In India, there are extreme inequalities of income and wealth and a majority of population live below the poverty line. How can budgetary policy help in solving this problem?  (6 marks)

Distribution of income is indeed highly unequal in India. This has lead to Economic Divide where the rich get richer and the poor get poorer. The benefits of the increased output/income in the country is not accruing to the poorer section of the country. The government through it's budgetary policy can change taxes and subsidies. It can charge higher taxes on the rich people and prove subsidies to the poor people in the form of subsidised food, employment opportunities, etc.