Monetary Policy And Fiscal Policy – Indian Economy – Free PDF Download

MONETARY POLICY

DEFINITION:

• It is a macroeconomic policy designed by the central bank of the country to manage money supply and interest rates.
• It helps in shaping variables such as:

1. INFLATION
2. CONSUMPTION
3. SAVINGS
4. INVESTMENT
5. CAPITAL FORMATION

FISCAL POLICY

• It is a set of government decisions regarding taxation, expenditure, subsidies and other financial operations.
• Using fiscal policy, Govt influences the savings, investment and consumption in the economy, to accomplish some national goals such as income redistribution, socio-economic welfare, economic development and inclusive growth.
• It can help with:

1. Full employment
2. To fight inflation
3. To boost Economic growth
4. To boost inclusive growth
5. To boost regionally balanced growth
6. Exchange rate stability

Q) ‘Fiscal Policy’ means ( UPSC IES 2018)

1. Balancing revenue collection and expenditure
2. Establishing equilibrium between demand and supply of goods and services
3. Use of taxation, public borrowing and public expenditure of government for purposes of stabilisation or development
4. Deficiency as an instrument of growth

Indian Economy | Free PDF

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