Question

How can a government budget help in reducing inequalities of income? Explain.

Answer 1

1. Budget of a government shows its comprehensive exercise on the taxation and subsidies.

2. A government uses fiscal instruments of taxation and subsidies with a view of improving the distribution of income and wealth in the economy.

3. A government reduces the inequality in the distribution of income and wealth by imposing taxes on the rich and giving subsidies to the poor, or spending more on *** of the poor.

4. It will reduce income of the rich and raises the living standard of the poor, thus, leads to equitable distribution of income.

5. Expenditure on special anti ** and employment schemes will be increased to bring more people above ** line.

6. Public distribution system should be inferred so that only the poor could get foodgrains and other essential items at subsidised prices.

7. Equitable distribution of income and wealth is a sign of social justice which is as the principal objective of any *** state in India.