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Q9 (CDS-I/2012) Economy › Government Finance & Budget › Union Budget process Answer Verified

Fiscal policy in India is formu- lated by—

Result
Your answer: —  ·  Correct: C
Explanation

In India, fiscal policy is formulated by the Ministry of Finance [3]. Fiscal policy involves government decisions regarding taxation, public expenditure, and public debt to influence the economy [1]. The Ministry of Finance is responsible for preparing the Union Budget, which serves as the primary vehicle for implementing fiscal policy and includes mandated statements under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 [3]. These statements, such as the Medium-term Fiscal Policy Statement and the Fiscal Policy Strategy Statement, outline the government's fiscal priorities and targets [2]. In contrast, the Reserve Bank of India (RBI) is responsible for monetary policy, while the Securities and Exchange Board of India (SEBI) regulates the securities market [2]. The Planning Commission, now replaced by NITI Aayog, previously focused on long-term developmental planning rather than direct fiscal management [2].

Sources

  1. [2] Macroeconomics (NCERT class XII 2025 ed.) > Chapter 5: Government Budget and the Economy > Capital Expenditure > p. 70
  2. [3] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > INDIAN TAX STRUCTURE AND PUBLIC FINANCE > p. 81
  3. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 5: Indian Tax Structure and Public Finance > Components of Fiscal Policy > p. 83
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