Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Fiscal policy


Published on

Published in: Business, News & Politics

Fiscal policy

  2. 2. Fiscal Policy
  3. 3. Fiscal Policy • The use of government spending and taxation to promote economy
  4. 4. According to Semuelson: “Fiscal policy is concerned with all those activities which are adopted by the government to collect revenues and make the expenditures so that economic stability could be attained without inflation and deflation”
  5. 5. Budget:  The budget is a financial statement showing the estimate of receipts and expenditures  Budget is an anti-inflationary as the objective is to check inflation and sustain high growth of economy.
  6. 6. Budget Revenue Budget Revenue Receipt Capital Budget Revenue Expenditure Capital Receipt Capital Expenditure
  7. 7. ACTIVITIES OF THE STATE  Collection of Revenues  Spending of Revenues
  8. 8. ACTIVITIES OF THE STATE ( cont.) • Collection of Revenues  Taxes  Fees  Fines  Loan – Internal Loans – External Loans
  9. 9. ACTIVITIES OF THE STATE ( cont.) Spending of Revenues   Productive Non-Productive
  10. 10. • Productive • • • • • • • Dams Roads Mills Bridges Railways Electricity Plants Engineering unit Non-Productive Health Education Defense Justice Social Security Embassies Politics
  11. 11. Types of Fiscal policy • Neutral Fiscal policy • Expansionary Fiscal policy • Contractionary Fiscal policy
  12. 12. Neutral Fiscal policy G=T (Govt. spending = Tax Revenue) neutral effect on economy
  13. 13. Expansionary Fiscal policy • Expansionary fiscal policy means that the government is increasing government spending and reducing taxation in an attempt to increase the money available in the economy. G>T T G Contractionary Fiscal policy • Contractionary fiscal policy is when the government increases taxation and reduces government spending in an attempt to reduce money in the economy and as a result inflation. G<T T G
  14. 14. Budget Deficit: • A government’s budget deficit is the difference between what it spends (G) and what it collects in taxes (T) in a given period: B u d g e t d e fic it ≡ G − T Budget Surplus: •The amount by which a government income exceeds its spending •Effective tool to achieve the objective of price stability
  15. 15. Objectives      To Achieve Equal Distribution of Wealth Increase in Savings Degree of inflation To Achieve Economic Stability Price stability
  16. 16. Limitation of Fiscal Policy: • • • • • Lack of Elasticity Illiteracy Limited Sector inadequate Statistics Delay in decision
  17. 17. Islamic Point of view: • Equally Distribution Of Resources • Collect Zakat from rich  Islamic Sources of Revenue • • • • • Zakat Ushar Fitrana Sadqat Khaiarat
  18. 18. • Where are we now? • Recent economic issues in Pakistan
  19. 19. WE ARE DIFFERENT – A LOT OF SPACE TO COVER Girl in search of water Man on the moon
  20. 20. WE ARE DIFFERENT – A LOT OF SPACE TO COVER Child labour scavenging food
  21. 21. Survival or Growth ?
  22. 22. Suggestions and Recommendations
  23. 23. –Road map Maintain fiscal prudence by keeping fiscal deficit low Keeping inflation under control growth momentum Improving social indicators
  24. 24. Thank You