ROLE OF FISCAL

HEMA.S
NIVEDHA.P
SANGEETHAPRIYA.S
GOWTHAM
SHRIRAM.V
 A policy in which government uses its
expenditure and revenue programmes to
produce desirable effects and avoid undesirable
effects on the national income, production and
employment.

INTRODUCT
ION
The use of such fiscal policy measures may be
grouped into two:

Automatic or Discretionary
built-in stabilizers fiscal policy
 • Fiscal policy refers to the government
programs of making both automatic
and discretionary changes in taxation,
public expenditure and borrowing in
OBJECTIVE order to achieve the intended goals of
economic growth, full employment,
S OF income equality and the stabilization of
the economy in its growth path.
FISCAL • The basic objectives of fiscal policy are:
POLICY Economic Growth
Full Employment
Price Stability
Equity and Justice
 • KEY POINTS:
 To accelerate the rate of
economic growth by stepping up
the rate of investment and capital
formation
 To increase savings and
discourage luxury consumption
 To allocate existing resources to
desired and priority sectors so
that a rapid economic growth can
be achieved
 To reduce inequalities in income
and wealth
 To maintain reasonable price
OBJECTIVES OF FISCAL stability

POLICY
(CONTD.)
IMPORTANT OBJECTIVES OF FISCAL POLICY
ADOPTED BY THE GOVERNMENT OF INDIA
 To mobilise adequate resources for financing various programmes and projects adopted for economic
development.
 To raise the rate of savings and investment for increasing the rate of capital formation;
 To promote necessary development in the private sector through fiscal incentive;
 To arrange an optimum utilisation of resources;
 To control the inflationary pressures in economy in order to attain economic stability;
 To remove poverty and unemployment;
 To attain the growth of public sector for attaining the objective of socialistic pattern of society;
 To reduce regional disparities; and
 To reduce the degree of inequality in the distribution of income and wealth.
 In order to attain all these aforesaid objectives, the Government of India has been formulating its fiscal
policy incorporating the revenue, expenditure and public debt components in a comprehensive manner.
  The Government has to play a
very active role in promoting
economic development and fiscal
policy is the instrument that the
state must see.
 Hence the great importance of
public finance in underdeveloped
countries desirous of rapid
economic development.
 In a democratic society, there is
an inherent dislike for direct
control regulation by the state.
 Hence a democratic state must
rely on indirect methods of
control and regulation and this is

ROLE OF FISCAL doing through fiscal and

monetary policies.

POLICY
 Role of Fiscal Policy in
Economic Development

 To raise the rate of productive investment of

both public and private sector of the country.
 To enhance the marginal and average rates of
savings for mobilising adequate financial
resources for making investment in public and
private sectors of the economy.
The fiscal policy of the country is trying to attain
both these two objectives during the plan
periods.
 Policy of Taxation
Public Expenditure Policy 
Development of infrastructure
TECHNIQU Development of public enterprises
Support to Private Sector
ES OF Social Welfare and Employment
FISCAL Programmes
POLICY Policy of Deficit Financing of Government of
India
Public Debt Policy of the Government of India
Internal Debt
External Debt
 GLOBALISATION AND ITS IMPACT ON INDIA

Globalisation is emerged as one of the most frequently used term of which

there is no universally acceptable definition. World-wide opinions are
divided both in support and opposition of it. Globalisation is derived from
the term “global” which implies covering the globe.
Globalisation means different things to different people. Economists
consider it as a step towards a fully integrated world market. Some political
scientists view it as a march away from the conventionally defined concept
of the state.
 • BENEFITS:
Risk Reduction
Convenient
Tracking Spends
CASHLESS Increase In Tax Base
ECONOMY Containment Of Parallel
Economy
Financial Inclusion
Discounts
    Capital Formation
Mobilisation of Resources
Merits or Incentives to Savings
 Inducement to Private Sector
Advantages of Reduction of Inequality

Fiscal Policy 
Export Promotion
Alleviation of Poverty and
Unemployment
 Progressive Taxes

Agricultural Taxation
Suggestio Broad-based Tax Net
ns for Checking Tax Evasion
Necessary Increasing Reliance on Direct Taxes
Reforms
in Fiscal Simplified Tax Structure

Policy Reduction of Non-Development Expenditure

Checking Black Money

Raising the Profitability of PSUs

Measures of Fiscal Policy Reforms

Reduction of Rates Simplification of Reforms in Indirect

of Direct Taxes Tax Procedure Taxes

Fall in the volume Reduction in the

Reduction in Fiscal
of Government Volume of
Deficit
Expenditure Subsidies

Reduction in Public Disinvestment in

Debt Public Sector