BUSINESS ENVIRONMENT. Project on FISCAL POLICY.
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MEANINGfiscal policy is the policy concerning the revenue expenditure and debt of the government for achieving certain objectives like control of inflation , public expenditure etc.According to pro. D. C. Rowan, "fiscal policy is defined as the discretionery action by the government to change the level of government expenditure on goods and services and transfer payments. And the yield of taxation at any given level of output".
FULL EMPLOYMENT it simply means that man power is ready to work at a prevailing wage rate without any dispute.
PRICE STABILITY another objective is price stability when price rises i.e. inflation exists in an economy , fiscal policy aims at decrease in demand and aggregate expenditure and tax rate is also raised. extra purchasing power of people goes into hands of general public and demand decreases because of excess supply, prices automatically go down because of fear of stocks.
REDUCTIO N IN ECONOMIC ACTIVITY to remove economic inequlity progressive direct taxes like income tax , property tax are levied at a higher scale because of burden of such taxes falls upon rich people.ECONOMICDEVELOPMENT to achieve economic devolopment of a country, fiscal policy acts as a source of capital formation because as capital formation is increased , production and employment also increases. Appropriate fiscal policy is requried for devolopment of country like India.
PUBLIC DEBT POLICY public are maonly two types :a)internal debt b)external debtif there is no decrease in private demand then debt debt can be used for increase in aggregate demand and on the other hand if with public debt private spending is curtailed , then it is uncertain effect on aggregate demand.DEFICIT FINANCING when the government lends from central bank to cover its deficit in its budget, this is called deficit financing, or simply means issuing of more currency or notes at the time of emergencies. This increase in currency creates extra purchasing power and as a result the total circulation of currency increases, demand increases and as result price increases.
=To fullfil one of its major abjectives of providing full employment, allocation of huge amount has been made in fiscal policy to eradicate poverty and generate employment.=Resourses have been moblized from rich class to poor by way of proggesive tax, corporation tax and capital gains.and this money is utilized for the wellfare of poor section.=Export have been encourged by the way of providing subsidies, concession , tax exmemption, cash subsidies etc.
+Fiscal policy need to be approval by the government , that is why decisions are not taken as time. +Strutural unemploynment cannot be tackled by the fiscal policy.+The country have been depend on the more on idirect tax, ultimately affecting poor person , so it is defective tax structure.+Increase in public expenditure on non development heads and deficit financing demand pull inflation has taken place.+Huge investment in public sectors have become sunk money now because of failure of public sectors, returns are becoming very low.