What is fiscal policy?
Fiscal policy refers to the economic policy of the government with regards to taxation, spending, and borrowing. The main objective of fiscal policy is to ensure that the economy is stable and growing. Fiscal policy can be used to achieve a variety of macroeconomic objectives, such as inflation control, economic growth, and full employment. In order to achieve these objectives, the government uses a variety of tools, such as tax rates and government spending.
Objectives of fiscal policy
India's fiscal policy has two main objectives: first, to ensure that the government has enough revenue to meet its expenditure; and second, to manage the economy in a way that maintains price stability and encourages economic growth. To achieve these objectives, the government uses a variety of tools.
Tools of fiscal policy
While there are many different tools that can be used to achieve these goals, the two most important are taxation and government spending. Taxation can be used to influence both consumer and business behavior, while government spending can be used to directly stimulate the economy.