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Public debt of central government

The Central government mainly borrowed for development schemes, though in these days it has started borrowing even to .meet its current expenditure.   The central government has been increasingly relying on the external debt as is shown in the table below. The percentage of external debt in the total debt increased from a mere 1.5 in […]

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Reasons for the growth in public expenditure in India

Several reasons could be given for the ever increasing public expenditure in India. The important reasons are given below: Increasing defence expenditure is one of the main reasons for the increasing public expenditure. With perennial threat in borders, India cannot but spend heavily on defence so as to keep the force with latest equipments and […]

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Causes for the mounting public expenditure in India

Public expenditure refers to the expenditure incurred by the government (both central and state) on various public projects. In these days, the welfare governments have to incur heavy expenditure so as to provide the minimum basic requirements to the poor and needy. Apart from this, the government should also undertake various activities like defence, transport, […]

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Fiscal policy and economic growth

Economic growth calls for the application of all the tools of fiscal policy.   In developing economy, there may be no shortage of real or physical resources, but there may be a severe shortage of financial resources which are required to utilize the physical resources. The object of fiscal authorities should be to mobilize much funds […]

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Fiscal policy and unemployment

Fiscal policy plays a vital role in generating employment opportunities in the developing countries. In a developing economy, it should aim at solving the problem of both cyclical unemployment and disguised unemployment. While the former is of temporary nature, the latter has the snow-balling effect The latter refers to a situation in which more than […]

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Fiscal policy during depression

Depression is a period characterized by low income, low employment and low consumption. Fiscal policy should change this situation. The government must adopt deficit budget in order to increase the income stream in the economy through increased injection of fresh purchasing power into the economy. Secondly, the government must encourage consumption and investment and for […]

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Fiscal policy during inflation

Inflation is a period in which the purchasing power with, the people in the economy is high.  The first step to curb inflation is to control the purchasing power with the people.  This can be done using all the tools of fiscal policy. For instance, during inflation, since the private expenditure is high the government […]

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What are the objectives of fiscal policy?

The following are the objectives of fiscal policy: 1. Maximization of the aggregate saving is the first objective. Tins are achieved by encouraging people to reduce the current and future consumption. Specifically’ the attempt is to bring down and control the conspicuous consumption of the rich people. 2. Maximization of capital formation is the second […]

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Self-reliance as principal objective of Indian five year plan

During the I and II Plans self-reliance was mentioned as one of the objectives, though the objective could not be clearly defined. In the HI Plan also the same position continued. Only from the IV Plan the concept of self-reliance could be clearly defined and understood. The IV Plan clearly pointed out that the dependence […]

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Economic growth as principal objective of Indian Five Year plan

Economic growth has been considered as one of the primary objectives of economic planning as it is hoped and once a higher rate of economic growth is achieved all the other objectives laid for the plan would be automatically achieved. But the experience in other countries has been that economic growth has benefited only the […]

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