ECONOMIC

POLICIES IN
INDIA
BY GROUP 4

SAFWAN
PRARTHANA.N
SHARATH
KIRTHI
SABITHA
TWINKLE
SWATHI
SHAHIN
INDUSTRIAL POLICY

Industrial policy means rules,

regulations, principles, policies and
procedures laid down by the government
for regulating, developing and controlling
Industrial undertakings in the country.
It prescribes the respective roles of the
public, private, joint and co-operative
sectors foe the development of industries.
Industrial Policy up to 1991:
Reservation of industries
Dominance of public sector
Entry and growth restrictions
Restrictions on foreign capital and technology

The new Industrial Policy July 24,1991

Objectives
Abolition of industrial licensing
Public sector’s Role Dilution
MRTP limit goes
Free entry to Foreign investment and Technology
MONETARY POLICY
DEFINITION :-
According to H.G.Johnson monetary policy is a policy
‘employing the central banks control of supply money as an
instrument for achieving the objective of general economic
policy’.
Objectives
 High rate of growth
 Full employment
 Price stability
 Equitable distribution of wealth and income
 Healthy BOP
 Control of business cycle
CREDIT CONTROL TOOLS
Creditcontrol tools are the measures used
by RBI to control the demand and supply
of money.

The various policy instruments Classified

in two categaries:

Quantitative tools
Qualitative tools
Quantitative tools
These instruments affects directly or indirectly the
lending or credit creation capacity of
commercial banks.
A. Bank Rate Policy
B. Open Market Operation
C. Variable Reserve Requirements
D. Cash Reserve Ratio
E. Statutory Liquidity Ratio
QUALITATIVE CREDIT CONTROL
SCC introduced for the first time in 1956 are
useful to supplement to general credit
regulation.
I. Fixation of margin requirements on secured
loans
II. Regulation of consumer credit
III. Control of bank advance through directives
IV. Rationing of credit
FISCAL POLICY
Fiscal policy refers to the policy of the govt regarding public
revenues, public expenditure and public debt. fiscal policy can be
used to change aggregate demand in such a way and to such an
extend that it contributes to economic stabilization especially in
developing economy.

OBJECTIVES

A. Full employment
B. Economic stability
C. Mobilization of recourses
D. Acceleration of economic growth
E. Increase employment opportunities
F. Price stability
 Instruments of fiscal policy
1. Taxation
2. Public expenditure
3. Public debts
4. Deficit financing
BUDGET
The budget of a govt is a summary or plan of the
intended revenues and expenditure of the govt. An
estimation of the revenue and expenses over a
specified future period of time. A budget can b
made for a person, a family or a group of people ,
a business, gvt, country , or multinational
organization or just about anything else that
makes and spends money. Budget are a micro
economic concept that shows the tradeoff made
when one good exchanged for another.
Budgetary concepts
Revenue
 Tax revenue: amount collected from various taxes like
direst & indirect taxes
 Non tax revenues: interest earned by govt on loans given
to states/PSU, income of PSU $ earning from
administrative services
 Revenue Receipts: total of tax revenue and non tax
revenue
 Capital receipts: recovery loans, receipts from public
sector disinvestment, govt borrowing
 Total receipts: total revenue and capital receipts
Expendture
Plan expenditure: It is asset-creating expenditure
causing capital formation. It builds up social and
economic capital
Non plan expenditure: non-asset creating & day to
day activities. It consists administration, defense,
police, subsidies & interest payments
Total expenditure: total of plan and non-plan
expenditure
Deficit concepts
Revenue deficit: when non-plan expenditure
exceeds revenue receipts. it shows the running
expenditure exceeds regular source of revenues
total receipts
Fiscal deficit: when total expenditure exceeds total
receipts. It reflects total borrowing required by the
govt.
Primary deficit: fiscal deficit minus interest
payment of the govt. It indicates how much money
is required to service past debt.
Public revenue
Public revenue refers to the income of the government. All
the revenue of the govt can be classified into: tax
revenue & non-tax revenue
Tax revenue refers to the revenue collected by the govt
through taxation.
Non tax revenue includes profit from various financial
institution,
Govt commercial undertaking ,interest from loans given to
other govt, local bodies and other institution etc.
 Classification of Tax:
Taxes are classified into two types:
1. Direct tax
2. Indirect tax
Direct tax:
Direct tax is a tax which is paid by the person or that it
is legally imposed and the burden of which can not
be shifted to any other person.
The impact and incidence of direct tax will be on the
same person.
Eg : income tax, wealth tax, and property tax.
Merits of direct tax:
Justice
Certainty
Economic and productive
Anti-inflationary
Reduces inequality
Demerits of direct tax
In equality
Unpopular
Inconvenient
Evasion
Limited scope
Indirect tax
Indirect tax is a tax, the burden of which
can be shifted to others. One person pays
an indirect tax and the ultimate burden of
the tax is passed on to others. The impact
and incidence of the tax is on the different
person.
E.g.: all commodity taxes like excise duty,
customs duty, sales tax etc
Merits of indirect tax:
Wide scope
Convenience
Ad valorem basis
Difficulty to evade
Convenience in assessment
More popular
Help to protect

Demerits:
Heavy burden on poor
Uneconomical
Regressive behavior
Leads to inflation
Adversely affects production and employment
Does not inculcate civic consciousness
Revenue and expenditures of the union
and the state
Income Tax
Corporation Tax
Death Tax
Capital Gain Tax
Commodity Tax [excise duty and custom
duties]
EXIM POLICY
Union Commerce and Industry minister Mr. Murasoli
Maran announced the new five-year Export Import
policy covering the 10th five year plan period of
2002-07, on March 31,2002.

The basic thrust area of the new policy is

Trade liberalization and promotion
Simplifications of procedures
Reduction in transaction costs
Areas of comparative cost advantage and core
competence
EXIM Policy includes:

Removal of quantitative restrictions

Agro exports
Cottage sector and Handicrafts
Small Scale Industry
Special Economic Zones [SEZs]
EPCG [Export Promotion Capital Goods] scheme
Diversification of markets
Reduction of Transaction cost
FOREIGN TRADE POLICY
The UPA government at the center announced a
new Foreign Trade Policy covering the period of
2004-09 on august 31,2004. trade is not an end
itself but a mean to economic growth and
national development.
OBJECTIVE:
To double our percentage share of global
merchandise within the next five years and to act
as an effective instrument of economic growth
by giving a thrust to employment generation.
THANK
YOU ;);)