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Advantages and disadvantages of government using fiscal or monetary policy?
Wiki User
∙ 11y ago
1.Capital formation: Fiscal policy has played a very important role in raising the rate of capital in country-in private as well as public sector. A major part of budgetary resources has been invested in Public Sector enterprises which have resulted in increase in gross domestic capital formation as percent of GDP from 10.2 percent in 1950-51 to 22.9 in 1997-98 and to 23.7 percent in 2001-02.
2. Resource Mobilisation: - Fiscal policy has helped to mobilize resources through taxes, savings, public debt etc. for economic development of the country. Resources mobilisation which was 70% in 1965-66 has increased to 90% in 2001-2002.
3. Incentives to Private Sector: - Private sector has been encouraged under fiscal policy for investment and production. Tax concessions, such subsidies exemptions in taxes have been given as incentives to private sector units set up in backward areas and expert oriented units. Similarly subsidies and tax concessions have also been given to encourage imports and as a result it has affected exports and imports of the country.
4. Encourage Savings: - Various incentives have been given to raise the rate of savings in household and corporate sector. To encourage savings in household sector various concessions and tax benefits have been given on fixed deposits, life insurance schemes, Kisan Vikas Patras (KVPs), National Saving Certificates (NSCs), provident funds etc. savings have been encourage in corporate sector by offering them tax concessions and tax exemptions.
5. Poverty alleviation and Employment Generation: -To fulfill one of its major objectives of providing full employment, allocation of huge amount has been made in fiscal policy to eradicate poverty and generate employment. For this a huge amount has been spent on different schemes like twenty point programme, Integrated Rural Development Programme (IRDP), Jawahar Rpzgar Yojana (JRY) etc.
6. Reduction in Inequality of Income and Wealth: -Fiscal Policy of the country has been making constant endeavour to reduce inequality of income and wealth. Resources have been mobilized from rich class to poor by way of progressive taxes, wealth tax, corporation tax and capital gain tax etc. and this money has been utlised for the welfare of poor people.
7. Export Promotion: - Export has been encouraged by way of providing subsidies, concessions, tax exemptions, cash subsidies etc. Exports have shown a rise from 4.5 percent in 1960-61 to 23.4 percent in 2001-2002. Import duty on raw material and capital goods used for production of goods meant for export has also reduced with a view to encourage exports.
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∙ 11y ago
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What is fiscal politics?
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Monetary and fiscal policies of RBI during recession?
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What is fiscal policy and how is it different to monetary policy?
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Fiscal policy and monetary policy?
fiscal is the governments budget in terms of spending and expenditure. so there can either be a budget deficit or a budget surplus. when there is a budget surplus, government use a contractionary fiscal policy, and when there is a deficit, they use an expansionary fiscal policy. Monetary policy is used to combat an economy growing to quickly and inflation is rising. in most countries this is the Official Cash Rate. There is a tight monetary policy which government can impose if the economy is growing rapidly and this is used to constrict spending within that economy
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The fiscal policy, which is, controlling the level of taxes and government spending, is left to the government. On the other hand, the monetary policy, that is, the tools fr controlling money supply in the economy, is controlled by the central bank.
What are the 10 point agenda of president estrada?
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