Fiscal policy has been one of the major instruments for achieving economic stability in the developed countries since 1930. In the developing countries, fiscal policy aims not only at economic stability but also at rapid economic growth.This note is divided into two sections. Section I reviews the role of fiscal policy in developing countries. Section II deals with the tools of fiscal policy and their effectiveness in the Indian context. The period covered is from 1955-56 to 1975-76. Special attention has been paid to the Union Budget proposals for the yeanrs 1976-77 and 1977-78.