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Managerial Economics

Proposal writing on Fiscal Policy

Kings College
Babarmahal, Kathmandu

Submitted by:
Saugat Bikram Shah
MBA I (working)

Submitted to:
Mr. Bibhu Aryal
Managerial Economics

Table of Content



Need of the study..2


Objectives of the study2


Limitations of the study..3


Scheme of the chapters....4


Chapter 1

Fiscal policy is the means by which a government adjusts its spending levels and tax rates to
monitor and influence a nation's economy. It is the sister strategy to monetary policy through
which a central bank influences a nation's money supply. These policies are used in various
combinations to direct a country's economic goals.
The two main instruments of fiscal policy are changes in the level and composition of taxation
and government spending in various sectors. These changes can affect the following
macroeconomic variables, amongst others, in an economy:
Aggregate demand and the level of economic activity;
Savings and Investment in the economy
The distribution of income
Fiscal policy can be distinguished from monetary policy, in that fiscal policy deals with taxation
and government spending and is often administered by an executive under laws of a legislature,
whereas monetary policy deals with the money supply, lending rates and interest rates and is
often administered by a central bank.

1.2 Need Of the Study:


The fiscal policy encompasses two separate but related decisions; public expenditures and the
level and structure of taxes. It occupies the central place for maintaining full employment
without inflationary forces in the economy. With its various instruments it influences the
economic stability of an economy. The fiscal policy of any government in the world is to be very
successful in several fields such as mobilization of resources for economic development,
increasing rate of savings and capital formation, developing cottage and small scale industries,
reducing the incidence of poverty etc.
Hence to fully understand what a countrys economy can do and can become over a period of
time, fiscal policy study is very important.

1.3 Objectives of the study:

There are following objectives of fiscal policy:

1. Development of Country:For development of Country, every country has to make fiscal policy. With this policy, all work
like govt. planning and proper use of funds for development functions is done.

2. Employment:
Getting the full employment is also the objective of fiscal policy .Government can fix certain
amounts which can be utilized for creation of new employment for unemployed people.

3. Inequality:

By making a good fiscal policy, govt. can reduce this difference if govt. makes it as its target.

4. Fixation of Govt. Responsibility:

It is the duty of Govt. to effective use of resources and by making of fiscal policy different
minister's accountability can be checked.

1.4 Limitations of the study

Inadequate resource mobilization has led to fiscal policy achieving a mixed success in
mobilization of resources.
Govt. fiscal policy has failed to reduce the black money.
After taking loan from World Bank under the fiscal policy's debt technique, govt. has to
obey the rules and regulations of World Bank and IMF. These rules are more harmful for
developing small domestic business
The rise in the rates of direct taxes results in the reduction of the disposable income of the
Increase in the rates of sales taxes and excise duties immediately cause a rise in the price
levels, thus creating inflation in the economy.

1.5 Scheme of the chapters

Following are the outlines of each chapter.
Chapter1 Introduction
Under this, there are sub headings. They are,

1. Background: This includes the background of the study and contains various
2. Objective: The objectives of the study are mentioned in this heading.
3. Limitations: It includes the things which obstruct or impede the study.
4. Literature review: This section consists of the literature review of the study that we
are conducting.
5. Study area and Rationale for Selection: Reason for selecting the area of study.
6. Nature and source of data: The type of data which are collected for the study are
mentioned in this part of the proposal.
7. Data Collection Techniques: This section shows the ways used to collect the data
and information.
Chapter 2 Data presentation and analysis
The data collected are analyzed and will be presented in various forms like charts, diagrams, bars
Chapter 3 Summary and Conclusion
Summarized explanation of the whole presentation of the study is written in this section of the

Fiscal Policy (2014), retrieved from
What is Fiscal Policy?,.Reem Heakal Retrieved from: