Question

Explain the 'redistribution of income ' objective of the government budget ? ( give answer in points ! my school teacher always chants . I hope you will provide answer in points minimum 3 )

Answer 1

Redistribution of income can be described as an objective of government budget as follows.

1) Redistribution of income allows the government minimise the inequality of income and wealth in an economy.

2) Legislative measures and fiscal measures are used to redistribute income among the rich and the poor.

3) Legislative measures includes such measures as Minimum Wages Act, Minimum Support Price, Right to Education, etc. Such measures raise the income earning capacity of the people and improve their standard of living.

4) And, fiscal measures comprise of the taxation and subsidy measures of the government. High rate of taxes can be levied on the high income group while the poor are granted subsides. In this sense, the purchasing power is transferred from the rich to the poor.

5) Also, the purchasing power can be transferred to poor in the form of pensions, scholarships, grants, etc. can be granted to the poor.