1. MONETARY POLICY

2. MEANING
Monetary policy is an instrument which effect the credit flow in an economy.
The variation effect the demand & supply of credit in an economy, and the level or nature of economic activities.

3. Objective Stability in price level Economic development
Arrangement of full employment
Expansion of credit facility
Equality & Justice
Stability in exchange rate

4. INSTRUMENTS GENERAL (QUANTITATIVE) Methods
SELECTIVE (QUALITATIVE) Methods

5. GENERAL (QUANTITATIVE) Methods
Meaning:-
These methods help in credit control in the economy.
Affect total quantity of the credit.

6. Types Bank rate policy Open market policy Cash reserve ratio
Statuary reserve ratio

7. Bank Rate policy
Traditional approach:- Bank rate means on which central bank discounts and rediscount the eligible bills.
Today’s approach:- Bank rate means the minimum rate on which central bank provides financial accommodation to commercial bank in the discharge of its function as the lender of the last resort.

8. Effect of Bank rate Increase in bank rate Decrease in bank rate
Increase in bank rate charge by the central bank on its advance to commercial bank.
Commercial bank increase the rate of interest on their loan.
Demand for the credits and loan decrease.
Flow of the money decrease in the economy
Use in inflationary situation
Decrease in bank rate charge by the central bank on its advance to commercial bank.
Commercial bank decrease the rate of interest on their loan.
Demand for the credits and loan increase.
Flow of the money increase in the economy
Use in depression situation

9. Open Market operation
Its include the sales and purchase by the central bank of ….
Assets
Foreign exchange
Gold
Government securities
Company securities

10. Use of Open Market operation
In the inflationary situation
In the depressionary situation
Central bank sell out the securities to commercial bank and control money supply.
Central bank decrease the money supply.
Central bank purchase the securities from the commercial bank.
Central bank increase the money supply.

11. Cash Reserve Ratio
Commercial bank has to keep a certain percentage of its total deposits with central bank.
It control the cash flow in economy.
It keeps changing in monetary policy framed by central bank of a country.

12. STATUARY LIQUIDITY RATIO
Commercial bank is to keep a certain percentage of its total deposits as liquid asset.
It control the cash flow in economy.
It keeps changing in monetary policy framed by central bank of a country.

13. Use of C.R.R. & S.L.R In Inflationary situation
In Depressionary situation
Increased the percentage of cash reserve ratio and Statutory liquidity ratio
It reduces the supply of money in an economy
Decreased the percentage of cash reserve ratio and Statutory liquidity ratio
It increases the supply of money in an economy

14. Function of credit regulation the quantitative methods
For expansion of credit
For contraction of credit
Reduce the bank rate
Purchase of securities
Reduce the C.R.R.
Reduce the S.L.R.
Increase the bank rate
sales of securities
Increase the C.R.R.
Increase the S.L.R.

15. Specific or qualitative Credit Control
Adopt for expansion and contraction of credit to attain specific objective.

16. Methods of qualitative credit control
Credit rationing
Change in margin
Direct action

17. FISCAL POLICY

18. MEANING
Measures related to taxation & public expenditure are normally called fiscal measures and the policy concerning them as known as FISCAL POLICY.
In short, fiscal policy or budgetary policy consists of steps & measures which the government in order to fulfill the aims of economic policy.

19. Objective of fiscal policy
To achieve and maintain the full employment in the economy.
Attain Economic growth in long term.
Achieve economic stability.
To guide the allocation of existing resources into socially necessary lines of development.

20. INSTRUMENTS
PUBLIC EXPENDITURE
TAXATION
PUBLIC DEBT

21. PUBLIC EXPENDITURE Meaning:- Government spending Productive
Non-Productive

22. Types PUMP PRIMING COMPENSATORY SPENDING
The government spending which will have the effect of setting the economy going on the way towards full utilization of resources.
Example:- Gov Expenditure, building infrastructure etc.
The government spending which will have the effect of setting the social objective and payment of interest on debt.
Example:- schools, hospitals, pensions, relief payments etc.

23. EFFECT
Gov. exp should be reduced in inflation and increased during depressions in case of a deflationary situation in an economy. Therefore it act as a balancing factor between saving & investment

24. TAXATION Meaning:- Source of Revenue Helps Gov. to do there exp.
Generated from public

25. Types of Tax Direct Tax Indirect tax
Direct tax are those tax which a person pay to government directly for himself and can not enforce on other.
For example:- income tax, wealth tax etc.
Indirect tax are those tax which a person can on others.
For example:- service tax, sales tax.

26. Effect of Taxation Reduction in taxation Increase in Taxation
Increase the disposable income.
Increase the consumption power.
Use for offsetting the deflation forces
Decrease the disposable income.
Decrease the consumption power.
Use for offsetting the inflation forces.

27. Public Debt
When Gov. exp. are more then Gov. revenue Government take Public Debt.
Deficit financing = Gov. exp. – Gov. revenue.
Government take the public debt to fulfill the gap between the Gov exp and the revenue.

28. Types of public debt Borrowing from public
Borrowing from commercial bank
Issue of new currency

29. Effect Public Debt effect the inflation and deflation
If government take the borrowing from public and banks it will decrease the cash flow in the market and increase the deflation.
If there is depression in economy government repay the debt the public which increase the cash flow of the money in market.

30. Some facts and figures Monetary policy is been framed by……………
Fiscal policy is been framed by………………
Present governor of R.B.I……………………
Present Finance minister of India……………….
Current S.L.R…………………….
Current C.R.R…………………..
Monetary policy in India framed under which act……………………….

31. THANK YOU