Which one of the following statements appropriately describes the “fiscal stimulus”?

Answer: (b) It is an intense affirmative action of the Government to boost economic activity in the country

A fiscal stimulus is a deliberate step by the Government, through tax relief and higher public spending, to revive demand and economic activity, usually in a slowdown. Option (b) says this in general terms. The other options describe narrow or unrelated policies.

• ✓ (b) Fiscal tools are taxation and expenditure. India's packages of December 2008 and January 2009 cut taxes to lift demand and raised spending on public projects to create jobs and assets. Both aim to boost overall economic activity.
• ✗ (a) A stimulus works mainly on demand. It is not limited to investment in manufacturing to meet a demand surge caused by rapid growth, and it is typically used when growth is slowing.
• ✗ (c) Pushing financial institutions to lend to agriculture is a credit or sectoral measure aimed at food production and prices. It is not a fiscal stimulus.
• ✗ (d) Financial inclusion means extending banking and credit access to people. It is a separate policy goal, not what a fiscal stimulus means.

Remember · Fiscal stimulus means the Government raising spending or cutting taxes to revive demand and growth, as in India's December 2008 and January 2009 packages.

Question: UPSC Civil Services (Preliminary) 2011, General Studies paper. Explanation: Minimalist IAS, checked 25 Oct 2026 (how we verify). · Report an error