Q. 155.0( 4 Votes )

Elaborate the obj

Answer :

With the help of budgetary polices, Government aims to reallocate resources keeping in mind the economic (profit maximization) and social (public welfare) priorities of the country. Government can impact allocation of resources by:

(i) Tax concessions or subsidies:

To increase investment, government can give concession on tax, subsidies etc. to the producers. For example, Government discourages the production of harmful consumption goods (like liquor, cigarettes etc.) by imposing heavy taxes and encourages the use of ‘Khaki products’ by providing subsidies.

(ii) Directly producing goods and services:

If private sector does not take interest, government can directly undertake the production.

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