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Power Point Presentation ON Monetary and Fiscal Policy of Rbi

The document discusses monetary and fiscal policy in India. It defines monetary policy as the Reserve Bank of India's policy to control money supply, interest rates, and inflation. The objectives are to reduce inflation and deficits. Instruments include interest rates, reserve requirements, open market operations, and currency issuance. Fiscal policy uses government spending and taxation to influence the economy. Objectives are economic growth, employment, and development. Instruments are spending, taxation, debt, and subsidies. Monetary policy controls money and credit, while fiscal policy is a broader government tool.

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Arvind Kumar Agrawal
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53 views14 pages

Power Point Presentation ON Monetary and Fiscal Policy of Rbi

The document discusses monetary and fiscal policy in India. It defines monetary policy as the Reserve Bank of India's policy to control money supply, interest rates, and inflation. The objectives are to reduce inflation and deficits. Instruments include interest rates, reserve requirements, open market operations, and currency issuance. Fiscal policy uses government spending and taxation to influence the economy. Objectives are economic growth, employment, and development. Instruments are spending, taxation, debt, and subsidies. Monetary policy controls money and credit, while fiscal policy is a broader government tool.

Uploaded by

Arvind Kumar Agrawal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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POWER POINT PRESENTATION

ON
MONETARY AND FISCAL POLICY OF RBI
MONETARY POLICY

AN INTRODUCTION -
AN INTRODUCTION-
 Monetary policy is a policy statement through which the central bank
(RBI) targets key set of indicators to ensure price stability in the
market in the economy.
 These indicators include money supply interest rate inflation.
WHAT IS THE MONETARY POLICY ?
 The Monetary and Credit Policy is the policy statement, traditionally
announced twice a year, through which the Reserve Bank of India
seeks to ensure price stability for the economy.
 These factors include - money supply, interest rates and the
inflation. In banking and economic terms money supply is referred to
as M3 - which indicates the level (stock) of legal currency in the
economy.
 Besides, the RBI also announces norms for the banking and financial
sector and the institutions which are governed by it.
OBJESTIVES OF MONETARY POLICY
 To reduce inflation by contracting money supply
 To print new currency with a view to reduce the trade deficit
 Boosting export to reduce huge external payment deficit
INSTRUMENTS OF MONETARY POLICY
 Bank rate of interest
 Cash reserve ratio
 Statutory liquidity ratio
 Open market operations
 Margin requirements
 Deficit financing
 Issue of new currency
 Credit control
FISCAL POLICY
AN INTRODUCTION-
AN INTRODUCTION-
 Fiscal policy is the policy of government concerned with
raising of revenue through taxation and other mean and
deciding on the level and pattern of expenditure
WHAT IS THE FISCAL POLICY ?
 Fiscal policy is the use of government expenditure and revenue
collection (taxation) to influence the economy
 Fiscal policy can be contrasted with the other main type of macro
economics policy, monetary policy, which attempts to stabilize the
economy by controlling interest rates and the money supply. The two
main instruments of fiscal policy are government expenditure and
taxation. Changes in the level and composition of taxation and
government spending can impact on the following variables in the
economy
 Aggregate demand and the level of economic activity
 The pattern of resource allocation;
 The distribution of income
OBJECTIVE OF FISCAL POLICY
 To accelerate rate of investment
 Achieving rapid economic development
 Achieving full employment
 Promoting foreign trade
 Establishing welfare states
 Also called budgetary policy
INSTRUMENT OF FISCAL POLICY
 Reduction of govt. Expenditure
 Increase in taxation
 Imposition of new taxes
 Wage control
 Rationing
 Public debt
 Increase in savings
 Maintaining surplus budget
OTHER MEASURES
 Increase in Imports of Raw materials
 Decrease in Exports
 Increase in Productivity
 Provision of Subsidies
 Use of Latest Technology
 Rational Industrial Policy
HOW IS THE MONETARY POLICY DIFFERENT FROM THE FISCAL
POLICY?
 The monetary policy regulates the supply of money and the cost and
availability of credit in the economy. It deals with both the lending
and borrowing rates of interest for commercial banks.
 The monetary policy aims to maintain price stability, full employment
and economic growth.
 The monetary policy is different from fiscal policy as the former
brings about a change in the economy by changing money supply and
interest rate, whereas fiscal policy is a broader tool with the
government.
 The fiscal policy can be used to overcome recession and control
inflation. It may be defined as a deliberate change in government
revenue and expenditure to influence the level of national output and
prices.

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