Let’s discuss Fiscal Policy in General
“Fiscal policy sees to it that employment is generated in the country and economic growth is on a steady pace. ”
Fiscal policy can be called a tool through which a government uses its income through a large variety of methods to achieve positive effect on the nation’s economy.Fiscal policy sees to it that employment is generated in the country and economic growth is on a steady pace. This is basically the purpose that is adhered to by developed economies.
In developing economies, fiscal policy aims at creating all the prerequisites so that sustainable economic growth can take place. Resources are gathered together with the intention that the prevailing low levels of investment can be brought to an optimum level.
The social acceptability of various kinds of programs is also to be kept in mind. It is because economy is very closely linked to society and any move that tends to upset the existing social structure is not relished by many a citizen.
Fiscal policy also tries to redistribute income of the country in such a way that gap between the rich and the poor is reduced to a considerable extent. This is mainly done by directing big portions of revenue for the upliftment of the poor. All such policies and programs are chalked out in minute detail in a fiscal policy.
Stabilizing the prices is another responsibility that is to a great extent entrusted upon the fiscal policy. Mostly economies in developing countries are passing either through inflationary or deflationary phases. Fiscal policy aims at controlling these stages.
The matter of the fact is that fiscal policies are most of the times successful only in developed countries. Developing countries have so many problems to tackle with that fiscal policy is rarely able to achieve its objectives to satisfactory levels.
One of the most important problems in developing countries is that of tax evasion. People out of ignorance or sheer greed refrain from paying proper taxes (more often than not in connivance with the officials) and as a result the government is mostly short of funds for the realization of the goals of its fiscal policy.
Such countries many a time have to depend upon loans from other countries and international organizations (like the IMF, WTO etc.) for the implementation of their fiscal and additional reforms.
Author - DeeKay
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