 MACROECONOMIC POLICY CHANGES FROM TIME TO TIME,IMPACT BUSINSS CONDITIONS MORE DIRECTLY.  ITS OBJECTIVES IS TO STIMULATE OR MAINTAIN GROWTH,ACHIEVE ECONOMIC STABILITY,INCREASE EMPLOYMENT AND MAKE THE ECONOMY MORE COMPETITIVE.  THE COUNTRIES WHICH BORROW HEAVILY FROM MULTI LATERAL INSTITUTIONS LIKE IMF AND WORLD BANK OFTEN HAVE TO ADJUST THEIR POLICY STRUCTURE TO THE LENDING CRITERIA AND CONDITION IMPOSED BY THESE INSTITUTIONS.

1. MONETARY POLICY 2. FISCAL POLICY 3. INDUSTRIAL POLICY 4. TRADE POLICY

 IT IS FORMULATED AND EXECUTED BY RESERVE BANK OF INDIA.  IT REFERS TO THAT POLICY BY WHICH CENTRAL BANK OF COUNTRY CONTROLS: 1. SUPPLY OF MONEY 2. COST OF MONEY OR RATE OF INTEREST WITH A VIEW TO ACHIEVE PARTICULAR OBJECTIVES.

ACCORDING TO D.C ROWAN “THE MONETARY POLICY IS DEFINED AS DISCRETIONARY ACT UNDERTAKEN BY THE AUTHORITIES DESIGNED TO INFLUENCE : THE SUPPLY OF MONEY RATE OF INTEREST THE AVAILABILITY OF MONEY FOR ACHIEVING SPECIFIC OBJECTIVES.”

MAIN OBJECTIVE OF THIS POLICY IS : TO ACHIEVE PRICE STABILITY, FINANCIAL STABILITY ADEQUATE STABILITY OF CREDIT FOR GROWTH.

 IT IS RELATED TO INCOME AND EXPENDITURE OF GOVERNMENT.  IT REFERS TO BUDGETARY POLICY OF GOVERNMENT.  IT IS OF GREAT IMPORTANCE FOR BOTH DEVELOPED AS WELL AS DEVELOPING COUNTRIES.  IT IS AN INSTRUMENT FOR PROMOTING ECONOMIC GROWTH,EMPLOYMENT, SOCIAL WELFARE ETC.  IT HAVE A GREAT BEARING ON ECONOMIC EQUALITY AND ECONOMIC GROWTH OF THE COUNTRY.

 ACCORDING TO ARTHUS SMITHIES,”FISCAL POLICY IS A POLICY UNDER WHICH THE GOVERNMENT USES ITS EXPENDITURE AND REVENUE PROGRAMMES TO PRODUCE DESIRABLE EFFECT AND AVOID UNDESIRABLE EFFECTS ON THE NATIONAL INCOME,PRODUCTION AND EMPLOYMENT”.

 IT MEANS THOSE PRINCIPLES AND ACTIVITIES WHICH ARE PURSUED AND PERFORMED TO HELP INDUSTRIALISE A COUNTRY.  IT INCLUDES RULES, REGULATION, PRINCIPLES AND PROCEDURES TO REGULATE THE INDUSTRIAL UNDERTAKING OF A COUNTRY IN THE DESIRED DIRECTION TO ACHIEVE BROADER OBJECTIVES LIKE:

INDUSTRIAL DEVELOPMENT ECONOMIC DEVELOPMENT BALANCED REGIONAL DEVELOPMENT INCREASE IN EMPLOYMENT ETC

“INDUSTRIAL POLICY MEANS POLICIES AND PROCEDURES LAID DOWN BY GOVERNMENT FOR REGULATING, DEVELOPING AND CONTROLLING INDUSTRIAL UNDERTAKINGS IN THE COUNTRY.” IT DESCRIBES THE ROLE OF PUBLIC, PRIVATE, JOINT AND COPERATIVE SECTOR IN THE DEVELOPMENT OF INDUSTRIES. IT INCLUDES POLICY REGARDING LABOUR AND CAPITAL,COTTAGE AND SMALL SCALE INDUSTRIES, FOREIGN CAPITAL AND PROTECTION ETC. IT IS FULLY CONTROLLED AND REGULATED BY THE GOVERNMENT.

 BASIC OBJECTIVE OF TRADE POLICY IS TO PROMOTE EXPORTS,REGULATE IMPORTS,IMPROVE TERMS OF TRADE,ENHANCE EXPORT COMPETITIVENESS AND CREATE CONDITIONS OF EXPORT -LED GROWTH.

THIS POLICY IS OF UTMOST IMPORTANCE TO EXPORTERS AS IT HAS A MAJOR IMPACT ON TRANSACTION COSTS AND EFFICIENCY OF TRADE TRANSACTIONS