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

Dr.B.Pradeep Kumar

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Monetary Policy; High Powered Money; Inflation; Fiscal Deficit (search for similar items in EconPapers)
JEL-codes: E00 E40 (search for similar items in EconPapers)
Date: 2014-10-12, Revised 2014-12-16
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Published in Rethinking Macroeconomic Policy in India (edited book) (2014): pp. 59-71

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