PROJECT ON FISCAL POLICY AND REVENUE ALLOCATION IN INDIA ISSUES AND C

PROJECT ON FISCAL POLICY AND REVENUE ALLOCATION IN INDIA: ISSUES AND CHALLENGES 6. INTRODUCTION: In economics, fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy. Fiscal policy basically means by which a government adjusts its levels of spending in order tomonitor and influence a nation's economy. It is the sister strategy to monetary policy, withwhich a central bank influences a nation's money supply. In this specific project, I would be dealing with the Indian Fiscal Policy in specific. India has been one of the fastest growing economies in the last decade and has been very well able to maintain a robust economic growth in spite of the global economic recession that took place in 2009.In this present paper, I would like to discuss the aforesaid position in relation to the present fiscal policy and standing of our nation. India is currently reviewing its fiscal rules framework with a view to inform the design of a successor arrangement. After a decade of large and intractable fiscal deficits, India adopted a rules-based fiscal framework, the Fiscal Responsibility and Budget Management Act (FRBMA), in 2003. The FRBMAs stated objective is to ensure inter-generational equity in fiscal management and the fiscal sustainability necessary for long-term macro-economic stability. Indias states were given incentives by the Twelfth Finance Commission (TFC) to implement their own fiscal responsibility laws (FRLs) in the form of conditional debt restructuring and interest rate relief. With the FRBMA and FRLs only setting out targets until March 2009, the Thirteenth Finance Commission is currently reviewing Indias fiscal rules framework. In an economy, Fiscal policy occupies one of the most important positions along with the monetary policy. It controls and delineates the entire array of public expenses and public expenditure. In this project, I would talk about the present Indian fiscal position in regard to fiscal deficit measured by various economic indicators. Secondly, I have discussed about the Fiscal Responsibility and Budget Management Act of 2003 and the prevailing fiscal position before and after the FRBMA era. I only focused on the Central expenditure incurred by the Union Government, while at times; parameters regarding state fiscal position have also been stated. Thirdly, I have listed and described the Long term fiscal policy challenges. Fourthly, I elaborated on the Global Economic Crisis and its impact of the Indian economy, Indian fiscal policy in specific. I have tried to suggest some probable measures and outlooks that should be taken in order to deal with this crisis. In the conclusion, I have tri ed to sum up the general position of Indian fiscal policy and have tried to list some specific suggestion for its improvement. Revenue Allocation:- Revenue allocation is the distribution of revenue, or total income, through a business, corporate or government structure. It often involves a complex process of determining how and where to funnel revenues in order to best maintain the viability and operating structure of an organisation. I'm going to create a hypothetical company to base an example around. My company is in the pet services industry, and I manage a group of devoted professionals that includes animal groomers, nutritionists, trainers, and why not animal whisperers and psychologists. Of course, each of these management ventures is going to make me a nice amount of money. What I do with that money is a matter of revenue allocation. It's my responsibility to figure out how to best distribute my revenues across all areas of my business real estate, salaries, marketing, purchases, my own personal income over a set period of time. Do I fund all my branches equally? Do I focus on an underperforming branch in hopes that I can stimulate new business? These are the questions I'd have to ask myself. Moving on, the main issue with revenue allocation is that it's not an exact science and can be a source of conflict. Money is a hot-button topic after all, and you'll rarely find two people who can agree on how it should be distributed. Additionally, there are many documented instances of people deliberately mishandling revenues, and many tales of financial corruption contain an element of irresponsible revenue allocation. If you're interested in reading up on a real-world case of revenue allocationgone terribly awry, then