To what extent would you attribute the deceleration in GDP growth to Dear Monetary Policy?

SHILPA SHEGOANKAR NEHA DHURI SUVARNA KAMBLE MANISHA RAI MADHURI PANDEY MAHESH RATHOD SANDEEP DUBEY NIRANJAN DAS DEEPIKA SUMIT GAJBE 113 68 83 109 100 110 69 64 63 75

Meaning of Monetary Policy

According to Prof. Harry Johnson, "A policy employing the central banks control of the supply of money as an instrument for achieving the objectives of general economic policy is a monetary policy." According to A.G. Hart, "A policy which influences the public stock of money substitute of public demand for such assets of both that is policy which influences public liquidity position is known as a monetary policy." From both these definitions, it is clear that a monetary policy is related to the availability and cost of money supply in the economy in order to attain certain broad objectives. The Central Bank of a nation keeps control on the supply of money to attain the objectives of its monetary policy.

Objectives of Monetary Policy The objectives of a monetary policy in India are similar to the objectives of its five year plans. In a nutshell planning in India aims at growth, stability and social justice. After the Keynesian revolution in economics, many people accepted significance of monetary policy in attaining following objectives. Rapid Economic Growth Price Stability Exchange Rate Stability Balance of Payments (BOP) Equilibrium Full Employment Neutrality of Money Equal Income Distribution These are the general objectives which every central bank of a nation tries to attain by employing certain tools (Instruments) of a monetary policy. In India, the RBI has always aimed at the controlled expansion of bank credit and money supply, with special attention to the seasonal needs of a credit.

Will dear money policy pay off?

The RBI seems to have accorded highest priority to liquidity management to tackle inflation. While it remains to be seen whether this will work or not, such tightened monetary policy does have a bearing on the other sectors of the economy.