Fiscal Policy

Fiscal Policy

Paramdeep Singh
Aniket Gupta
Himanshu Bharti
Tenzin Palzom
 Fiscal Policy-Meaning

Any decision to change the level, composition

or timing of govt. expenditure or to vary the
burden ,the structure or frequency of the tax
payment is fiscal policy.”
- G.K Shaw
 Objectives of Fiscal Policy

i. GENERAL obj-. aimed at achieving

macroeconomic goals
ii. SPECIFIC obj-. relating to any typical
problems of an economy
 Instruments of Fiscal Policy

• Government expenditure
• Public debt
• Deficit financing
 Methods of funding

• The benefit from printing money

• Borrowing money from the population or from
abroad
• Consumption of fiscal reserves.
• Sale of fixed assets
 Borrowing

A fiscal deficit is often funded by issuing

bonds, like treasury bills or consoles
and gilt-edged securities.
 Public debt

Internal borrowings
1. Borrowings from the public by means
of treasury bills and govt. bonds
2. Borrowings from the central bank
External borrowings
3. foreign investments
4. international organizations like World
Bank & IMF
 Taxation

1. Direct taxes-
2. Indirect taxes-
 Stances of Fiscal Policy

Neutral
Expansionary
Contarctionary
 Effects of Fiscal Policy

•In an effort to achieve an objective of price

stability, full employment & economic growth.
•To stabilize price when prices are high
•Its is decreasing the net exports
 Criticisms of
Fiscal Policy
Crowding out
Poor Information
Time Lags
Other components of A.D.
 Thank You

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-Dr. Manmohan Singh,
Prime Minister
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