Whenever we watch news channels or parliament debates, In the headlines, we keep hearing about fiscal policy and monetary policy. The percentage regarding the growth and fall. Most of us do not try to understand what it is. We simply skip or just look at it, as data pointers from the government.
Let's try to understand fiscal policy which is controlled by the Ministry of finance, when the governments measure and regulate the actual development of past, present and future outcomes. It helps in preparing budgets, debt, taxation procedures, laws, increases or decreases and overall spending and expenditures. It calculates all the revenue collected and estimates the revenue allocations of overall India.
When it comes to monetary policy, it is controlled by the RBI, which is an independent body and has its own decisions based on India’s economic circumstances rather than political influence. Its major focus is on borrowing wealth and interest rates. Deciding the Repo Rate and Reverse Repo Rate of loans which have been taken by governments or which we have borrowed from other nations and banks providing loans at what price. It decides the actual figures and data, on what basis the financial institution should work. Irrespective of the governments they keep a watch on the overall money flow to control inflation and to protect against economic crises hitting India.
Fiscal Policy and Monetary Policy are two pillars of balancing the nations. For regular activities and development procedures, the government deals with them and, when it comes to the overall safety of the economy, monetary policy works effectively.
