Fiscial policy
- 1. Submitted BY : Amanpreet Kaur
- 2. Fiscal Policy • Policy related to government income and expenditure called Fiscal Policy. It Plays a major role in both developed and developing nations. It Includes The Following Components : 1. Expenditure Policy 2. Taxation Policy 3. Public Debt Policy 4. Deficit financing
- 3. Objectives of Fiscal Policy 1. To reduce poverty and unemployment 2. To reduce economic inequalities 3. Rapid Economic Development 4. Capital Formation 5. Control on Inflation 6. Balanced Economic Development 7. Economic Stability 8. Optimum utilization of Resources
- 4. Tools of Fiscal Policy Following are the tools of fiscal policy 1. Public Expenditure Policy: Bradly we grouped the tools of fiscal policy in two groups (A)Government Expenditure 1. Public Expenditure Policy (B)Financial Resources 1.Taxation Policy 2.Public Debt Policy 3.Deficit Financing
- 5. Public Expenditure Policy • Public expenditure is spending made by the government of a country on collective needs and wants such as pension, provision, infrastructure, etc. Until the 19th century, public expenditure was limited as laissez faire philosophies believed that money left in private hands could bring better returns.
- 6. Taxation Policy • Tax policy is the choice by a government as to what taxes to levy, in what amounts, and on whom. ... The microeconomic aspects concern issues of fairness (who to tax) and allocative efficiency (i.e., which taxes will have how much of a distorting effect on the amounts of various types of economic activity).
- 7. Public Debt Policy • in India, public debt refers to a part of the total borrowings by the Union Government which includes such items as market loans, special bearer bonds, treasury bills and special loans and securities issued by the Reserve Bank. It also includes the outstanding external debt.
- 8. Deficit Financing • Deficit financing in India is said to occur when the Union Government's current budget deficit is covered by the withdrawal of cash balances of the government and by borrowing money from the Reserve Bank of India. When the government draws its cash balances, these become active and come into circulation.
- 9. Advantages of Fiscal Policy of India 1. Control Inflation 2. Predicts mistakes 3. Capital formation 4. Resource Mobilization 5. Incentives to private sector 6. Encourages savings 7. Employment generation 8. Reduction in inequality of Income and Wealth
- 10. Disadvantages of Fiscal Policy 1. Lack of Elasticity 2. Inadequate Statistics 3. Illiteracy 4. Limited Sector 5. Delay in Decision 6. Limitations regarding Full Employment 7. Defective Tax Structure 8. Inflation 9. Huge investment with negative return in public sector
- 11. fiscal deficit • A fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings. Deficit differs from debt, which is an accumulation of yearly deficits.
- 12. Definition of Fiscal deficit • Definition Fiscal deficit is the difference between the governments total expenditure and its total receipts(excluding borrowing).If the Government spends more than it earns we have a situation which is called a fiscal deficit . • Fiscal deficit =government spending – government revenue
- 13. • Fiscal deficit as a percentage of GDP . GDP is the market value of all final goods and services produced in a country in a year. The GDP number includes both government spending and private consumption of goods and services.
- 14. • India's April-February fiscal deficit touched 8.51 trillion rupees ($123.07 billion), or 134.2 percent of the budgeted target for the current fiscal year, government data showed on Friday. • Earlier in February, while presenting the annual budget for 2019/20, the government had revised upward its fiscal deficit target to 3.4 percent of GDP for the current fiscal year from the previously estimated 3.3 percent budgeted target
- 15. Causes of increase In Fiscal Deficit Increase in interest on Debt Increase in subsidies Increase in Defense Expenditure Disinvestment of Public sector unit Efforts to Reduce Government Admistrative expenses Enactment of fiscal responsibility and budget Management Act
- 16. Reduction in Central sales Tax Introduction of Goods and Service Tax New Direct Tax code Inefficient Tax collection
- 17. The fiscal deficit for FY20 has been pegged at 3.4 per cent of the GDP, finance minister Piyush Goyal said in his Budget speech. The fiscal deficit for the current fiscal has been revised upward to 3.4 per cent from the Budgeted target of 3.3 per cent. Fiscal deficit for FY21 has been pegged at 3 per cent. Finance minister Piyush Goyal said that the government would have kept its fiscal deficit target below the Budgeted target of 3.3 per cent had it not been for the allocation of Rs 20,000 crore for the darner's income support scheme in the current fiscal. Piyush Goyal on Friday unveiled a modest farm support scheme, under which the government plans to offer income support for marginal farmers at Rs 6,000 per year under a scheme called Kisan Samman Nidhi Budget 2019: Fiscal deficit for FY20 pegged at 3.4%
- 18. Initiatives in Public Expenditure Management 1. Central Plan Scheme Monitoring System (CPSMS) 2. Public Financial Management System 3. Quarterly exchequer control based cash and expenditure management system
- 19. Review of Indian Fiscal Policy Fiscal Policy For 2015-2016 1. Fiscal correction Process 2. Revised Roadmap 3. Fourteen Finance commission 4. Transition Phase 5. Fiscal Trends 6. Non- debt capital receipts
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