Fiscal Policy and Fiscal Prudence (Fiscal Deficit & Public Debt) क्या है?
ऐतिहासिक पृष्ठभूमि
मुख्य प्रावधान
9 points- 1.
Fiscal Policy Instruments include government spending (revenue and capital expenditure) and taxation (direct and indirect taxes).
- 2.
Aims to achieve economic growth, price stability, employment generation, and equitable distribution of income.
- 3.
Fiscal Deficit is a key indicator of fiscal health, often expressed as a percentage of GDP.
- 4.
High fiscal deficit leads to increased government borrowing, which can 'crowd out' private investment and lead to higher interest rates.
- 5.
Public Debt includes internal debt (market borrowings, small savings) and external debt.
- 6.
Unsustainable public debt can lead to a debt trap, where a significant portion of revenue is used for interest payments.
- 7.
FRBM Act aimed to reduce fiscal deficit to 3% of GDP and eliminate revenue deficit.
- 8.
Fiscal Prudence involves balancing expenditure with revenue, prioritizing productive capital expenditure, and managing debt sustainably.
- 9.
State finances are governed by their own budgets, with borrowing limits set by the Union government under Article 293.
दृश्य सामग्री
हालिया विकास
5 विकासFRBM targets were relaxed during the COVID-19 pandemic (2020-2022) to support economic recovery.
Union Budget 2024-25 aims to bring down fiscal deficit to 4.5% of GDP by 2025-26.
Increased focus on capital expenditure to boost long-term growth and create assets.
Concerns raised by RBI and Finance Commissions about the rising public debt of states, partly due to freebies and populist measures.
Debate on the quality of fiscal deficit – whether it's driven by productive capital spending or unproductive revenue expenditure.