Q.10. Discuss the role of fiscal policy in addressing economic inequalities in India. What measures can be taken to make it more inclusive?
Ans: As per the IMF “ Fiscal policy is the use of government spending and taxation to influence the economy”.
Fiscal policy, through taxation and government spending, plays a crucial role in addressing economic inequalities in India
- Progressive Taxation: Higher taxes on the wealthy and corporations can redistribute income to fund welfare programs. Example: The 2023 Budget introduced higher surcharges on individuals earning over ₹5 crore, aiming to reduce income inequality.
- Social Sector Spending: Increased allocation for health, education, and social security benefits the marginalized. Example: The National Health Mission (NHM) and Samagra Shiksha Abhiyan aim to improve healthcare and education access for the poor.
- Direct Benefit Transfers (DBT): DBT ensures targeted delivery of subsidies, reducing leakages and benefiting the needy. Example: The PM-KISAN scheme provides ₹6,000 annually to small farmers directly into their bank accounts.
- Employment Generation Programs: Schemes like MGNREGA provide livelihood security to rural households, reducing poverty. Example: In 2022-23, MGNREGA generated 2.8 billion person-days of employment, supporting rural incomes.
- Subsidies for Essential Goods: Subsidies on food, fuel, and fertilizers help low-income households manage living costs. Example: The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) provided free food grains to 80 crore people during the COVID-19 pandemic.
- Promoting Inclusive Growth: Fiscal policies focus on backward regions and marginalized communities to bridge regional and social disparities. Example: The Aspirational Districts Programme targets 112 underdeveloped districts for improved healthcare, education, and infrastructure.
Measures to Make Fiscal Policy More Inclusive
- Strengthening Tax Compliance: Expanding the tax base and reducing tax evasion can increase revenue for welfare programs. Example: The GST regime has increased tax compliance, with over 13 million taxpayers registered as of 2023.
- Enhancing Public Expenditure Efficiency: Better targeting and monitoring of welfare schemes can ensure benefits reach the intended beneficiaries. Example: The Aadhaar-linked DBT system has reduced leakages in subsidy distribution.
- Investing in Human Capital: Increased spending on education and skill development can empower marginalized groups. Example: The Skill India Mission aims to train 40 crore people by 2025, improving employability.
- Promoting Gender-Responsive Budgeting: Allocating funds for women-specific programs can reduce gender disparities. Example: The Beti Bachao Beti Padhao scheme focuses on improving female literacy and child sex ratio.
- Addressing Regional Disparities: Special fiscal packages for underdeveloped regions can promote balanced growth. Example: The North East Special Infrastructure Development Scheme (NESIDS) aims to improve infrastructure in the Northeast.
- Strengthening Local Governance: Empowering local bodies with adequate funds can address grassroots-level inequalities.
Fiscal policy is a powerful tool for addressing economic inequalities in India. By enhancing tax compliance, improving public expenditure efficiency, and investing in human capital, fiscal measures can be made more inclusive, ensuring equitable growth for all sections of society.
| Keywords: Fiscal Policy, Economic Inequality, Progressive Taxation, Direct Benefit Transfer (DBT), Social Sector Spending, Inclusive Growth |
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| Question of the Day Q. What role can the service sector play in promoting employment-oriented growth in India? भारत में रोजगारोन्मुख विकास को बढ़ावा देने में सेवा क्षेत्र क्या भूमिका निभा सकता है? |
| KeyWords – उद्यमिता, विदेशी निवेश, डिजिटल अर्थव्यवस्था, समावेशी विकास, कौशल विकास Entrepreneurship, Foreign Investment, Digital Economy, Inclusive Growth, Skill Development |