Definition, Types and Objectives of Fiscal Policy

11/11/22, 7:57 PM Definition, types and objectives of Fiscal policy - INSIGHTSIAS
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INTRODUCTION TO ECONOMICS 
Branches of economics
GENERAL STUDIES 1  GENERAL STUDIES 2 
Different types of sectors in an economy
Different types of economic
GENERAL systems
STUDIES 3  GENERAL STUDIES 4 
Difference between economic growth vs economic development
The concept of demand and supply in an economy
Factors of production
NATIONAL INCOME ACCOUNTING 
National Income
Importance of quantifying economic growth
Various types of economic indicators or concepts related to measuring economic growth
Methods of estimating National Income 
Output Method
Expenditure Method
Income method
Determinants of National Income
Issues associated with National Income accounting in India
Possible solutions to Issues with National Accounting
STRUCTURE OF INDIAN ECONOMY: A BRIEF OVERVIEW 
Indian economy at the time of independence: Basic characteristics

Indian economy in the present times 
Basic characteristics of the Indian economy in present times
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Features of Indian Economy

Role of Agriculture in India
Growth of Services sector in India
Status of Human Resource in India
Status of Natural Resource in India
Challenges with Indian Economy
Overall Solutions to achieve a New India by 2022
PLANNING IN INDIA 
Historical evolution of planning in India

Genesis of Planning Commission and its objectives 
Functions of Planning Commission
Framework of planning under the commission
Growth of Indian economy under the various-five year plans of the Planning commission
Analysis of the working of Planning commission
Genesis of NITI AYOG and its objectives 
Framework of planning under the AYOG
Performance of the AYOG since its inception
Issues plaguing the AYOG and measures to resolve these issues
RESOURCE MOBILIZATION 
Definition of a resource
Types of resources
Need for mobilizing resource in an economy
Sources of resource mobilization in India
Role of Fiscal Policy in Resource Mobilization
Role of Tax in Resource Mobilization
Role of Capital/ Financial Markets in Resource Mobilization
Role of Banking/ Banks in Resource Mobilization
Issues faced in resource mobilization in recent times
Steps to be taken to address issues resource mobilization
INCLUSIVE GROWTH AND ISSUES ARISING FROM IT 
Definition of inclusive growth

Salient Features of Inclusive Growth
Elements of Inclusive growth
Need for Inclusion
Reasons for Inequality in India
Dimensions of Inclusive Growth
Measuring Inclusive Growth
Experience of Indian in ushering in Inclusive growth since independence
Measures taken by India since independence to ensure inclusive growth in the economy
Reasons why India has not been able to achieve inclusive growth in the economy
Recent actions taken to usher inclusive growth in the economy in the below domains 
Rural economy based growth

Sustainable and inclusive agricultural growth
Holistic approach to combat poverty in India
Social sector development
Role of public and private partnership in this regard
Balanced regional growth
Industrial growth and its role in ushering inclusive growth
GOVERNMENT BUDGETING 
Definition of budget
Types of budget
Various important terminologies associated with budget
Budgeting process in India
Some recent reforms introduced in the budgeting process
Issues associated with budgeting process in India
Measures required to address issues related to Budgeting
FISCAL POLICY 
Definition, types and objectives of Fiscal policy

Important concepts/terms related to Government revenue and expenditure
Deficit 
Types of deficit
Methods of financing deficits in India
FRBMA policies 
Changes in FRBMA policies since its introduction
Analysis of implementation of FRBMA
Recommendations made with regards to FRBMA policies
THE RESERVE BANK OF INDIA AND MONETARY MANAGEMENT 
Function of Reserve Bank of India (RBI)

Definition of monetary policy
Monetary policy of the Reserve Bank of India (RBI) 
Quantitative tools of monetary policy of RBI
Qualitative tools of Monetary policy of RBI
Major monetary policy reforms introduced in recent times
An objective analysis on the efficacy of monetary policy in India
Recommendations made by various committees and economists to improve monetary
policy framework in India
Amendments introduced in RBI act over the years
Issues associated with RBI functioning
Measures to address the issues plaguing RBI
INFLATION 
Definition of Inflation
Types of Inflation
Factors causing Inflation
Indicators used to measure Inflation
Effect of Inflation in Indian economy
Inflation Targeting in India
Pros and cons of Inflation targeting in India
Various other methods of combating Inflation
Government steps to control inflation
Present trend of Inflation in the economy
TAXATION SYSTEM IN INDIA 
Definition of Taxation
Objectives behind Taxation
Types of taxes
Description of various types of taxes in India 
Direct taxes in India
Indirect taxes in India
Major taxation related reforms introduced in recent times
Trend of tax collection in India
Issues associated with taxation system in India
Measures suggested/recommendations made to address issues associated with taxation
system in India
INDIAN FINANCIAL SYSTEM: COMMERCIAL BANKING SYSTEM 
Historical evolution of banking system in India

Functions of banks in an economy
Classification of Banks in India 
Scheduled banks
Non-scheduled banks
Nationalization of banks
Narasimhan committee recommendation on Banking sector
Banking reforms introduced in India in recent times
Issues associated with banking system in India
Way Forward : Fifth Generation Banking
INDIAN FINANCIAL SYSTEM-II: MONEY AND CAPITAL MARKET IN INDIA 
Definition of Money Market and Capital Market

Importance of Money Market and Capital Market for an Economy
Money Market Instruments
Regulatory framework of Indian money market
Money Market Reforms
Issues / Challenges related to Money Market in India
Types of Capital Market 
Gilt-Edged Market
The Industrial Securities Market

Stock exchanges in India 
Historical evolution of stock market in India
Importance of stock exchanges
Various stock exchanges in India
Regulatory framework of Capital Market in India
Capital Market Reforms
Recommendations for Further Improving Capital Market in India
INVESTMENT MODELS 
Definition of investment
Importance of investment for an economy
Classification of investment
Factors affecting investment
Various investment models 
Public investment model
Private investment model
Public private partnership model
Issues associated with PPP model
Reforms undertaken to better PPP model in recent times
Some investment models used in India since independence 
Harrod-Domar model
Solow Swan model
Feldman- Mahalanobis model
Rao- Manmohan model
INFRASTRUCTURE 
Relationship between infrastructure and economic development

Energy 
Coal
Power
Transport system in India’s economic development
Growth in Indian railways
Roads and road transport system in India
Water transport in India
Civil Aviation in India
Communication Infrastructure in India
Urban infrastructure
Infrastructural reforms taken in the above sectors
An objective analysis of the present infrastructure in the country
Measures to further improve infrastructure in the country
Social Infrastructure 
Concept of social sector and social infrastructure
Development of Education In India

Health and Family Welfare and The Development of Health Infrastructure
AGRICULTURE 
Indian agriculture at the time of independence

Land reforms
Indian agriculture under the five year plans
Food security in India
Organization of agricultural credit in India
Agriculture Marketing and Warehousing
Agricultural labour
Agriculture and Food processing industries
Indian agriculture in the present times 
Growth trajectory
Issues plaguing Indian agriculture
Programmes and policies introduced in India in recent times to address the issues
Some more measures or recommendations made by the committee to improve
agricultural growth in India
INDIAN INDUSTRIES AND ECONOMIC GROWTH 
Indian industry at the eve of independence

Industrial growth under five year planning
Major Industrial policies introduced in India since independence
Basic characteristics of Indian industries in the present times
Measures taken in recent times to increase the industrial growth in the country
Issues plaguing industrial growth in India despite the measures
Suggestions and recommendations given by various committees to increase the industrial
growth in the country
FOREIGN TRADE AND INTERNATIONAL ORGANIZATIONS 
Present foreign trade of India

Foreign trade policies
Impact of globalization on Indian economy
India’s balance of payments
GATT, WTO and India’s foreign trade
IMF and World Bank
Recent reforms taken by Indian in this domain
POVERTY AND UNEMPLOYMENT 
Poverty 
Definition of Poverty
Classification of Poverty
Poverty in India at the eve of Independence
Various Methodologies Proposed by Various Committees for Calculation of Poverty 
Growth of Industry in India

Poverty Alleviation Programmes since Independence
Impact of LPG reform on reducing poverty in India
Reasons why poverty still exists in India
Actions required to address the above issues
Unemployment 
Definition of Unemployment
Types of unemployment
Measurement of Unemployment in India
Unemployment Trends in India
Causes of unemployment in India
Programmes, policies and measures taken to address Unemployment in India since
Independence
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objectives of Fiscal policy
Definition, types and objectives of Fiscal

policy
Fiscal policy, also known as Budgetary policy relates to two important issues. These
are:
1. The items on which the government should spend
2. How the government should raise resources to finance its expenditure?
The answer to the first question will depend on the priorities of the government to
solve various economic, social and other problems that a country face. For example,
if there is a constant threat of attack from another country, the government has no
choice but to spend more on defence. If there is a threat of outbreak and spread of an
epidemic, the government has to spend more on health services. If the government
had taken loan in the past, it has to spend more on interest payments.
On the second question the government has to consider various ways to raise
resources. Should the people be taxed more? Which section of the people to be taxed
more? Which commodities are to be taxed? How much the government should
borrow? From whom should it borrow and in what form? The answers to these
questions are to be found in the policy objectives of the government.
The fiscal policy is concerned with the raising of government revenue and
Government Budget increasing expenditure. To generate revenue and to increase
expenditures, the government finance or policy called Budgeting policy or fiscal
policy. The major fiscal measures are:
1. Public Expenditure – Government spends money on a wide variety of

things, from the military and police to services like education and health
care, as well as transfer payments such as welfare benefits.
2. Taxation – Government imposes new taxes and change the rate of current
taxes. The expenditure of government is funded by the imposition of taxes.
3. Public Borrowing – Government also raises money from the population or

from abroad through bonds, NSC, Kisan Vikas Patra, etc. 4. Other Measure
– Other measures adopted by the government are:
(a) Rationing and price control
(b) Regulation of wages
(c) Increase the production of goods and services.
Difference between fiscal and monetary policy
(Source: economicshelp.org)

Types of fiscal policy
(Source of infographic: freepik)
Objectives of Fiscal policy
1. To promote economic growth: Government promotes economic growth by

setting up basic and heavy industries like steel, chemical, fertilizers,
machine tools, etc. It also builds infrastructure like roads, canals, railways,
airports, education and health services, water and electricity supply,
telecommunications, etc. that foster economic growth. Both basic and
heavy industries and infrastructure require huge amount of investment
which normally the private sector does not take up. Since these industries
and infrastructure facilities are essential for economic growth in the
country, the burden to set up and develop them falls on the government.
2. To reduce income and wealth inequalities: Government reduces

inequalities in income and wealth by taxing the rich more and spending
more on the poor. Further, it provides for the employment opportunities to
poor that help them to earn.
3. To provide employment opportunities: Employment opportunities are

increased by the government in various ways, One, jobs are created when
it sets up public sector enterprises. Two, it provides subsidies and other
incentives like tax holidays, low rates of taxes etc. to private sector that
encourage production and employment. It also encourages setting up of
small scale, cottage and village industries by people which are employment
oriented. This it does by providing them tax concessions, subsidies, grants,
loans at low rates of interest, etc. Finally, it creates jobs for poor when it
undertakes public works programmes like construction of roads, bridges,

canals, buildings, etc.
4. To ensure stability in prices: Government ensures stability of prices of

essential goods and services by regulating their supplies. Hence, it incurs
expenditure on ration and fair price shops that keep sufficient stock of
food grains. If also subsidizes cooking gas, electricity, water and essential
services like transport and maintains their prices at low level affordable to
the common man.
5. To correct balance of payments deficit: The balance of payments account

of a country records its receipts and payment with foreign countries.
When payments to foreigners are more than receipts from foreigners, the
balance of payments account is said to be in deficit. Quite often this deficit
is caused when a country imports more than it exports. Consequently, the
payments on imports to foreigners are more than the receipts from
exports. In such a situation, to reduce the deficit in balance of payment
account, the government discourages imports by increasing taxes on them
and encourages exports by increasing subsidies and other export
incentives. However, it should be noted that tax on import is not a popular
measure now as it is treated as an obstacle to free flow of goods and
services between countries.
6. To provide for effective administration: Government incurs expenditures

on police, defence, legislatures, judiciary, etc. to provide effective
administration
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11/11/22, 7:57 PM Definition, types and objectives of Fiscal policy - INSIGHTSIAS

 Call us @ 08069405205 (tel:+08069405205)

NATIONAL INCOME ACCOUNTING 

STRUCTURE OF INDIAN ECONOMY: A BRIEF OVERVIEW 

Indian economy at the time of independence: Basic characteristics

Features of Indian Economy

Historical evolution of planning in India

INCLUSIVE GROWTH AND ISSUES ARISING FROM IT 

Definition of inclusive growth

Rural economy based growth

THE RESERVE BANK OF INDIA AND MONETARY MANAGEMENT 

Function of Reserve Bank of India (RBI)

TAXATION SYSTEM IN INDIA 

INDIAN FINANCIAL SYSTEM: COMMERCIAL BANKING SYSTEM 

Historical evolution of banking system in India

INDIAN FINANCIAL SYSTEM-II: MONEY AND CAPITAL MARKET IN INDIA 

Definition of Money Market and Capital Market

The Industrial Securities Market

Relationship between infrastructure and economic development

Development of Education In India

Indian agriculture at the time of independence

INDIAN INDUSTRIES AND ECONOMIC GROWTH 

Indian industry at the eve of independence

FOREIGN TRADE AND INTERNATIONAL ORGANIZATIONS 

Present foreign trade of India

POVERTY AND UNEMPLOYMENT 

Growth of Industry in India

Home (https://www.insightsonindia.com/) » Economy

Definition, types and objectives of Fiscal

1. The items on which the government should spend

2. How the government should raise resources to finance its expenditure?

1. Public Expenditure – Government spends money on a wide variety of

3. Public Borrowing – Government also raises money from the population or

(a) Rationing and price control

(b) Regulation of wages

(c) Increase the production of goods and services.

Difference between fiscal and monetary policy

Types of fiscal policy

(Source of infographic: freepik)

Objectives of Fiscal policy

1. To promote economic growth: Government promotes economic growth by

2. To reduce income and wealth inequalities: Government reduces

3. To provide employment opportunities: Employment opportunities are

undertakes public works programmes like construction of roads, bridges,

4. To ensure stability in prices: Government ensures stability of prices of

5. To correct balance of payments deficit: The balance of payments account

6. To provide for effective administration: Government incurs expenditures

No Related Posts found

InstaClasses/OGP(Offline&Online Guidance Program) 2023 (Bengaluru from 14th March

Now reach all our Branches with ease!!!! Call us @ 08069405205

Want to work at Insights IAS? Write in to us at

Copyright © Insights Active Learning

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