This PPT provides basic and clear information about monetary policy and fiscal policy in India

1. Kamal Ega, MBA

2. Agenda
 Introduction
 Monetary policy
Role & Objectives
Instruments
Inflation
 Fiscal Policy
Role & Objectives
Budget-> Revenue and Expenditure
Highlights of Budget 2015

3. Introduction

4. Monetary Policy
A programme of action undertaken by the
monetary authorities – The central bank (RBI)
to control and regulate the SUPPLY OF MONEY
with the public and Flow Of Credit with the
view of achieving MACROECONOMIC goals

6. Tools of Monetary Policy in India
 Bank Rates
 Repo Rate and Reverse Repo Rate
 CRR
 SLR

7. Bank Rate
 Bank Rate is the rate at which RBI allows finance to
commercial banks.
 Any upward revision in Bank Rate by central bank is
an indication that commercial banks should also
increase deposit rates as well as Prime Lending Rates.
 This any revision in the Bank rate influence interest on
your deposits and also an increase or decrease in your
EMI.
 At present Bank Rate: 8.5%

8. Repo Rate and Reverse Repo Rate
 Repo Rate is the rate at which RBI lends money to
commercial banks.
 At present Repo Rate: 7.5%
 Reverse Repo Rate is the rate at which RBI borrows
money from the commercial banks.
 At present Reverse Repo Rate : 6.5%

9. Cash Reserve Ratio
 Cash Reserve Ratio is the amount of funds that the
banks have to keep with the RBI.
 The CRR is basically to secure solvency of the
banks.
 The present CRR: 4%

10. Statutory Liquidity Ratio
 Statutory Liquidity Ratio (SLR) is the Indian
government term for reserve requirement that the
commercial banks in India require to maintain in the
form of gold, cash or government approved securities
before providing credit to the customers.
 SLR is maintained in order to control the expansion of
bank credit.
 The present SLR: 21.5%

11. Inflation
 Inflation is state in which the value of money
falling and the prices are rising.

12. Fiscal Policy
 The word Fisc means ‘state treasury’ and fiscal policy
refers to policy concerning the use of state treasury or
the govt. finance to achieve the macroeconomic goals.
 The fiscal policy is concerned with the raising of
government revenue and incurring of government
expenditure.

13. Objectives of Fiscal Policy
 Development by effective mobilization of
resources
 Effective allocation of Financial Resources
 Reduction in inequalities of Income and Wealth
 Price stability and Control of Inflation
 Employment Generation
 Capital Formation
 Development of Infrastructure

14. Budget
 An estimation of the revenue and expenses over a
specified future period of time
 Budget refers a financial statement which shows
anticipated revenue and anticipated expenditure in an
accounting year

16. Highlights of Budget 2015
 Corporate tax to be reduced from 30% to 25% over the
next four years
 Rationalization and removal of various tax exemptions
 GST to come into force from April 1, 2016
 Service tax increased from 12% to 16%
 Income tax on royalty/fees for technical sevices cut
from 25% to 10%
 FMC to be merged with SEBI