PROMOTIONAL ROLE OF MONETARY POLICY IN INDIA SINCE 1991

Abstract

Monetary Policy plays an important role both in developed and developing countries alike for their economic growth and stability. Monetary Policy is the macroeconomic policy laid down by the Central Bank. It involves management of money supply and interest and in the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth, and liquidity. Since 1991, India has been experiencing impact of process of economic liberalization in primary, secondary, and tertiary sectors of the Indian economy. The present decade of 21th century economic reforms consist of a broad spectrum of measures including the financial sectors reforms that might have affected the role of monetary policy in promoting financial environment needed for the development of these sectors. After independence, it’s a good time to take stock of the past and a good time to establish goals transition. The economy has moved from an isolated and slow growing economy to one that is growing faster and beginning to integrate with the global economy. The transition began with liberalization also changed the framework of monetary policy. Responsibilities of Reserve Bank of India have been increased in taking such measures which can make effective progress in developing economy.