Big Push Theory to Reduce Fiscal Deficit


Authors : Diptarghya Bhattacharjee

Volume/Issue : Volume 5 - 2020, Issue 4 - April

Google Scholar : http://bitly.ws/9nMw

Scribd : https://bit.ly/35F4cNi

Fiscal deficit is very harmful for an economy, so government always tries to reduce the massive deficit and the one process is to earn high tax revenue and other process is to less expenditure but in developing or underdeveloped country, it is very tough to cut the expenditure but government can earn more tax revenue from industries if the industries can earn more profit. Here the big push model will be applied. This model asserts that the big push will be imposed in a country and the investment on modern sector will grow up and they will be profitable and government can earn more tax by increasing tax base not raising the tax rate and due to more modern sector the unemployment problem will be reduced and as a result the expenditure will be lowered and fiscal deficit will be reduced for long run and here I will consider three equilibria and one is bad, 2 nd is good and last is very good and after modernising industries the equilibrium will shift consecutively and fiscal deficit will reduce.

Keywords : Fiscal Deficit; Big Push; Tax Revenue; Modern Sector.

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