Answer to Question #216002 in Economics for Palwikhan

Question

Question 1: The strategies like reduction in taxes and government budget deficit will increase the investment substantially then why it is challenging to implement both strategies at same time? Which strategy should be chosen in order to have more investment incentives? Elaborate

Answer 1

The state acts as a business entity, generates investment resources and in this capacity becomes a direct participant in the investment process.

State regulation of investment processes is understood as legislatively defined forms and methods of an administrative and economic nature, used by governing bodies of all levels for the implementation of investment policy that ensures the state tasks of the socio-economic development of the country and its regions,

increasing the efficiency of investments, ensuring safe conditions for investments in various investment objects.

State regulation of investment processes is expressed in the direct management of public investments: a tax system with differentiation of tax rates and tax benefits, financial assistance in the form of grants, subsidies, budget loans, concessional loans, in financial and credit policy, pricing, issuance of securities, depreciation politics.