Group4Fiscal Policy & Impact on Retail Banking
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Group4Fiscal Policy & Impact on Retail Banking

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Group4Fiscal Policy & Impact on Retail Banking Group4Fiscal Policy & Impact on Retail Banking Presentation Transcript

  • 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 - Vishwanathan center – Hyderabad Batch No – hyd01aa0213 Participant name Participant ID S.KARTHIK GOUD E30031000148 T.PRAVEEN E30031000114 SANDEEP E30031000119 ANURAG E30031000113
  • INDEX 1 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 two Contractionary 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 LAST CHANGE OPEN NAME PRICE (%) National Highways Authority of India 999.50 Canara-rob Debt equity-tax fund saver fund 0.26% 0.25 997.00 0.39 HIGH YEILDING FD”S HIGH 999.50 LOW VOLUMEFACE VALUE 992.00 12081 17.74 Interest Rates ICRA CRISI L FITCH CARE 1 YEAR 2 YEAR 3 YEAR MAAA FAAA N/A N/A 8.90% 9.05% 9.15 % 1,000
  • 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 2016-17 Present fiscal deficit 6.1 % of GDP Fiscal deficit of 5.3 % in my view is doable – FINANACE MINISTER Fiscal deficit target of 5.3 % hard to achieve – MOODY High fiscal deficit is a threat for sovereign rating