2. In Economics And Political Science, Fiscal
Policy Is The Government Revenue
Collection(mainly Taxes) And Expenditure To
Influence The Economy.
According To The Keynesian Economics When
The Government Changesthe Level Of
Taxation And Government Spending ,It
Influnces The Aggregate Demand.
3. The Prinicipal Objective Of Fiscal Policy Is To
Ensure Rapid Economic Growth And
Development.
The Objective Can Be Achieved By
Mobilisation Of Financial Resources.
1) Taxation
2)public Savings
3)private Savings
4. TAXATION;Through Effective Fiscal Policies The
Government Aims To Mobilise Resources By
Way Of Direct Taxes As Well As Indirect Taxes
Because Of Most Important Source Of
Mobilisation In India Is Taxation.
PUBLIC SAVINGS; The Resources Can Be Mobilised
Through Public Savings By Reducing
Government Expenditure And Increasing
Surplus Of Public Sector Enterprises.
5. PRIVATE SAVINGS ; Through Effective Fiscal Measures
Such As Tax Benefits,the Government Casn Rise
Resources From Private Sector And Households.
•Resources Can Be Mobilised Through
Government Borrowings By Ways Of Treasury
Bills ,Issue Of Government Bonds Etc.,Loans From
Domestic And Foreign Partiesand By Deficit
Financing.
6. Increase In subsides
Payment of Interest
Defence Expenditure
Poor Performance Of Public Sector
Excessive Government Borrowings
Tax Evasion
Huge Borrowings
Other Causes
7. 1. Increase in Subsidies
The government has been providing subsidies on a number of items such
as fertilizers, exports, food items, etc. This has resulted in a fiscal imbalance.
The major subsidies provided by the Central Government of India has increased
over the years resulting in fiscal imbalance.
2. Payment of Interest
One of the major components of government expenditure is the interest
payment both on domestic loans and foreign loans. The government debt has
increased considerably over the years. This has resulted in increased interest
burden on the government.
3. Defence Expenditure
The defence expenditure is increasing over the years. The government has
limited scope to reduce defence budget due to security problems across the
Indian borders.
4. Poor Performance of Public Sector
The poor performance of public sector has also resulted in fiscal imbalance.
The poor performance of public sector is due to various reasons such as
political interference, inefficiency and corruption of management, low labour
efficiency, lack of professionalism, surplus staff, etc.
8. 5. Excessive Government borrowings
The internal and external debt of the government has increased
considerably during the past few decades. Due to the debts; the
government has to incur high expenditure in form of interest
payments.
6. Tax Evasion
Indian tax system is made up of complex procedures with
numerous exemptions. Corruptions is rampant at all levels,
which leads to the fiscal imbalance.
7. Huge Borrowings
The gap between expenditure and revenue is financed through
loans, both internal and external. The borrowings have been
spent on unproductive purposes as well. The huge borrowings
resulted in large interest payments.
8. Other Causes
Unproductive expenditure by the government, Weak resource
mobilisation and Low Capital Formation.
9.
10. A.REDUCE GOVERNMENT EXPENDITURE
Reduction In Interest Burden
Reducing Subsidies
Reduction In Government Overheads
Closure Of Sick Units
B.RAISE GOVERNMENT FUNDS
Collection Of User Charges
Improvement In Performance Of Psu”s
Proper Mobilization Of Tax Resources
Market Oriented Development
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11. NewFiscal Policy of India↓
In View Of The Economic Liberalization In The
Recent Years, Certain Themes Have Been
Emphasized In The New Fiscal Policy Of India.
They Are :-
Simplification Of Tax Structure And Laws.
Reasonable Direct Taxes And Better
Administration.
Stable Tax Policy Environment.
Weightage To Resource Allocation And Equity
Consequences Of Taxation.
More Reliance On Fiscal And Financial Instrument
In Managing The Economy.
Better Links Between Fiscal And Monetary Policy.
Strengthening Methods Of Expenditure Control.
12. Development by effective Mobilisation of Resources
Reduction in inequalities of Income and Wealth
Price Stability and Control of Inflation
Employment Generation
Balanced Regional Development
Reducing the Deficit in the Balance of
Payment
Increases National Income
Development of Infrastructure
Foreign Exchange Earnings
13.
14.
15. The Objectives Of Fiscal Policy Such As
Economic Development, price Stability, Social
Justice Etc,.
It Can Be Achieved Only If The Tools Of Policy
Like Public Expenditure, Taxation, Borrowing
And Deficit Financing Are Effectively Used.
The Success Of Fiscal Policy Depends Upon
Taking Timely Measures And Their Effective
Adminstration During Implemenation.
