AN OVERVIEW OF INDIAN POLICY FRAMWORK

By Anuja kulshrestha

MONETARY POLICY

Monetary policy is the process by which the government, central bank, or monetary authority of a country controls :(i) the supply of money, (ii) availability of money, and (iii) cost of money or rate of interest to attain a set of objectives oriented towards the growth and stability of the economy

OBJECTIVE
Maximum feasible output Fuller employment High rate of economic growth Price stablity Equality in distribution of income and wealth Healthy balance of payment

Quantitative instruments Qualitative instruments

QUANTITATIVE INSTRUMENTS QUALITATIVE INSTRUMENTS

Bank Rate Policy Open Market Operations Cash Reserve Ratio Statutory Liquidity Ratio Requirement

Credit Rationing Direct Action Moral Persuasion Margin

MONETARY POLICY REFORMS

1. 2.

3.

4. 5.

6.

Reduced Reserve Requirements Increased Micro Finance : (to strengthen the rural finance the RBI has focused more on the Self Help Group (SHG)) Fiscal Monetary Separation: (In 1994, the Government and the RBI signed an agreement through which the RBI has stopped financing the deficit in the government budget). Changed Interest Rate Structure Changes in Accordance to the External Reforms : The Monetary policy has shown the impact of liberal inflow of the foreign capital and its implication on domestic money supply. Higher Market Orientation for Banking : (More freedom to banks for methods of assessing working funds and other functioning has empowered and assured market orientation.)

INDUSTRIAL POLICY

INDUSTRIAL POLICIES - MEANING

Industrial policy means rules, regulations, principles, policies and procedures laid down by government for regulating, developing, and controlling industrial undertakings in the country. It prescribes the respective roles of the public, private, joint and cooperative sectors for the development of industries. It also indicates the role of the large, medium and small scale sector. It incorporates fiscal and monetary policies, tariff policy, labour policy, and the government attitude towards foreign capital, and Role to be played by multinational corporations in the development of the industrial sector.

NEW INDUSTRIAL POLICY ,1991

This new policy de-regulates the industrial economy in a substantial manner .the major objectives are : To build on the gains already made Correct the distortion or weakness that might crept in Maintain a sustained growth in productivity and gainful employment Attain international competitiveness

INDUSTRIAL POLICY
In pursuit of the above objectives, Government have decided to take a series of initiatives in respect of the policies relating to the following areas. A. Industrial Licensing. B. Public Sector Policy. C. MRTP Act D. Foreign Investment. E. Foreign Technology Agreements.

FISCAL POLICY

Fiscal Policy-Meaning
The word fisc means state treasury and fiscal policy refers to policy concerning the use of state treasury or the govt. finances to achieve the macroeconomic goals.
any decision to change the level, composition or timing of govt. expenditure or to vary the burden ,the structure or frequency of the tax payment is fiscal policy.

OBJECTIVE
1)mobility of resources 2) Promotion of saving and investment 3) Removal of poverty and unemployment 4)Growth of public sector 5) Economic stability 6)Achieve favorable balance of payment 7)Support private sector

Instruments of Fiscal Policy

Taxation Policy. Public borrowing. Forced saving. Public expenditure

FISCAL REFORMS
1.

2.
3.

4. 5.

Reduction of Fiscal deficit. Reduction of Government Expenditure Phasing out Subsidies and budgetary support to PSUs Savings Policy Tax Reforms

FOREIGN TRADE POLICY

FOREIGN TRADE

Exchange of goods and services between the countries is known as foreign trade. The difference is the producer and consumers reside in separate countries.

COMPONENTS OF FTP
Export Import

DEVELOPMENT AND REGULATION ACT OF FOREIGN TRADE POLICY

In 1992, the govt. enacted foreign trade (Development & Regulation ) Act to facilitate import and enhancing exports from India. As per the provisions of the act , the Govt. : make provisions for facilitating and controlling foreign trade; prohibit ,restrict and regulate exports & imports ,in all or specified cases as well as subject them to exemptions; authorized to formulate and announce an export & import policy and also amend the same from time-to-time,by notification in the Official Gazette.

MEANING OF FOREIGN TRADE POLICY

Foreign trade policy is the combination of words First is foreign trade and Second is policy Foreign trade:It is the exchange of goods and services between nations. Goods can be defined as finished products, as intermediate goods used in producing other goods, or as agricultural products and foodstuffs. Policy: policy is the set of rules and procedure.

OBJECTIVES OF THE FOREIGN TRADE POLICY OF INDIA

The Foreign Trade Policy of India is based on two major objectives, they are To double the percentage share of global merchandise trade within the next five years. To act as an effective instrument of economic growth by giving a thrust to employment generation

STRATEGY OF FOREIGN TRADE POLICY OF INDIA

Removing government controls Facilitating development of India as a global hub for manufacturing, trading, and services Generating additional employment opportunities technological and infrastructural up gradation

Simplification of commercial and legal procedures and bringing down transaction costs.
Simplification of levies and duties on inputs used in export products

FEATURES OF FTP(09-2014)

Duty exemption scheme Duty free import authorisation Export promotion of capital goods(EPCG) Deemed exports Star export houses Focus market scheme Focus product scheme Vishesh krishi gram upaj yojna(VKGUY) Service export 100%EOU/SEZ, etc