2. Financial Administration
Financial administration refers to that set of activities which are related to
making available money or funds to the various govt. sectors to enable
them to carry out there objectives.
Financial administration involves all activities of finance and taxation.
3. Monetary Policy
Process by which monetary authority(authority that controls all matters
related to money) , generally central bank controls the supply of money
by exercising it’s control over interest rates in order to maintain price
stability, reduce inflation and to achieve high economic growth.
The major techniques of the central bank or RBI to implement it’s
monetary policies are:
a) Money supply
b) Interest rates
c) Cash reserve ratio(CRR)
4. d) Statutory liquidity ratio
e) Bank rate
f) Moral suasion
g) Repo rate and reverse repo rate
5. Objectives Of Monetary Policy
Full employment
Price stability
Economic growth
Exchange rate stability
6. Fiscal Policy
It refers to a policy concerning the use of state treasury or the govt. finances to
achieve the macro – economic goals.
Monetary policy and fiscal policy are complimentary to each other and equally
necessary in managing a nation’s economy.
There are 3 types of fiscal policy:
1) Neutral fiscal poicy:- it implies a policy for a balanced budget where govt.
spending is equal to the revenue/tax collection so there is status quo in the
economy.
7. 2) Expansionary fiscal policy:- when govt. spending exceeds taxation
revenue leading to a larger budget deficit.
3) Contractionary fiscal policy:- when govt. spending is less than what is
collected as revenue. It is usually associated with a budget surplus.
8. Instruments Of Fiscal Policy
Public works
Public expenditure.
Taxation policy
Public debt.
9. Objectives Of Fiscal Policy
Efficient allocation of financial resources.
Increase in capital.
Increase national income.
Reduction in inequalities of income and wealth.
Price stability and control of inflation.
10. Role Of Finance Ministry
Ministry of finance plays a very crucial role. It is responsible for the overall
financial management of a country.
It is responsible for all the fiscal policies made in the nation that leads to
growth and development of the entire nation. Being the head, finance
minister presents the annual union budget in the parliament.
It is also called as treasury department of government of India.
The growth and international position depend on the decisions of the
finance minister related to economic affairs. It includes the decisions
related to expenditure, revenue, investment etc.
