Monetary Policies of India, Monitary Policy
instruments/Tools, Objectives of Monetary policy of RBI, Quatitative and
Qualitative Control measure, What is CRR, What is SLR, What is REPO, What is reverse Repo, Difference between repo and reverse repo, Credit rationing etc.
Monetory
Policy: This policy affects the growth of money supply in the
economy by changing the cost of credit. It is controlled by Central Bank of
India i.e RBI.
It
is of two types:
I.
Expansionary or Cheap money Policy: It
increases money supply by making credit cheaply available.
II.
Contractionary Money Supply: It decreses money supply by
making credit expensive.
Monetary
policy / monetary management:
It is regarded as an
important tool of economic management in India. To push up growth this policy
determines the amount of money and credit that will be available to various
sector of the economy, whether it is High scale Sector or Small scale Sector.
While adopting this policy, it has also to keep in mind that money supply does
not exceed the genuine demands of various sectors and lead to inflation.
To strike a balance between
the two objectives of pushing growth on the one hand and control inflation on
the other, RBI has followed a policy of CONTROLLED EXPANSION that means money
supply is expanded to meet only the genuine requirement of various sector
taking a caution that it does not leads to inflation.
Objectives of
Monetary Policy in INDIA:
1. Growth With Stability :
Traditionally,
RBI’s monetary policy was focused on controlling inflation through contraction
of money supply and credit. This resulted in poor growth performance. Thus, RBI
has now adopted the policy of ‘Growth with Stability’ as earlier discussed.
This means sufficient credit will be available for growing needs of different
sectors of economy and at the same time, inflation will be controlled.
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