Fiscal Neutrality Fiscal neutrality occurs when taxes and government spending are neutral, with neither having an effect on demand. Fiscal neutrality creates a condition where demand is neither stimulated nor diminished by taxation and government spending. A balanced budget is an example of fiscal neutrality, where government spending is covered […]
Daily archives: 9 January 2018
Fiscal Drag Fiscal drag is a concept where inflation and earnings growth may push more tax payers into higher tax brackets. Therefore fiscal drag has the effect of raising government tax revenue without explicitly raising tax rates. This fiscal drag has the effect of reducing Aggregate Demand and becomes an […]
What is Fiscal Drag?
Crowding out The crowding out effect is an economic theory stipulating that rises in public sector spending drive down or even eliminate private sector spending. In simple terms, if the government borrows too much from the market, the money left for lending for others is less. Which means the supply […]
What is crowding out phenomenon?
Current Account Deficit (CAD) A current account deficit means the value of imports of goods / services / investment incomes is greater than the value of exports. The current account also includes net income, such as interest and dividends, as well as transfers, such as foreign aid, though these components […]
What is Current Account Deficit? and Problems due to it
Fiscal Consolidation Fiscal consolidation is a process where government’s fiscal health getting improved indicated by reduced fiscal deficit which is manageable and bearable for the economy. Improved tax revenue realization and better aligned expenditure are thus components of fiscal consolidation. In India, fiscal deficit is the king indicator to show […]
What is Fiscal Consolidation?
What is Fiscal Responsibility? Fiscal responsibility implies a government pursues the appropriate level of government spending and tax to: Maintain sustainable public finances. Ensure fiscal policy aids the optimal rate of economic growth. Maintain appropriate levels of public investment. The ultimate idea is to keep rising levels of debt in […]
What is Fiscal Responsibility and Budget Management Act(FRBM)?
National Investment Fund The Government of India constituted the National Investment Fund (NIF) on 3rd November, 2005, into which the proceeds from disinvestment of Central Public Sector Enterprises were to be channelized. The corpus of the fund was to be of permanent nature and the same was to be professionally […]
What is National Investment Fund
Fiscal Deficit-Need and Implications Is FD good or bad? Fiscal deficit is bridged by market borrowings and central bank printing fresh currency (monetization). To a limited extent, FD is important as the Government’s ability to help growth and welfare increases. Government can always return the loans when its revenues improve […]
Is Fiscal Deficit good?
Deficit Deficit is the difference between expenditure and receipt. Deficit is classified as follows Surplus Its the opposite of deficit. Surplus occurs when the receipt(income) is more than expenditure. The extra money left in the hands of the spending authority(Govt) is the surplus amount. Surplus never happens because there's always […]
Deficit-Various types of deficit
Budget, in simple terms is an estimate of expenditure and income for a specified period of time(generally, an year). In fact, Indian constitution does not use the word "Budget" anywhere. It is referred to as Annual Financial Statement. Why is Budget so significant? The Budget is one of the most […]