Monetary & Fiscal Policy IT Industry

.What is Policy?  Principle to rule or to guide decisions and     achieve rational outcomes Either a procedure or a protocol By the Board of or senior governance body Assists subjective as well as objective decision making Considered as a "Statement of Intent" or a "Commitment".

the payment of taxes on income) .Difference b/w Policy & Law POLICY LAW Policy merely guides actions Law can compel or prohibit toward those that are most likely behaviours (e. a law requiring to achieve a desired outcome.g.

often targeting a rate of interest for the purpose of promoting economic growth and stability. .Monetary Policy  Monetary policy is the process by which the monetary authority of a country controls the supply of money.

& other financial operation to achieve national goals. .Fiscal Policy  Fiscal Policy is defined as the govt.  The two main instruments of fiscal policy are government expenditure and taxation. Programme of taxation. expenditure.

. It can increase or decrease the supply of currency as well as interest rate. carry out open market operations. full employment and economic growth Regulates the supply of money and the cost and availability of credit in the economy. The annual Union Budget showcases the government's Fiscal Policy. control credit and vary the reserve requirements. Can be used to overcome recession and control inflation.MONETARY DIFFER FROM FISCAL POLICY Monetary Policy  Aims to maintain price stability. Fiscal Policy  Fiscal policy is a broader tool with the government. Fiscal policy aims at changing aggregate demand by suitable changes in government spending and taxes. Lending and borrowing rates of interest for commercial banks.

.OBJECTIVES OF MONETARY POLICY  Maximum feasible output.  Growth in employment & income  Price stability.  High rate of growth.  Stability of Forex & national currency  Inflation Control  Greater equality in the distribution of income and wealth.

fish.HIGHLIGHTS OF CURRENT MONETARY POLICY  Cash reserve ratio retained at 6 percent  Statutory liquidity ration retained at 24 percent  Bank rate untouched at 6 percent  Inflation expected to remain elevated for few more months  High global commodity prices may also exert pressure on domestic inflation  High global crude prices. meat. milk and pulses high . domestic fuel subsidies will impact inflation  This year's monsoon may impact yields of grains. pulses. oilseeds and cotton  Inadequate supplies may keep prices of eggs.

health. governance etc. financial inclusion. to greatly enhance efficiency across the board in the economy. employment generation.  Peak rate of customs duty is 10% .Key Facts  IT POLICY focuses on application of technology-enabled approaches to overcome monumental developmental challenges in education. skill development.

Electronic components including semiconductors.  VAT on IT items is @4% and non-IT electronic items are @12.5%. . CST is 2%. EXAMPLE. Semiconductor manufacturing equipment.Key Facts  The customs duty on 217 Information Technology Agreement (ITA-1) items* is zero%.  Customs duty on specified capital goods used for manufacture of electronic goods is 0%.Telecommunication equipment. Software and Scientific instruments.

 Custom duty on LCD panels and set top box is 5%. .  Mean rate of excise duty( CENVAT) is 8%.

 Skilled Indian workforce cost is reasonably low  Process outsourcing and knowledge process outsourcing have expanded significantly in the Indian job market  India has a huge pool of English-speaking IT professionals.India's IT Industry  India is home of IT professionals. .

1999. software technology parks(STPs).India's IT Industry  A separate ministry – Oct 15. .  Information technology Act 2000 INVESTMENT POLICY  Automatic route for foreign equity up to 100 percent in software and electronics  Electronic hardware technology parks(EHTPs).  Simplification and liberalization of export and import policy. free trade zones and 100 percent trade oriented units(TOUs).

 Exports US $ 10 billion  Job creation: a million direct and 2-3 million indirect  High quality standards  250 fortune of 500 companies.a. growing at 50% p.OPPORTUNITIES  IT industry US $ 14 billion.clients of Indian firms .

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