Fiscal Policy

Meaning of fiscal policy:

The fiscal policy is concerned with the raising of government revenue and incurring of government expenditure. To generate revenue and to incur expenditure, the government frames a policy called budgetary policy or fiscal policy. So, the fiscal policy is concerned with government expenditure and government revenue.

News article 1)

India may miss fiscal deficit target of 4.8%: Fitch

By ET Bureau | 27 Sep, 2013, 04.00AM IST

KOLKATA: The Indian government may overshoot its fiscal deficit target of 4.8% of GDP as the 17% rupee depreciation in the last five months could inflate the oil subsidy bill, said Fitch group company India Ratings & Research, raising the spectre of a possible credit rating downgrade. Unless the prices of diesel, petrol and LPG are raised, the fiscal deficit could exceed 5%, it said.  "Despite a 0.5/ litre monthly hike in diesel prices, under-recovery of three controlled fuels diesel, liquefied petroleum gas and superior kerosene oil -- is threatening the government's fiscal arithmetic," said Devendra Kumar Pant, chief economist and head of public finance at India Ratings & Research. "Therefore, unless the price of diesel is hiked steeply or those of the three controlled petro products are hiked moderately, the government's fiscal deficit is likely to cross 5% of GDP," he said. 

Arvind Mayaram, economic affairs secretary at the finance ministry, has expressed confidence about meeting the fiscal deficit target, saying that any additional outgo on account of oil subsidies would be met through budgetary resources. 

Fitch maintained a stable outlook on India's BBB- rating last month and said that policy management would be the key factor in determining economic and financial stability. Typically, ratings are revised when cyclical weaknesses turn into structural problems. 

The price of the Indian crude basket between the first fortnight of April and the first fortnight of September this year increased by...