RECENT MONETARY AND FISCAL POLICIES IN INDIA: AN IN-DEPTH ANALYSIS OF RBI AND GOVERNMENT

Abstract

This research paper provides a comprehensive analysis of the recent monetary and fiscal policy interventions in India, specifically focusing on the period from 2024 to 2026. It details the objectives, instruments, and key decisions of both the Reserve Bank of India (RBI) and the Government of India (GoI). The analysis reveals a strategic shift in the RBI's monetary policy towards an accommodative stance, primarily driven by a benign inflation outlook, aiming to bolster economic growth. Concurrently, the Government's fiscal policy, as outlined in the Union Budgets for 2024-25 and 2025-26, emphasizes capital expenditure, tax rationalization, and targeted social and economic development schemes to stimulate demand and address structural challenges. The combined effect of these policies is largely expansionary, positioning India for sustained economic growth and stability amidst global uncertainties. The paper synthesizes the rationale behind these policy shifts, their projected impacts on key macroeconomic indicators such as GDP growth, inflation, and employment, and assesses their combined effectiveness, highlighting the critical role of policy coordination and the challenges that lie ahead.