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The fiscal policy is concerned with the raising of government revenue and incurr ing of government expenditure. To generate revenue and to incur expenditure, the government frames a policy called budgetary policy or fiscal policy. So, the fi scal policy is concerned with government expenditure and government revenue. Fiscal policy meaning objectives india Fiscal policy has to decide on the size and pattern of flow of expenditure from the government to the economy and from the economy back to the
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  Thefiscalpolicyisconcernedwiththeraisingofgovernmentrevenueandincurringofgovernmentexpenditure.Togeneraterevenueandtoincurexpenditure,thegovernmentframesapolicycalledbudgetarypolicyorfiscalpolicy.So,thefiscalpolicyisconcernedwithgovernmentexpenditureandgovernmentrevenue.FiscalpolicymeaningobjectivesindiaFiscalpolicyhastodecideonthesizeandpatternofflowofexpenditurefromthegovernmenttotheeconomyandfromtheeconomybacktothegovernment.So,inbroadtermfiscalpolicyrefersto thatsegmentofnationaleconomicpolicywhichisprimarilyconcernedwiththereceiptsandexpenditureofcentralgovernment. Inotherwords,fiscalpolicyreferstothepolicyofthegovernmentwithregardtotaxation,publicexpenditureandpublicborrowings.Theimportanceoffiscalpolicyishighinunderdevelopedcountries.Thestatehastoplayactiveandimportantrole.Inademocraticsocietydirectmethodsarenotapproved.So,thegovernmenthastodependonindirectmethodsofregulations.Inthisway,fiscalpolicyisapowerfulweaponinthehandsofgovernmentbymeansofwhichitcanachievetheobjectivesofdevelopment.MainObjectivesofFiscalPolicyInIndia?Thefiscalpolicyisdesignedtoachivecertainobjectivesasfollows:-1.DevelopmentbyeffectiveMobilisationofResourcesTheprincipalobjectiveoffiscalpolicyistoensurerapideconomicgrowthanddevelopment.ThisobjectiveofeconomicgrowthanddevelopmentcanbeachievedbyMobilisationofFinancialResources.ThecentralandthestategovernmentsinIndiahaveusedfiscalpolicytomobiliseresources.Thefinancialresourcescanbemobilisedby:-Taxation:Througheffectivefiscalpolicies,thegovernmentaimstomobiliseresourcesbywayofdirecttaxesaswellasindirecttaxesbecausemostimportantsourceofresourcemobilisationinIndiaistaxation.PublicSavings:Theresourcescanbemobilisedthroughpublicsavingsbyreducinggovernmentexpenditureandincreasingsurplusesofpublicsectorenterprises.PrivateSavings:Througheffectivefiscalmeasuressuchastaxbenefits,thegovernmentcanraise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partiesandbydeficitfinancing.2.EfficientallocationofFinancialResourcesThecentralandstategovernmentshavetriedtomakeefficientallocationoffinancialresources.TheseresourcesareallocatedforDevelopmentActivitieswhichincludesexpenditureonrailways,infrastructure,etc.WhileNon-developmentActivitiesincludesexpenditureondefence,interestpayments,subsidies,etc.Butgenerallythefiscalpolicyshouldensurethattheresourcesareallocatedforgenerationofgoodsandserviceswhicharesociallydesirable.Therefore,Ind  ia'sfiscalpolicyisdesignedinsuchamannersoastoencourageproductionofdesirablegoodsanddiscouragethosegoodswhicharesociallyundesirable.3.ReductionininequalitiesofIncomeandWealthFiscalpolicyaimsatachievingequityorsocialjusticebyreducingincomeinequalitiesamongdifferentsectionsofthesociety.Thedirecttaxessuchasincometaxarechargedmoreontherichpeopleascomparedtolowerincomegroups.Indirecttaxesarealsomoreinthecaseofsemi-luxuryandluxuryitems,whicharemostlyconsumedbytheuppermiddleclassandtheupperclass.ThegovernmentinvestsasignificantproportionofitstaxrevenueintheimplementationofPovertyAlleviationProgrammestoimprovetheconditionsofpoorpeopleinsociety.4.PriceStabilityandControlofInflationOneofthemainobjectiveoffiscalpolicyistocontrolinflationandstabilizeprice.Therefore,thegovernmentalwaysaimstocontroltheinflationbyReducingfiscaldeficits,introducingtaxsavingsschemes,Productiveuseoffinancialresources,etc.5.EmploymentGenerationThegovernmentismakingeverypossibleefforttoincreaseemploymentinthecountrythrougheffectivefiscalmeasure.Investmentininfrastructurehasresultedindirectandindirectemployment.Lowertaxesanddutiesonsmall-scaleindustrial(SSI)unitsencouragemoreinvestmentandconsequentlygeneratesmoreemployment.VariousruralemploymentprogrammeshavebeenundertakenbytheGovernmentofIndiatosolveproblemsinruralareas.Similarly,selfemploymentschemeistakentoprovideemploymenttotechnicallyqualifiedpersonsintheurbanareas.6.BalancedRegionalDevelopmentAnothermainobjectiveofthefiscalpolicyistobringaboutabalancedregionaldevelopment.TherearevariousincentivesfromthegovernmentforsettingupprojectsinbackwardareassuchasCashsubsidy,Concessionintaxesanddutiesintheformoftaxholidays,Financeatconcessionalinterestrates,etc.7.ReducingtheDeficitintheBalanceofPaymentFiscalpolicyattemptstoencouragemoreexportsbywayoffiscalmeasureslikeExemptionofincometaxonexportearnings,Exemptionofcentralexcisedutiesandcustoms,Exemptionofsalestaxandoctroi,etc.TheforeignexchangeisalsoconservedbyProvidingfiscalbenefitstoimportsubstituteindustries,Imposingcustomsdutiesonimports,etc.Theforeignexchangeearnedbywayofexportsandsavedbywayofimportsubstituteshelpstosolvebalanceofpaymentsproblem.Inthiswayadversebalanceofpaymentcanbecorrectedeitherbyimposingdutiesonimportsorbygivingsubsidiestoexport.8.CapitalFormationTheobjectiveoffiscalpolicyinIndiaisalsotoincreasetherateofcapitalformationsoastoacceleratetherateofeconomicgrowth.Anunderdevelopedcountryistrappedinvicious(danger)circleofpovertymainlyonaccountofcapitaldeficiency.Inordertoincreasetherateofcapitalformation,thefiscalpolicymustbeefficientlydesignedtoencouragesavingsanddiscourageandreducespending.  9.IncreasingNationalIncomeThefiscalpolicyaimstoincreasethenationalincomeofacountry.Thisisbecausefiscalpolicyfacilitatesthecapitalformation.Thisresultsineconomicgrowth,whichinturnincreasestheGDP,percapitaincomeandnationalincomeofthecountry.10.DevelopmentofInfrastructureGovernmenthasplacedemphasisontheinfrastructuredevelopmentforthepurposeofachievingeconomicgrowth.Thefiscalpolicymeasuresuchastaxationgeneratesrevenuetothegovernment.Apartofthegovernment'srevenueisinvestedintheinfrastructuredevelopment.Duetothis,allsectorsoftheeconomygetaboost.11.ForeignExchangeEarningsFiscalpolicyattemptstoencouragemoreexportsbywayofFiscalMeasureslike,exemptionofincometaxonexportearnings,exemptionofsalestaxandoctroi,etc.Foreignexchangeprovidesfiscalbenefitstoimportsubstituteindustries.Theforeignexchangeearnedbywayofexportsandsavedbywayofimportsubstituteshelpstosolvebalanceofpaymentsproblem.
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