Fiscal policy involves a government's taxing and spending policies and aims to manage the economy. This includes generating government income through taxation, deciding how to allocate government expenditures, managing public debt, and dealing with budget deficits. The main objectives of India's fiscal policy are to reduce poverty and unemployment through job creation, promote capital formation by developing rural industries, reduce economic inequality through a progressive tax system, and achieve economic stability and increase savings rates. Key techniques of fiscal policy include public expenditure policies on infrastructure, education, and subsidies; taxation policies on direct and indirect taxes; public debt policies on internal and external borrowing; and deficit financing policies involving borrowing from the central bank.

1. Fiscal Policy

2. Fiscal Policy is a part of economic policy of the government which is
related to government income and expenditure.
This is a kind of policy which tells us from where the government will generate
income & where the government will spend their expenditure from that earned
income.
Also known as –
It deals with Taxation, Government Expenditure, Borrowing, Deficit
Financing & Management of public debt in an economy.
Budgetary Policy
Income & Expenditure Policy
Tax & Expenditure Policy

3. Objective of Fiscal Policy of India
1. To remove poverty and unemployment - In fiscal policy, they will decide
that where they will spend money. So, that for people new employment
opportunities will be generated. So that if employment will be
generated, then automatically poverty level will also decrease.
2. To promote capital formation - In fiscal policy, the government will
charge tax and from this, it will generate their income and from that
income, the government will spend on the development of the rural
areas. So that factory will be set up there and from that industrial
structure of the country will be improved.

4. 3. To reduce economic inequality - Inequality means number population in
the country is very rich and some are very poor. So that in fiscal policy,
government decides that how much tax they will charge from the
selected amount of the population base on their income level. So that
whose income level is high, then the government will charge higher rate
tax from them and the low tax rate on low-level income people.
4. Achieve Economic stability - If the income level of the people is high, so
the government will charge the higher rate of tax for them by through
which government takes the money from their hand and that earned
money government will utilize it for the productive purpose only.
5. To Increase rate of saving - The government provides many saving benefits
in their policies. In under section 80c, people will get deduction benefits.
So that by through which many people get encouraged from that and
they will try to save their money.

5. Techniques / Scope of Fiscal Policy
Expenditure
- Public expenditure
policy
Income
- Taxation policy
- Public debt policy
- Deficit policy

6. Public expenditure policy
Development
- Infrastructure
- Irrigation
- Power project
- Education
Non- Development
- Subsidies
- Election expenses
- Defense expenses

7. Why taxation policy?
a) Mobilisation of resources
b) Promote Saving
c) Promote Investment
d) Bring equality of Income & Wealth
Taxation
Policy
Direct Tax
- Income Tax
Indirect Tax
- GST

8. Public Debt Policy
- Public debt is a part of total borrowings by the union
government. Market loans, Special bearer bonds,
Treasury bills, Securities are issued by Reserve Bank.
Internal Debt
(within the country)
External Debt
(Borrowing from
Abroad)

9. Deficit Financing
- Taking loan from RBI by the government to meet
the budgetary deficit.
RBI – Issuing new currency notes
Deficit budgetary – When government expenditure > government income
Effect of Deficit Financing
Deficit
Financing
Increase
money supply
Fall in value of
money
Increase in
price level

10. Thank you