Question

How can budgetary policy be used to reduce inequalities of income? Explain with your opinions.

Answer 1

Answer - The budgetary policies of the government can be used to reduce the income inequalities. This can be done through the process of income distribution.

The government should follow the progressive tax system. If already followed , the tax rate on higher income slab can be increased. This will ensure lesser inequality.

By giving subsidies to poor , the government can give them the chance to increase their real income , improve standards of living and have opportunity of employment. These steps are part of budgetary policy and will help to reduce the income inequality.