Explain the budgetary measures for the following objectives of government budget- setting up a production unit in the backward area.
OR
How government budget can be used for bringing price stability in the market?
Explain the budgetary measures for the following objectives of government budget- setting up a production unit in the backward area.
OR
How government budget can be used for bringing price stability in the market?
For setting up a production unit in backward areas, there is a need to reallocate the resources by the government.
There are many activities which are not undertaken by the private sector due to the lack of profits or huge investment involved. Provisions like water supply, sanitation etc., have to be undertaken by the government itself. The government can encourage the private sector to take interest in the production of public goods by providing tax concessions and subsidies and in this way, it helps in reallocating the resources.
OR
Economic stability means stability in fluctuations of prices in the economy. The government can control these fluctuations through taxes and expenditure. For instance, the government can reduce the expenditure in the situation of inflation and increase the expenditure in the condition of depression.
In order to maintain price stability, the government uses its fiscal policy to control general price levels.
When there are inflationary pressures in the economy, the government increases the tax and reduces its expenditure to reduce the demand level and hence prices are controlled and vice-versa.
For setting up a production unit in backward areas, there is a need to reallocate the resources by the government.
There are many activities which are not undertaken by the private sector due to the lack of profits or huge investment involved. Provisions like water supply, sanitation etc., have to be undertaken by the government itself. The government can encourage the private sector to take interest in the production of public goods by providing tax concessions and subsidies and in this way, it helps in reallocating the resources.
OR
Economic stability means stability in fluctuations of prices in the economy. The government can control these fluctuations through taxes and expenditure. For instance, the government can reduce the expenditure in the situation of inflation and increase the expenditure in the condition of depression.
In order to maintain price stability, the government uses its fiscal policy to control general price levels.
When there are inflationary pressures in the economy, the government increases the tax and reduces its expenditure to reduce the demand level and hence prices are controlled and vice-versa.
