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Why is the knowledge of Fiscal Policy important to a Retail Banker and it’s impacts on sales pitch. Substantiate with an Investment option.
Faculty name - Vishwanathancenter – Hyderabad
Batch No – hyd01aa0213
Participant name Participant ID
S.KARTHIK GOUD E30031000148
T.PRAVEEN E30031000114
SANDEEP E30031000119
ANURAG E30031000113
INDEX1 Fiscal Policy
2 Objectives
3 Functions
4 Types of Fiscal Policies
5 Limitations
6 Factors affecting fiscal policy
7 Fiscal Deficit
8 Why it is important to a Retail Banker
9 Impacts on sales pitch & examples
10 Current trend on Fiscal policy
Introduction
Definition :Fiscal Policy refers to a policy under which government uses it’s expenditure and revenue programs to produce desirable effects on national income, production and employment
Fiscal can be explained as Financial ,so a policy in relation to finance and something similar to monetary policy
Now a Monetary policy is formed by RBI and the Fiscal policy is formed by central government
The main aim of the policy is to see the three facets of financial system are healthy i.e. public debt, public revenue, public expenditure
Objectives Economic growth Full Employment Reducing inequalities of income and
wealth Controlling inflation Price stability
Functions
•Allocation
•Distribution
•Stabilization
•Development
Types of Fiscal policy
Expansionary Fiscal Policy An increase in government expenditure
for goods and services A decrease in taxes Some combination of twoContractionary Fiscal Policy A decrease in government
expenditure for goods and services An increase in taxes
Expansionary fiscal policy
Contractionary fiscal policy
Difference between fiscal policy and monetary policy
Limitations
•Lack of adequate data•Time lag•Budget deficit•Small proportion of population in taxable
income groups
Factors affecting fiscal policy
Tax policies
Government subsidies
Government borrowings, lending's & investments
Fiscal Deficit The expenses that the government
incurs is always more than the income it makes, this difference or deficit is known as “ Fiscal Deficit”
It is expressed as a percentage of GDP
The financing of this deficit is known as “Deficit Financing”
Why it is important to a Retail Banker ?
It will help a retail banker in determining:-•Selection of Investment product.•Market behavior.•Product yield / Returns.•Risk diversification.
EXAMPLES ?
COMPANY NAME
LAST PRICE
CHANGE(%)
OPEN HIGH LOW VOLUME
FACE VALUE
National Highways Authority of India
999.50 0.26% 997.00 999.50 992.00 12081 1,000
Canara-rob equity-tax saver fund
Debt fund
0.25 0.39 17.74
HIGH YEILDING FD”S Interest Rates
ICRA CRISIL FITCH CARE 1
YEAR2
YEAR3
YEAR
MAAA FAAA N/A N/A 8.90% 9.05% 9.15 %
Current trend on Fiscal Policy Deficit level in india is better than many
democratic countries Government plans to bring down Fiscal deficit to
3 % of GDP by 2016-17Present fiscal deficit 6.1 % of GDPFiscal deficit of 5.3 % in my view is doable –
FINANACE MINISTERFiscal deficit target of 5.3 % hard to achieve –
MOODYHigh fiscal deficit is a threat for sovereign rating