Fiscal Policy refers to the use of government spending and tax policies to affect macroeconomic conditions, particularly employment, inflation, and macroeconomic variables such as aggregate demand for goods and services. These actions are primarily intended to stabilize the economy. To accomplish these macroeconomic objectives, fiscal and monetary policy actions are usually combined.

Everything relating to the government’s income and expenditures is covered under Fiscal Policy. The most significant aspects of the economy are addressed through fiscal policy measures, which range from budgeting to taxation. The three components of fiscal policy in India are as follows. Public Debt, Government Expenditures, and Government Revenues.