A country’s monetary and fiscal policies influence its economic outlook. In India, the Monetary Policy is drafted by the central bank (RBI). Through monetary policy, the RBI controls the cost of borrowing, liquidity conditions, inflation, etc. This has the power to shape the trajectory of the economy and ensure that prices remain stable in the medium to long term.

 

On the other hand, the Fiscal Policy is drafted by the government and consists of the use of government revenue (taxes, dividends, disinvestments, etc.) and expenditure (welfare schemes, projects, etc.) to grow the economy. Often, when the government changes tax rates demand in the economy also changes in proportion. Fiscal Policy influences the demand, supply, and employment levels in the economy.

 

The monetary and fiscal policy are the two most important influencers in a country’s economy. They dictate what the medium to long term future holds for the country.

 

Recent Posts

Financial Planning for Newlyweds

Posted on November 25, 2020

High Tide Continues

Posted on November 21, 2020

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Open chat