FISCAL POLICY IN INDIA
Meaning of Fiscal Policy
Fiscal policy refers to the policy of the government relating to taxation, public expenditure, borrowing and public debt to influence economic activity.
In India, fiscal policy is primarily concerned with:
- Economic growth
- Price stability
- Employment generation
- Redistribution of income
- Resource mobilisation
- Macroeconomic stability
- Regional development
Main Instruments of Fiscal Policy
- Government Expenditure
| 1. Revenue Expenditure Salaries and pensionsInterest paymentsSubsidiesGrantsMaintenance expenditure | 2. Capital Expenditure Roads and highwaysRailwaysSchools and hospitalsIrrigationDefence infrastructureCreation of productive assets |
Fiscal Policy vs Monetary Policy
| Basis | Fiscal Policy | Monetary Policy |
|---|---|---|
| Main Authority | Government | RBI |
| Main Instruments | Taxes, expenditure, borrowing | Repo rate, CRR, OMO, etc. |