Counter-Cyclical Fiscal Policy

  • With the country going through a pandemic-driven slowdown, the Economic Survey 2020-21 has pushed for the adoption of counter-cyclical fiscal policy to enable growth.

About Counter-Cyclical Fiscal Policy

  • It refers to a strategy by the government to counter boom or recession through fiscal measures.
  • It works against the ongoing boom or recession trend; thus, trying to stabilize the economy. Understandably, countercyclical fiscal policy works in two different directions during these two phases.
  • Thus, in a recession or slowdown, the government increases expenditure and reduces taxes to create a demand that can drive an economic boom.
  • The basic idea of this measure ....
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