WELCOME TO

FISCAL POLICY
Uzma Siddiqui (PUCIT)

Fiscal Policy

Fiscal Policy
The use of government spending and
taxation to promote economy

According to Semuelson:
Fiscal policy is concerned with all those
activities which are adopted by the
government to collect revenues and
make the expenditures so that economic
stability could be attained without
inflation and deflation

Budget:
The budget is a financial statement
showing the estimate of receipts and
expenditures
Budget is an anti-inflationary as the
objective is to check inflation and sustain
high growth of economy.

Budget

Revenue
Budget

Revenue
Receipt

Capital
Budget

Revenue
Expenditure

Capital
Receipt

Capital
Expenditure

ACTIVITIES OF THE STATE

Collection of Revenues
Spending of Revenues

ACTIVITIES OF THE STATE ( cont.)

Collection of Revenues
Taxes
Fees
Fines
Loan
Internal Loans
External Loans

ACTIVITIES OF THE STATE ( cont.)

Spending of Revenues

Productive
Non-Productive

 Productive
Productive

Dams
Roads
Mills
Bridges
Railways
Electricity Plants
Engineering unit

Non-

Health
Education
Defense
Justice
Social Security
Embassies
Politics

Types of Fiscal policy

Neutral Fiscal policy

Expansionary Fiscal policy
Contractionary Fiscal policy

Neutral Fiscal policy

G=T (Govt. spending = Tax Revenue)

neutral effect on economy

Expansionary Fiscal policy

Expansionary fiscal policy means that the government is increasing government spending
and reducing taxation in an attempt to increase the money available in the economy.
G>T
T

Contractionary Fiscal policy

Contractionary fiscal policy is when the government increases taxation and reduces
government spending in an attempt to reduce money in the economy and as a result
inflation.
G<T
T

Budget Deficit:
A governments budget deficit is the difference
between what it spends (G) and what it collects in
taxes (T) in a given period:

B u d g e t d e fic it G T

Budget Surplus:
The amount by which a government income
exceeds its spending
Effective tool to achieve the objective of price
stability

Objectives

To Achieve Equal Distribution of Wealth

Increase in Savings
Degree of inflation
To Achieve Economic Stability
Price stability

Limitation of Fiscal Policy:

Lack of Elasticity
Illiteracy
Limited Sector
inadequate Statistics
Delay in decision

Islamic Point of view:

Equally Distribution Of Resources
Collect Zakat from rich

Islamic Sources of Revenue

Zakat
Ushar
Fitrana
Sadqat
Khaiarat

Where are we

now?

Recent economic issues in Pakistan

WE ARE DIFFERENT A LOT OF SPACE TO COVER (

Girl in search of water

Man on the moon

WE ARE DIFFERENT A LOT OF SPACE TO COVER (2

Child labour scavenging food

Survival
or
Growth

Suggestions and
Recommendations

Road map
Maintain fiscal
prudence by
keeping fiscal
deficit low
Keeping
inflation under
control

growth
momentum

Improving
social
indicators

Thank
You