MONETORY POLICY

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In a developing country like India, the monetary policy is
significant in the promotion of economic growth.
The various instruments of monetary policy include
variations in bank rates, other interest rates, selective
credit controls, supply of currency, variations in reserve
requirements and open market operations
RATE HIKE CONTINUES
• Reporate was hiked five times in 2022
• Increased by 25 bps in Feb 2023
FY24 GROWTH FORECAST CUT
• Growth projected to fall to 2.9% in
2023 but rise to 3.1% in 2024.

KEY INDICATORS CURRENT RATE INFLATION RATES

CRR 4.50% • Expected to average 5.6% in Q4 of
SLR 18.00% 2023-2024

REPO RATE 6.50% HEDGING OF GOLDS IN IFSC

REVERSE REPO RATE 3.35% • Indians are currently not allowed to
BANK RATE 6.75% hedge their exposure to gold price
risk in overseas market
 FISCAL POLICY
Some of the key highlights of Union Budget 2023-2024

• 35000 crore for Energy Transmissions with • Number of tax labs reduced from 7 to 5 in
green growth in focus. new tax regime.

• Education sector to get a boost, 1.12 lakh • Schemes for women at higher interest rate.
crore allocated for education - the highest
ever and an increase of around 8.2% than
what was pegged in 2022-2023.
• Paving a way for new digital learning. 30 skill
India International centres to be set up.
10,000 bio input research centres.
• Funds set aside for new Infrastructure, 50
new airports and heliports to be made,
10,000 crore allocated for urban infra fund
every year, 75,000 for 100 transport infra • Scope of Digi locker to be increased.
project.
 CHALLENGES FACING INDIAN ECONOMY
Although Indian GDP’s growing steadfastly there are some major problems pulling Indian Economy down.

The following eight points highlight the major problem faced by Indian economy.

• Low level of national income and per capita income.

• Vast inequalities in income and wealth.
• Predominance of agriculture.
• Tremendous population pressure.
• Massive unemployment.
• Scarcity of capital and low rate of capital formation.
• Underdeveloped infrastructure.
• Low level of technology.
 VIEWS AND THOUGHTS
• Strong economic growth in the first quarter of FY 2022- • Exports fared remarkably well during the pandemic and
23 helped India overcome the UK to become the fifth- aided recovery when all other growth engines were
largest economy after it recovered from repeated waves losing steam in terms of their contribution to GDP.
of COVID-19 pandemic shock.
• While Indian economy is steadfastly growing, it still has
• India has emerged as the fastest-growing major a long way to go.
economy in the world and is expected to be one of.the
top three economic powers in the world over the next • India's fiscal deficit for the first nine months of this
10-15 years, backed by its robust democracy and strong fiscal year through December stood at 9.93 lakh crore
partnerships. rupees, or 59.8% of annual estimates. The fiscal deficit
widened from 50.4% reported in the comparable year-
• India’s nominal gross domestic product (GDP) at current earlier period.
prices is estimated to be at Rs. 232.15 trillion (US$ 3.12
trillion) in FY22. India has the third-largest unicorn base • There’s still a wide range of development to be done in
in the world. different sectors like Infrastructure, Education,
Employment and Public Healthcare.
• The government is also focusing on renewable sources
to generate energy and is planning to achieve 40% of its
energy from non-fossil sources by 2030.