Question:medium

The fiscal policy of India is formulated by the

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Fiscal policy means taxation and government spending, which is the finance ministry's job through the union budget, not the RBI's.
Updated On: Jul 13, 2026
  • Planning Commission
  • ministry of finance
  • Reserve Bank of India (RBI)
  • none of these
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The Correct Option is B

Solution and Explanation

Step 1: Understanding the Concept:
We need to identify which government body sets fiscal policy in India. First, we should be clear on what fiscal policy means.

Step 2: Key Formula or Approach:
Fiscal policy deals with government revenue and expenditure, that is, taxes collected and money spent through the budget. This is different from monetary policy, which deals with interest rates and money supply.

Step 3: Detailed Explanation:
The union budget, which lays out how much tax will be collected and how the government will spend it, is prepared and presented by the finance ministry every year. The Planning Commission instead focuses on planning resource allocation across five year plans, and the RBI is responsible for monetary policy tools like the repo rate and money supply, not for fiscal decisions. So the body that actually formulates fiscal policy is the ministry of finance.

Step 4: Final Answer:
India's fiscal policy is formulated by the ministry of finance.
\[ \boxed{\text{ministry of finance}} \]
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