Which of the following is not the main objective of “Fiscal Policy of India” ?
To increase liquidity in economy
Fiscal policy is the government’s policy on taxation, public expenditure and public borrowing, framed through the Union Budget.
Its main objectives in India include promoting price stability (by controlling excess demand through taxes and spending), reducing inequality of income and wealth (through progressive taxation and welfare spending) and generating employment (through public investment).
Regulating liquidity, that is, the supply of money and credit in the economy, is the job of monetary policy conducted by the Reserve Bank of India through tools such as CRR, SLR, repo rate and open market operations.
Therefore, increasing liquidity is not a main objective of fiscal policy.
Hence, the answer is To increase liquidity in economy.
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(v) Reserve requirements
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