Fiscal policy in India: Targets

Fiscal policy in India: Targets

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• To encourage economic expansion - Establishing basic and heavy industries like steel, chemicals, fertilizers, machine tools, and so on helps the economy grow. It also builds roads, canals, railways, airports, education and health services, the supply of water and electricity, telecommunications, and other infrastructure. that encourage Monetary development. Heavy and basic industries, as well as infrastructure, necessitate significant investments that the private sector typically declines to make. The government bears the responsibility for establishing and developing these industries and infrastructure facilities because they are necessary for the country's economic expansion.

• To lessen wealth and income disparities - Government diminishes imbalances in pay and abundance by burdening the rich more and spending erring on poor people. Further, it accommodates the Work open doors to unfortunate that assist them with acquiring.

• Provision of opportunities for employment - The government creates jobs by establishing public sector businesses, which increases employment opportunities. Second, it offers tax breaks and other incentives like tax holidays and low tax rates. to the private sector, which promotes employment and production. It additionally supports setting up of limited scope, bungalow and town businesses by individuals which are Work situated. This is accomplished by offering them tax breaks, grants, subsidies, low-interest loans, and other benefits. Finally, it employs low-income people by carrying out public works projects like building roads, bridges, canals, and other structures.

• To guarantee price stability - By regulating the supplies of essential goods and services, the government maintains price stability. As a result, it spends money on rations and fair-price grocery stores that keep enough food grains on hand. In addition, it maintains low prices for essential services like transportation and subsidizes cooking gas, electricity, and water.

• Correction of the deficit in the balance of payments - A nation's receipts and payments to other nations are recorded in its Balance of Payments account. The Balance of Payments account is said to be in Deficit when foreign payments exceed foreign receipts. This deficit frequently arises when a nation imports more goods than it exports. As a result, foreigners receive more money from imports than they receive from exports. In such a scenario, the government encourages exports by increasing subsidies and other export incentives and discourages imports by increasing taxes on them to reduce the deficit in the balance of payment account. However, it is important to note that taxing imports is currently not a popular policy because it prevents the free flow of goods and services between nations.

• Provision of effective administration - Police, defense, legislatures, the judiciary, and other government services all require money.