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Functions of Modern State - Fiscal Economics | Study Material, Lecturing Notes, Assignment, Reference, Wiki description explanation, brief detail |

Chapter: 12th Economics : Fiscal Economics

Functions of Modern State

The modern state is a welfare state and not just police state.

Functions of Modern State

The modern state is a welfare state and not just police state. The state assumes greater roles by creating economic and social overheads, ensuring stability both internally and externally, conserving resources for sustainable development and so on.


(i) Defence

The primary function of the Government is to protect the people from external aggression and internal disorder. The government has to maintain adequate police and military forces and render protective services.

(ii) Judiciary:

Rendering justice and settlement of disputes are the concern of the government. It should provide adequate judicial structure to render justice to all classes of citizens.

(iii) Enterprises

The regulation and control of private enterprise fall under the purview of the modern State. Ownership of certain enterprises and operating them successfully are the responsibilities of the government.

(iv) Social Welfare

It is the duty of the state to make provisions for education, social security, social insurance, health and sanitation for the betterment of the people in the country.

(v) Infrastructure

Modern States have to build the base for the economic development of the country by creating social and economic infrastructure.

(vi) Macro-economic policy

The Government has to administer fiscal policy and monetary policy to achieve macro-economic goals.

(vii) Social Justice

During the process of growth of an economy, certain sections of the society gain at the cost of others. The Government needs to intervene with fiscal measures to redistribute income.

(viii) Control of Monopoly

Concentration of economic power is another evil to be corrected by the Government. So, the state intervenes through control of monopolies and restrictive trade practices to curb concentration of economic power.

In fine, the state can play three kinds of roles.

i) As a producer of goods and services.

ii) As a supplier of public goods and social goods.

iii) As a regulator of the system.


Tags : Fiscal Economics Fiscal Economics
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