Royal Group (Hemal, Vivek, Mitul)
Royal Group (Hemal, Vivek, Mitul)
Royal Group (Hemal, Vivek, Mitul)
CONTENTS
MEANING OBJECTIVES MACROECONOMICS GOALS INSTRUMENTS LIMITATIONS
Fiscal Policy-Meaning
The word fisc means state treasury and fiscal policy refers to policy concerning the use of state treasury or the govt. finances to achieve the macroeconomic goals.
Fiscal policy is formed by the Central Government Ministry of Finance
6 Balanced Regional Development 7 Reducing the Deficit in the Balance of Payment 8 Capital Formation 9 Increasing National Income 10 Development of Infrastructure 11 Foreign Exchange Earnings
Government Expenditure
It includes : Government spending on the purchase of goods & services. Payment of wages and salaries of government servants Public investment Transfer payments
Taxation
Meaning : Non quid pro quo transfer of private income to public coffers by means of taxes. 1. Direct taxes- The term direct tax generally
means a tax paid directly to the government by the persons on whom it is imposed. Personal Income Tax, Banking Cash Transaction Tax
2. Indirect taxes- The term indirect tax is contrasted with a direct tax which is collected directly by government from the persons (legal or natural) on which it is imposed Central Sales Tax, Customs, Service Tax, excise duty.
Public debt
1.
Internal borrowings
Borrowings from the public by means of treasury bills and govt. bonds
2.
External borrowings 1. foreign investments 2. International organizations like World Bank & IMF(International Monetary Fund)
BUDGET
A budget is a detailed plan of operations for some specific future period It is an estimate prepared in advance of the period to which it applies.
BALANCE OF PAYMENT
Balance of payment (BoP) is an account of the international transactions of a country, and shows how the country is faring in trade, attracting capital from abroad, and the effect of that on its foreign exchange reserves.
The Capital Account Measures The Difference Between India Sales Of Assets To Foreigners And India Purchases Of Foreign Assets.
Conclusion
The objectives of fiscal policy such as economic development, price stability, etc. can be achieved only if the tools of policy like Public Expenditure, Taxation, Borrowing and deficit financing are effectively used.
Indias forex reserves had dwindled to lows of $5.1 billion in 1991 and as a result India had to borrow from the IMF by pledging its entire stock of gold.
At over $290 billion, Indias position is far better than it was in 1991 but if you look at the example of any of our neighboring Asian tigers, or even the western countries when they were growing, all of them have grown by relying on exports and running trade surpluses, and thats what Indias goal should also be.