ECONOMICS" indicate that government changes in the level
of taxation and government spending influences aggregate
demand and the level of economic activity.
3. It is sister strategy to monetary policy through which a central
bank influences nation's money supply. These two policies
are used in various combination to direct country's Eco-fiscal
policy.
4. Using a mix of monetary and fiscal policies, government can
4. Main objectives of Fiscal policy
▪ Development by
effective mobilization of
resources
▪ reduction in
inequalities of income
and wealth
▪ price stability and
control of inflation
▪ Employment
generation
▪ Balanced regional
development
▪ increases national
income
▪ Development of
infrastructure
▪ Foreign exchange
earnings
7. Types of fiscal policy
Fiscal Policy types
Expansionary Fiscal
Policy
its is a form of fiscal policy
that involves decreasing
taxes, increasing government
expenditure. Decrease in
taxes means households have
more disposal incomes to
Contractionary Fiscal Policy
it is a form of fiscal policy
that involves increasing
taxes, decreasing
government expenditure.
Increase in taxes means
households have less
9. Current situation
Shubhash Chandra
Garg, the financial
secretary,the
government is looking
to achieve the fiscal
deficit target of 3.3% in
2019-2020 by boosting
their revenue.
According to him,
direct taxes
collections will
increase by 17.5% and
indirect taxes will
increase as predicted
by 15%.
