ABSTRACT
In discussing the basic tenets of fiscal policy, the chapter starts with the process and institutional set-up and then goes into the annual budget preparation process and institutional setting for Implementation. It discusses the issue of taxation in great detail and delves into the basic tenets of progressive versus libertarian thinking. The chapter also delves into issues like the Laffer curve, tax compliance or the widening of the tax base. In discussing fiscal consolidation and sustainability, the chapter probes into public expenditure, fiscal deficit, fiscal multiplier and crowding out. The chapter also takes up the result of the Ricardian Equivalence and its applicability in an emerging market economy.
