Phase IFoundation
Background
Overview
Fiscal policy decisions, especially regarding subsidies and price controls in critical sectors like energy, have significant implications for government finances, inflation, social welfare, and the health of public sector undertakings. These are recurring themes in UPSC exams.
Fiscal policy refers to the government's use of spending and taxation to influence the economy. In the context of energy, it often involves direct or indirect subsidies, or price stabilization mechanisms, to protect consumers from global price volatility and manage inflation.