What is vertical and horizontal fiscal imbalance?
A vertical fiscal imbalance occurs when revenues do not match expenditures for different government levels. A horizontal fiscal imbalance occurs when revenues do not match expenditures for different regions of the country.
What is the other name for fiscal policy?
Deficit financing is done so that overall government expenditures matches with overall government income. Deficit financing is also the other name of fiscal policy. Correct answer is option A. Was this answer helpful?
What do you mean by fiscal imbalance what steps have been taken by the government of India to correct the fiscal imbalances?
Fiscal imbalance takes place due to excess of government expenditure over revenue. To overcome the deficit, government resort to borrowings. This further aggravates the situation of debt servicing. Therefore there is a need to correct and overcome the fiscal imbalance.
What is fiscal imbalance explain with examples?
Fiscal imbalance is a mismatch in the revenue powers and expenditure responsibilities of a government. In the literature on fiscal federalism, two types of fiscal imbalances are measured: Vertical Fiscal Imbalance and Horizontal Fiscal Imbalance.
What is vertical fiscal imbalance in India?
Vertical fiscal imbalance (VFI) is defined as the share of sub-national governments’ own spending not financed through own revenues.
What is expansionary fiscal policy?
Expansionary fiscal policy—an increase in government spending, a decrease in tax revenue, or a combination of the two—is expected to spur economic activity, whereas contractionary fiscal policy—a decrease in government spending, an increase in tax revenue, or a combination of the two—is expected to slow economic …
What is fiscal feudalism?
fiscal feudalism, feudalism kept alive for no other reason than to bring in. revenue to the government. In contrast with the major gaps in its other source material, the accounts of. the receiver-generals of the Court of Wards are virtually complete for the whole. period of its existence.
What is vertical and horizontal imbalance India?
Vertical Fiscal Imbalance:- It is the fiscal imbalance measured between the two levels of government (Center and States or Provinces). Horizontal Fiscal imbalance:- It is the fiscal imbalance measured between the governments at the same level. For e.g. local and state governments of two states.
What is vertical fiscal gap?
Vertical fiscal imbalance refers to surplus resources relative to responsibilities with one tier of government, usually the Federal Government and corresponding deficiencies of resources relative to responsibilities at the lower tiers government, i.e., states and local governments.