Fiscal policy in India is formulated by

Q. Fiscal policy in India is formulated by-

1. the Reserve Bank of India
2. the Finance Ministry
3. the Planning Commission
4. the Securities and Exchange Board of India

Answer: The Finance Ministry

Key points related to Fiscal Policy

• Fiscal Policy is the one maintained and set by the Government of India. Fiscal policy aims to set the limits of various deficits such as revenue deficit, budget deficit, fiscal deficit within the budget so as to drive the economy forward within the set limits of the deficits.
• The monetary policy is decided by the central bank or RBI in India's case, the fiscal policy is decided by the government.
• Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.
• The objective of fiscal policy is to maintain the condition of full employment, economic stability and to stabilize the rate of growth. For an under-developed economy, the main purpose of fiscal policy is to accelerate the rate of capital formation and investment.
• Monetary policy is the process by which monetary authority of a country, generally central bank controls the supply of money in the economy by its control over interest rates in order to maintain price stability and achieve high economic growth.