LatestIncome Tax 26 June 2026
Monetary vs Fiscal Policy: How India Steers the Economy
India's economy is steered by a combination of monetary and fiscal policies, but what are the key differences between the two? Since the 2016 amendment to the RBI Act, India has taken a more proactive approach to economic management.
- India's economy is influenced by both monetary and fiscal policies, with monetary policy focused on managing inflation and interest rates through the Reserve Bank of India (RBI).
- Fiscal policy, on the other hand, involves government spending and taxation to stimulate economic growth.
- Since the 2016 amendment to the RBI Act, India has adopted a more proactive approach to economic management, blending monetary and fiscal policies to achieve its economic goals.
- The government raises revenue through direct taxes (income tax) and indirect taxes (GST), while the RBI uses monetary tools to control inflation and stabilize the currency.
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