supriya fiscal policy

8/2/2019 Supriya Fiscal Policy

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Fiscal Policy

Presented by :Swapnil

SupriyaM.B.A 4th semester


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Fiscal Policy-Meaning

The fiscal policy is concerned with the

raising of government revenue and

incurring of government expenditure. Togenerate revenue and to incur expenditure,

the government frames a policy called

budgetary policy or fiscal policy. So, thefiscal policy is concerned with government

expenditure and government revenue.


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The word fisc means state treasury and fiscalpolicy refers to policy concerning the use ofstate treasury or the govt. finances to achievethe macroeconomic goals.

any decision to change the level, composition ortiming ofgovt. expenditure or to vary the

burden ,the structure or frequency of the tax

payment is fiscal policy.- G.K. ShawG.K. Shaw


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Objectives of Fiscal Policy

It has 2 major objectives:

i. GENERAL obj-. aimed at achievingmacroeconomic goals

ii. SPECIFIC obj-. relating to any typical

problems of an economy


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Fiscal Policy And Macroeconomic

Goals Economic Growth: By creating conditions for increase in

savings & investment.

Employment: By encouraging the use of labour-absorbing

technology

Stabilization: fight with depressionary trends and booming

(overheating) indications in the economy

Economic Equality: By reducing the income and wealth

gaps between the rich and poor.

Price stability: employed to contain inflationary and

deflationary tendencies in the economy.


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Instruments of Fiscal Policy

Budgetary surplus and deficit

Government expenditure

Taxation- direct and indirect

Public debt

Deficit financing


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Budgetary surplus and deficit

A budget is a detailed plan of operations for some

specific future period

Keeping budget balanced (R=E) or deficit (RE) as a matter of policy is itself a fiscal

instrument.

An accumulated deficit over several years (or

centuries) is referred to as the government debt A deficit is a flow. And a debt is a stock. Debt is

essentially an accumulated flow of deficits


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Government Expenditure

It includes :

Government spending on the purchase of

goods & services.

Payment of wages and salaries of

government servants

Public investment

Transfer payments


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Taxation

Meaning : Non quid pro quo transfer of

private income to public coffers by means

of taxes.

Classified into

1. Direct taxes- Corporate tax, Div. Distribution

Tax, Personal Income Tax, Fringe Benefit taxes,Banking Cash Transaction Tax

2. Indirect taxes- Central Sales Tax, Customs,

Service Tax, excise duty.


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Public debt

Internal borrowings1. Borrowings from the public by means of treasury bills

and govt. bonds

2. Borrowings from the central bank (monetized deficitfinancing)

External borrowings

1. foreign investments

2. international organizations like World Bank &IMF

3. market borrowings


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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.


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COMPONENTS OF BUDGET

Revenue receipts

Capital receipts

Revenue expenditure

Capital expenditure


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THANK YOU.

supriya fiscal policy

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