What is fiscal policy?

Fiscal policy is like a plan that helps the government decide how much money it should spend and how much it needs to earn to keep the economy running well. Recently, fiscal policy has become more important for achieving quick economic growth in India and around the world. Getting the economy to grow fast is a big goal of Indian government. Fiscal policy, along with another policy called monetary policy, is crucial for managing the country's economy.

What does Fiscal Policy in India mean? Example of Fiscal Policy in India:
Fiscal policy is how a government controls the money it gets from taxes and spends on public things. If the government gets more money than it spends, it's called a surplus. If it spends more than it gets from taxes, it's called a deficit. To cover extra spending, the government may borrow money or use its foreign reserves. For example, during tough economic times, the government might spend more on building projects and helping people. The goal is to put more money in people's hands so they can spend it, and to encourage businesses to invest. The government might also reduce taxes to earn less money itself.

Main objectives of Fiscal Policy in India
Economic growth: Fiscal policy helps the economy grow so that certain economic goals can be reached.
Price stability: It controls prices to regulate them when they go too high due to inflation.
Full employment: It aims to achieve full or near-full employment to recover from low economic activity.

Importance of Fiscal Policy in India

• In India, fiscal policy is important for increasing the amount of money available for public and private projects.
• Through taxes, fiscal policy collects a lot of money to fund various government projects.
• Fiscal policy also encourages saving by providing incentives.
• It motivates the private sector to grow.
• Fiscal policy aims to reduce the imbalance in how income and wealth are distributed.