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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
announced
twice in the year
first in April and
second
in
October.

Money supply(m3)
Inflation
Interest rate

IMPACT OF
MONETARY POLICY

MONEY
SUPPLY IN
THE
ECONOMY

INTEREST
RATE AND
SAVING

EXPORTERS
AND
IMPORTERS

INFLATION

JOBS AND
WAGES

GROWTH DURING THE LAST FISCAL YEAR


Chart Title
Feb-10
Feb-11
26.5
24.2
22.85 20.09
15.92
15.43

24.4
18.34
16.23
4.11

FOOD
INFLATION
TOTAL
POPULATION
OF INDA

DEPENDENCY
CONTRIBU FOOD
ON AGRI.(OF
TION IN
INFLATIO
TOTAL POPULA) GDP(AGRI) N

110 CRORE

58.2%

14.2%

9.5%

AGRICULTURE SECTOR'S CONTRIBUTION IN GDP


AGRICULTURE SECTOR'S CONTRIBUTION IN GDP
16.4
15.7
14.6
14.2

2007-08

2008-09

2009-10

2010-11

EXTENT OF
MONEY
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.

EXTENT OF MONEY
The central measures the
extent of money and
credit available in the
economy using the
indices like
m0,m1,m2,m3.

TOOLS OF THE
MONETARY POLICY

OMO
CRR
REPO
SLR
BANK RATE

CRR AND INTEREST RATES


PERCENTAGE PER ANNUM

KEY RATE

NOV 2ND
2010

JAN 25TH
2011

MAR 17TH
2011

CRR

REPO RATE

6.25

6.50

6.75

REVERSE
REPO

5.25

5.50

5.75

BANK RATE

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

TAXATION

PUBLIC DEBT.

PUBLIC
EXPENDITURE.

DIRECT TAX

PERSONAL
INCOME TAX

CORPORATION
TAX

WEALTH TAX

INHERITANCE

INDIRECT TAX

EXCISE
DUTY

VAT

SALES
TAX

CUSTOMS
DUTY

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