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What is Fiscal Policy?

• Fiscal policy refers to the governing bodies spending and taxation
to influence the economic conditions, mainly the macroeconomic
condition. It includes employment, inflation, aggregate demand
for goods and services and economic growth.
• राजकोषीय नीित से ता पय आिथक थितय , मु य प से
यापक आिथक थित को भा वत करने के िलए शासी िनकाय
के खच और कराधान से है । इसम रोजगार, मु ा फ ित, व तुओं
और सेवाओं क कुल मांग और आिथक वकास शािमल ह।

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Objectives of Fiscal Policy
1. Higher Economic Growth
2. Price Stability
3. Reduction in Inequality
4. Higher Employment
5. Economic Growth

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• Expansionary Fiscal Policy
• Contractionary Fiscal Policy TYPES OF
• Neutral Fiscal Policy FISCAL POLICIES
Expansionary Fiscal Policy ( व तारवाद राजकोषीय नीित)
Expansionary fiscal policy is when the government increases the
money supply in the economy using budgetary instruments to
either raise spending or cut taxes—both having more money to
invest for customers and companies.
व तारवाद राजकोषीय नीित तब होती है जब सरकार खच बढ़ाने या
कर म कटौती करने के िलए बजट य उपकरण का उपयोग करके
अथ यव था म धन क आपूित बढ़ाती है - दोन म ाहक और
कंपिनय के िलए िनवेश करने के िलए अिधक पैसा होता है ।
Contractionary Fiscal Policy: (संकुचनकार नीित)
A contractionary policy is a monetary measure to reduce
government spending or the rate of monetary expansion by a
central bank. It is a macroeconomic tool used to combat rising
inflation.
संकुचनकार नीित सरकार खच या क य बक ारा मौ क
व तार क दर को कम करने के िलए एक मौ क उपाय है ।
यह एक यापक आिथक उपकरण है जसका उपयोग बढ़ती
मु ा फ ित से िनपटने के िलए कया जाता है ।
Neutral Fiscal Policy (तट थ नीित)
The first type of fiscal policy is a neutral policy, which is also
known as a balanced budget. This is where the government
brings in enough taxation to pay for its expenditures. In other
words, government spending equals taxation.
पहले कार क राजकोषीय नीित तट थ नीित है , जसे
संतुिलत बजट के प म भी जाना जाता है । यह ं पर सरकार
अपने खच का भुगतान करने के िलए पया कराधान लाती
है । दस
ू रे श द म, सरकार खच कराधान के बराबर है
 Consolidated Fund of Contingency Fund of Public Account of
Fund
India India India
Public money other
Taxes and non-tax
Income than those under
revenue
consolidated fund

Public money other

Unforeseen
Expenditure All expenditure than those under
expenditure
consolidated fund
Parliamentary Required prior to Required after the
Not required
Authorisation expenditure expenditure
Articles 266(1) 267(1) 266(2)
Components of Fiscal Policy

1. Government Receipts
2. Government Expenditure

Types of Funds in India

1. Consolidated Fund of India
2. Contingency Fund of India

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Government Receipts
Revenue Receipt Capital Receipt
A. Tax Revenue 1. Loans Recovery
1. Direct Tax 2. Disinvestments
2. Indirect Tax 3. Borrowing
B. Non Tax Revenue
1. Fees
2. License and Permits
3. Fines and Penalties, etc

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Government Expenditure
Revenue Expenditure: Capital Expenditure

• Interest Payments • Loans repayments

• Defence Expenses • Loans to public enterprises,
• Salaries

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What are capital receipts?

1) Create Liabilities or Reduce Assets

2) Create Assets or Reduce Liabilities
3) Tax and Non-tax revenues
4) Tax Revenues subtracted from Non-Tax
1) दे नदा रयां बनाएं या संप कम कर
2) संप बनाएं या दे नदा रयां कम कर
3) कर और गैर-कर राज व
4) कर राज व को गैर-कर से घटाया गया

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What is Budget?
A government budget is an annual statement of the estimated receipts and
expenditure of the government during a fiscal year. Just as your household
budget is all about what you earn and spend, similarly the government
budget is a statement of government income and expenditure.

एक सरकार बजट एक व ीय वष के दौरान सरकार क अनुमािनत ाि य

और यय का वा षक ववरण होता है । जस तरह आपके घर का बजट
आपके ारा कमाए और खच कए गए सभी के बारे म है , उसी तरह सरकार
बजट सरकार क आय और यय का ववरण है ।

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 Budget in Parliament
• Article 112- Annual Financial Statement (Budget)
• Only introduced in Lok Sabha
• Present – 1st Feb
• First Paperless budget – 2021 (Nirmala Sitharaman)
• Who Create – Dept of Economic Affairs (finance ministry)

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 Types of Deficit
• Fiscal Deficit:
Total Expenditure – Total revenue (Excluding the borrowings)
• Revenue Deficit:
Revenue Expenditure – Revenue Receipts
• Primary Deficit
Fiscal Deficit – Interest Payment

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Use Code “Y724” For Batch & “Y724S” For Test Series/Book