Question

Long answer type questions:
Explain the budgetary measures for achieving following objectives: (i) Setting up of production units, in backward regions; (ii) Reducing inequalities of income and wealth.

Answer 1

1) Setting up of production nits in backward regions: While allocating funds for infrastructural development, focus is placed on the development of backward regions in the country. This contributes to the balanced regional growth. In India, establishment of special economic zones is an important step towards the development of backward areas. Tax laws are liberal in backward areas.

2) Reducing inequalities of income and wealth: Taxation and subsidies is the key policy instrument used by the government to reduce the inequalities of income and wealth. By imposing taxes on rich and giving subsidies to the poor, the government redistributes income in favor of poorer sections of the society.