Syllabus: GS-III
Subject: Economic Development
Topic: Fiscal Policy and Budgeting.
Important points from the Discussion (Mains)
- Consultation with states crucial for next-gen reforms in health, education, MSMEs, land, and labour.
- Sustainable, moderate growth is favoured over unsustainable high growth for economic stability.
Important Terms (Prelims):
| Counter-Cyclical Fiscal Policy:·        It adapts to economic cycles by adjusting taxation and government spending.
·        During recessions, it focuses on reducing taxes and increasing spending to stimulate demand and foster economic recovery. ·        In contrast, during economic booms, the policy aims to raise taxes and cut public expenditure to prevent overheating and curb inflation. ·        Allowing unchecked expansion during booms can lead to inflation and exacerbate debt crises. ·        The goal is to maintain stability and balance in the economy by countering the effects of both recessionary and expansionary phases. |
