RBI
•RBI was established on April 1,1935, in accordance with the provisions of the reserve bank of india,1934.•RBI governor is Dr. Subbarao.•Office- Mumbai.•Once privatized ,RBI became government owned bank in 1949.
WHAT IS RBI
"...to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage."
RBI CENTRAL BOARD
RBI governed by the central board of director.
• official director:One governor and 4 are deputy governor.• Non official director: ten Directors from various fields and one
government Official• Others: four Directors - one each from four
local boards• Functions : General superintendence and
direction of the Bank's affairs
OBJECTIVES
maintaining price stability ensuring adequate flow of credit to productive sectors. Monetary Authority:
� Issuer of Currency� Banker and Debt Manager to Government� Banker to Banks� Regulator of the Banking System� Manager of Foreign Exchange � Developmental Role Research, Data and Knowledge Sharing:
RBI APPROACH
They monitor and analyze the movement of a number of indicators .
Interest rates, inflation rate, money supply, credit, exchange rate, trade, capital flows and fiscal position, along with trends in output as we
develop our policy perspectives.
MAIN ACTIVITIES
Cash Reserve Ratio (CRR) Statutory Liquidity Ratio (SLR)� Refinance facilities � Open Market Operations (OMO) � Repo Reverse repo rate� Bank rate
MONETARY POLICY
MONETARY POLICY announced twice in the year first in April and second in October.
Monetary policy is a policy statement
through which the central bank(RBI)
targets key sector of indicators to
ensure price stability in the economy.
These indicators includes.
Money supply(m3)
Inflation
Interest rate
IMPACT OF MONETARY POLICY
MONEY SUPPLY IN THE
ECONOMY
INFLATION
JOBS AND WAGES
EXPORTERS AND
IMPORTERS
INTEREST RATE AND SAVING
GROWTH DURING THE LAST FISCAL YEAR
15.92 20.0915.43
4.11
24.422.85 26.5 24.216.23 18.34
Chart Title
Feb-10 Feb-11
FOOD INFLATION
TOTAL POPULATION OF INDA
DEPENDENCY ON AGRI.(OF TOTAL POPULA)
CONTRIBUTION IN GDP(AGRI)
FOOD INFLATION
110 CRORE 58.2% 14.2% 9.5%
2007-08 2008-09 2009-10 2010-11
16.4
15.7
14.614.2
AGRICULTURE SECTOR'S CONTRIBUTION IN GDP
AGRICULTURE SECTOR'S CONTRIBUTION IN GDP
EXTENT OF MONEY
• EXTENT OF MONEY
The central measures the extent of money and credit available in the economy using the indices like m0,m1,m2,m3.
Expansion of money policy
•Money supply in the economy will be increased by RBI through issue of currency, budgetary operations and borrowings by governments from foreign countries•Growth in money supply more than the growth in real national income. If money supply is exorbitantly more ill results in economy.
TOOLS OF THE MONETARY POLICY
OMO
CRR
REPO
SLR
BANK RATE
KEY RATE NOV 2ND 2010
JAN 25TH 2011
MAR 17TH 2011
CRR 6 6 6
REPO RATE 6.25 6.50 6.75
REVERSE REPO
5.25 5.50 5.75
BANK RATE 6 6 6
CRR AND INTEREST RATES PERCENTAGE PER ANNUM
FISCAL POLICYFiscal policy is the policy of government concerned
with raising of revenue through taxation and other means and deciding on the level and pattern of expenditure.
objectives1. To accelerate rate of investment.2. Achieving rapid economic development.3. Achieving full employment.4. Promoting foreign trade.5. Establishing welfare trade.
Fiscal policy operated through budget.
INSTRUMENT OF FISCAL POLICY
TAXATION
PUBLIC EXPENDITURE
.PUBLIC DEBT.
DIRECT TAX
PERSONAL INCOME TAX
CORPORATION TAX
INHERITANCE
WEALTH TAX
INDIRECT TAX
EXCISE DUTY
VAT
CUSTOMS DUTY
SALES TAX
PUBLIC EXPENDITURE
RISE IN PUBLIC EXPENDITURE WILL INCREASE THE STANDARD OF LIVING
PUBLIC EXPENDITURE IS DONE THROUGH BUDGET
THE GOVERNMENT WILL MAKE FOLLOWING CHANGES ON PUBLIC EXPENDITURE
SIZE OF PUBLIC EXPENDITURECOMBINATION OF PUBLIC EXPENDITUREDIRECTION OF PUBLIC EXPENDITURE
BUDGET
BUDGET MEANS AN ESTIMATE OF REVENUE AND EXPENDITURE.
IMPORTANCE
IN INDIA,THE TOTAL BUDGETARY EXPENDITURE OF BOTH CENTRE AND STATE IS 50% OF GDP.
1. IT ACCELERATES ECONOMIC DEVELOPMENT2. IMPROVES PRODUCTION IN PRIVATE SECTOR3. IMPROVE INCOME DISTRIBUTION4. PROMOTE EXPORT AND IMPORT DISTRIBUTION
BUDGET
UNION BUDGET MAKE BY THE CENTRAL GOVERNMENT IMPORTANT ASPECTS OF 2011-12 BUDGET
Income-tax exemption limit raised to increase the exemption limit of Income tax
liability from 1.6 lakhs to 1.8 lakhs. This measure has assured a saving of at least Rs. 2000 to every tax payer in this slab.
Defence budget hiked to Rs 1.54 lakh croreThe Finance Minister announced that the Defence sector will get more than 1.64 trillion (1.64 lakh crore rupees) for defense budget. It's an increase of more than 4% from last year.
Excise duty on 130 new itemsPranab Mukherjee announced 1% Excise duty on 130 new items. These items exclude food products clothes and daily utilities.
STATE BUDGET MAKE BY THE STATE GOVERNMENT
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