Rethinking the Role of Monetary Policy in India: A Critical Analysis

Kumar, Dr.B.Pradeep (2014): Rethinking the Role of Monetary Policy in India: A Critical Analysis. Published in: Rethinking Macroeconomic Policy in India (edited book) (18 December 2014): pp. 59-71.

Abstract

The ever increasing attention being paid to finance capital and the financialization process itself has rendered the old fashioned monetary policy apparently in effective in accomplishing celebrated twin objectives of containing inflation and fueling economic growth. It is becoming evident that the growth of financial institutions which have not been directly regulated by the Central Banks as in the case of orthodox financial intermediaries, has in fact rendered the weapons of monetary policy almost inoperative, and therefore, it appears that central banks all over the world, especially in developing countries like India, have confined themselves into the role of ‘measuring’ inflation and taking steps to ease inflationary pressured by the way of putting certain ‘classical restrains’ on the lending rate of formal financial institutions over which Central Banks still have the regulatory mandates.

• Item Type: MPRA Paper
• Language: English
• Keywords: Monetary Policy, High Powered Money, Inflation, Fiscal Deficit
• Subjects: E - Macroeconomics and Monetary Economics > E0 - General > E00 - General; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General

References

Bhalla, S. (2014, September 13). Where Monetary Policy is Irrelevant? The Indian Express.

Friendman, M. (1956). The Quantity Theory of Money.

Gupta, S. B. (2010). Monetary Economics: Theory and Policies. New Delhi: Sultan Chand.

Monhanty, R. K. (2014). Fiscal Deficit-Economic Growth Nexus in India: A Cointegration analysis. Retrieved November 27, 2014, from www.punjabiuniversity.ac.in.

Rangarajan, C., & Mohanty, M. S. (1998). Fiscal deficit, external balance and monetary growth. Reserve Bank of India Occasional Papers , 635-653.