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 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.
•MONETARY
POLICY
• Money supply(m3)
announced twice • Inflation
in the year first in
April and second • Interest rate
in October. •
•
IMPACT OF
MONETARY
POLICY
GROWTH DURING THE LAST FISCAL YEAR
FOOD
INFLATION
TOTAL DEPENDENCY CONTRIBU FOOD
POPULATION ON AGRI.(OF TION IN INFLATIO
OF INDA TOTAL GDP(AGRI) N
110 CRORE POPULA)
58.2% 14.2% 9.5%
EXTENT OF •EXTENT OF MONEY
MONEY The central measures the
Expansion of money
policy extent of money and
•Money supply in the
economy will be credit available in the
increased by RBI
through issue of economy using the
currency, budgetary
operations and indices like
borrowings by
governments from m0,m1,m2,m3.
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
• CRR AND INTEREST RATES
• PERCENTAGE PER ANNUM

KEY RATE NOV 2ND JAN 25TH MAR 17TH

2010 2011 2011
CRR 6 6 6
REPO RATE 6.25 6.50 6.75
REVERSE 5.25 5.50 5.75
REPO
BANK RATE 6 6 6
 FISCAL POLICY
Fiscal 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.
•

objectives
•

1. 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
DIRECT TAX
INDIRECT 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 EXPENDITURE
COMBINATION OF PUBLIC EXPENDITURE
DIRECTION 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 DEVELOPMENT
2.IMPROVES PRODUCTION IN PRIVATE SECTOR
3.IMPROVE INCOME DISTRIBUTION
4.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
crore
The 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 items
Pranab 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

• THANK
• YOU