For 4th sem ba economics studenta

1. FISCAL POLICY

2. INDRODUCTION
• FISCAL IS A PART OF MACRO ECONOMICS
• THIS POLICY IS ALSO KNOWN AS BUDGETARY POLICY
• ONE MAJOR FUNCTION OF GOVERNMENT IS TO STABILIZE THE ECONOMY
• CURRENT INDIAN GOVT WANT TO ACHIEVE FISCAL DEFICIT BY NOT REDUCING
EXPENDICTURE BUT INCREASING TAX COLLECTION

3. MEANING OF FISCAL POLICY
FISCAL POLICY IS THE USE OF GOVERNMENT SPENDING AND TAXATION TO
INFLUENCE THE ECONOMY. GOVERNMENT USE FISCAL POLICY TO INFLUENCE THE
LEVEL OF AGGREGATE DEMAND IN THE ECONOMY IN AN EFFORT TO ACHIEVE THE
ECONOMIC OBJECTIVES OF PRICE STABILITY FULL EMPLOYMENT AND ECONOMIC
GROWTH.

4. DEFINITION OF FISCAL POLICY
• THE MEANS BY WHICH THE GOVERNMENT ADJUSTS ITS SPENDING LEVELS AND
TAX TO MONITOR AND INFLUENCE A NATION’S ECONOMY
• GOVERMENT CAN INFLUENCE MACROECONOMIC PRODUCTIVITY LEVELS
INCREASING OR DECREASING TAX LEVELS AND PUBLIC SPENDING

5. OBJECTIVES OF FISCAL POLICY
• IN ORDER TO STABILIZE THE PRCING LEVEL IN THE ECONOMY
• THE MAIN OBJECTIVES IS TO ACHIEVE AND MAINTAIN THE LEVEL OF FULL
EMPLOYMENT IN THE COUNTRY
• ALSO TO STABILIZE THE GROWTH RATE IN THE ECONOMY
• ALSO PROMOTE THE ECONOMIC DEVELOPMENT IN A COUNTRY
• IN ORDER TO MAINTAIN THE LEVEL OF BALANCE OF PAYMENT IN THE
ECONOMY

6. TYPES OF FISCAL POLICY

7. .EXPANSIONARY FISCAL POLICY:- INCREASE IN GOVERNMENT EXPENDITURE FOR GOODS AND
SERVICES
• AN DECREASE IN TAX
• SOME COMBINATION OF TWO
• CONTRACTIONARY FISCAL POLICY:- A DECREASE IN GOVERNMENT EXPENDITURE FOR GOODS
AND SERVICES
• AN INCREASE IN TAX

8. DIFFERENCE BETWEEN FISCAL POLICY AND
MONETARY POLICY

9. METHODS OF FISCAL POLICY FUNDING
• GOVERNMENT SPEND MONEY ON A WIDE VARIETY OF THINGS ,FROM THE MILITARY
TO SERVICES LIKE EDUCATION AND HEALTH CARE,AS WELL AS TRANSFER PAYMENTS
• THIS EXPENDITURE CAN BE FUNDED IN A NUMBER OF DIFFERENT WAYS:
• 1.TAXATION REVENUE
• 2.SEIGNIORAGE,THE BENIFIT FROM PRINTING MONEY
• 3.BORROWING MONEY
• 4.CONSUMPTION OF FISICAL RESERVES
• 5.SALES OF FIXED ASSETS

10. INSTRUMENTS OF FISCAL POLICY
• BUDGETARY SURPLUS AND DEFICIT
• GOVERNMENT EXPENDITURE
• TAXATION - DIRECT AND INDIRECT
• PUBLIC DEBT

11. • 1. PUBLIC DEBT:PUBLIC DEBT IS REFERS TO BORROWING GOVERNMENT FROM
WITH IN THE COUNTRY OR FROM ABROAD FROM PRIVATE INDIVIDUALS OR
ASSOCIATION OF INDIVIDUALS OR FROM BANKING
• : INTERNAL AND EXTERNAL
• :PRODUCTIVE AND UNPRODUCTIVE
• :SHORT TERM AND LONG TERM

12. • INTERNAL PUBLIC DEBT:-WHEN THE GOVERNMENT BORROWS MONEY FROM THE
POEPLE OF THE COUNTRY
• EXTERNAL PUBLIC DEBT:-PUBLIC DEBT RAISED FROM ABROAD THROUGH
FOREIGN GOVERNMENTS OR FOREIGN AGENCIES LIKE THE WORLD BANK
INTERNATIONAL MONITORY FUND ETC.
• PRODUCTIVE DEBT:-PRODUCTIVE DEBT IS THE PUBLIC DEBT WHICH IS USED BY
THE GOVERNMENT FOR PRODUCTIVE PURPOSE

13. • UN PRODUCTIVE DEBT:IF THE LOAN IS FINANCED FOR PROJECTS THAT WILL
BRING REVENUE TO THE GOVERNMENT
• SHORT TERM LOAN:THE LOAN WHICH ARE TO BE PREPAID WITH IN A PERIOD OF
ONE YEAR
• LONG TERM LOAN:THE LOAN WHICH ARE TO BE PREPAID AFTER A PERIOD OF
ONE YEAR

14. • 2. TAXATION :TAX IS A LEGAL COMPULSORY PAYMENT PAID TO THE
GOVERNMENT BY THE POEPLE
• IT IS THE MOST COMMON AND EFFECTIVE WAY FOR THE GOVT TO INFLUENCE
THE AGGREGATE DEMAND IN THE ECONOMY
• TWO TYPES OF TAXES
• 1)DIRECT TAX
• 2)INDIRECT TAX

15. • DIRECT TAX:-IT IS THE TAX WHERE THE LIABILITY TO PAY AND THE INCIDENCE
LIE ON THE SAME EXAMPLE:-INCOME TAX, CORPORATE TAXETC.
• INDIRECT TAX:-WHEN THE LIABILITY TO PAY AND THE INCIDENCE OF THE TAX
LIE ON A DIFFERENT PERSON
• EXAMPLE:-SALES TAX,SERVICES TAX ETC...

16. 4.GOVERNMENT EXPENDITURE
• DURING THE TIME OF INFLATION THE GOVERNMENT DECIDE TO REDUCES IT’S
EXPENDITURE ON PUBLIC WELFARE LIKE POLICE ,MILITARY, COURTS ETC ....
• THIS RESULTS IN THE FALL OF AGGREGATE DEMAND
• WHICH LEADS TO REDUCTION IN THE INFLATIONARY GAP

17. 3) BUDGETARY SURPLUS
• AT THIS TIME THE GOVERNMENT REDUCE ITS EXPENDITURE ON PUBLIC DEMAND
• THE SURPLUS FROM PREVIOUS YEARS CAN BE USED
• IT IS THE SIGN THAT THE GOVT IS NOT EFFICIENCY