INDIAN FISCAL

POLICY
Group No.-7
Patel Krishna (06)
Patel Sapana (22)
Vankar Jignasa (23)
Chalke Namrata (25)
Patel Mansi (24)
Makwana Nikita (60)
Patel Avani (11)
Patel Vaishnavi (17)
Rao Shivani (34)
FISCAL POLICY
The fiscal policy of government relates to
government income and expenditure. The main
source of government income is taxation.

It includes the taxation policy. To raise

revenue government increases the taxes. Higher
burden of tax will reduce the consumption
expenditure.
INTRODUCTION
Fiscal policy includes:-
1. Taxation
2. Public borrowing
3. Public expenditure

. It is used by government for the purpose of

development .
. In advanced countries the role of fiscal policy is to
stabilize the rate of growth.
. In underdeveloped countries fiscal policy is to
increase the rate of capital formation.
Objectives
To increase the rate of investment
To encourage socially optimal investment
To increase employment opportunity
To promote economic stability
To control the inflation
To increase and redistribute national
income
Scope
Budgetary surplus & Deficit
Government expenditure
Taxation Direct & Indirect
Public debt
Deficit financing
Budget
Budget is an important instrument for
promoting economic growth and to
tackle the problem of price instability in
the economy.

A Budget is a statement wherein

estimates of Governments expenditure
and revenue for a year are provided.
Cont
Type of
Budget

Balanced Surplus Deficit

Budget Budget Budget

Revenue Fiscal Primary

 Union Budget
Indirect Tax:-

. Basic custom duty on commercial vehicles is being

increased from 10 % to 20%

. Excise duty of 2% without CENVAT credit or 6%

with CENVAT credit is being levied on peanut butter.

. Excise duty structure of NIL without credit or 12.5%

with credit is being prescribe for solar water heater
and system.
 Union Budget
. Excise duty on cigarettes is being increased by
25% for cigarettes of length not exceeding 65 mm
and by 15% for cigarettes of other length.

. In service thx, rate is being increased from 12%

plus education cess to 14%.

. Clean energy Cess levied on coal, lignite and peat

is being increased from Rs. 100 per tonne to Rs.
200 per tonne.
 Union Budget
Direct tax:-

. No change in the rate of personal income tax and the rate of tax
for companies in respect if income earned in the FY 2015-16.

. LEVY SURCHARGE @12% on individuals, HUFs, artificial

juridical persons, firms, cooperative societies having income
exceeding Rs. 1 cr.

. In case of domestic companies having income exceeding 1 cr. to

10 cr. to be levied @7% and @12% is to be levied on domestic
companies having income exceeding 10 cr.

. It is proposed to provide penalty on repaid in case above 20000

for immovable property transactions.
Union Budget
Government Borrowing, lending and
investment:-

. Low interest rates in the international

financial markets so it is beneficial to
borrow from international financial market.
 Union Budget
Railway Budget :-

. Government support of Gross budgetary support (GBS)

and return on this investment it is called dividend , is
paid every year and rate of dividend is 5%.

. Railways revenues earned through passenger and

freight. Some earnings are also contributed by luggage/
parcels, advertisement paid by railways PSUs.
Remaining surplus id used to pay dividend and balance
is ploughed back as plan investment for meeting safety
and development.
Union Budget
Investment in railways is funded through
GBS, internal resource and extra budgetary
resource(EBR). The 12th five year plan for
railways has been approved at Rs. 5.19
lakh cr. targeting investment of 1.94 lakh cr.
Through GBS, 1.05 lskh cr. of IR and Rs.
2.2. lakh cr of EBR.
Budget of Gujarat
Budget of Maharashtra
 Importance
It applicable to the advanced and well to do
countries of Europe and it has little relevance to
underdeveloped economies.

To increase the rate of Saving and Investment

Affecting the allocation of resource

Controlling inflation

Promoting economic stability


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