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The Rise of the Indian Economy: Fiscal, Monetary and Other Policy Challenges

Kaushik Basu

Rivista italiana degli economisti, 2012, issue 2, 169-190

Abstract: This paper brings analytical economics to bear on some of the central economic policychallenges faced by contemporary India; monetary policy for controlling inflation, central bank exchangerate interventions and fiscal policy for promoting growth. Government, by giving orchestrated guaranteesfor infrastructure can ensure that multiple projects come up raising the probability of success of all theseprojects. India has responded to inflation by using fiscal contraction, liquidity tightening and monetarypolicy. By using a suitable strategic technique - called "schedule intervention" - it is possible for the centralbank to influence the exchange rate without affecting foreign currency reserves.

Keywords: Indian Economic Development; Exchange Rate Intervention; Fiscal Policy; Infrastructure; Monetary Policy (search for similar items in EconPapers)
Date: 2012
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Handle: RePEc:mul:jqat1f:doi:10.1427/37493:y:2012:i:2:p:169-190