Elaborate the objective of ‘reallocation of resources’ in the gove

1.	Elaborate the objective of ‘reallocation of resources’ in the government budget.
Answer» Reallocation of resources - Government through its budgetary policies tries to reallocate resources to ensure fulfillment of various socio-economic objectives. The government may influence the allocation of resources through: (a) Taxation policy - Heavy taxes may be imposed on harmful products to discourage their production and subsidies may be provided on the production of socially useful products to encourage their production. (b) Government may directly undertake production of certain goods and services in the areas where private sector may not be willing to participate in production activities.

Elaborate the objective of ‘reallocation of resources’ in the government budget.

Answer»

Reallocation of resources - Government through its budgetary policies tries to reallocate resources to ensure fulfillment of various socio-economic objectives. The government may influence the allocation of resources through:

(a) Taxation policy - Heavy taxes may be imposed on harmful products to discourage their production and subsidies may be provided on the production of socially useful products to encourage their production.

(b) Government may directly undertake production of certain goods and services in the areas where private sector may not be willing to participate in production activities.

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