impact of monetary policy on indian economy in the post-reform period

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16. Rangarajan, C. 1997. ‗Monetary Policy and Price Stability‘. Southern Economist, 36(8), August 15, p.34-36. 17. Rangarajan, C. 1997. ‗Role <strong>of</strong> Monetary Policy‘. Economic and Political Weekly, 32(52), December 27, p.3325-3328. 18. Partha Ray, Itimanshu Joshi and Mridul Sagar, 1998. ‗New Monetary Transmission channels-Role <strong>of</strong> Interest Rates and Exchange Rate in conduct <strong>of</strong> Indian Monetary Policy‘. Economic and Political Weekly, 33(44), October 31, p.2787-2784. 19. Rajanendra Narayan Nag and Mallinath Mukhopadhyay, 1998. ‗Macro-Economic Effects <strong>of</strong> stabilization under Financial Repression‘. Indian Economic Review, 38 (1), January-June, p.1-17. 20. Reddy, Y.V. 1988. ‗Money and Finance through the Looking Glass‘, (Review Article <strong>of</strong> Indian Economy : Essays on Money and Finance, by C. Rangarajan, UBS Publishers' Distribution, New Delhi), www.rbi.org.in 21. EPW Research Foundation, 1999. ‗Monetary Policy: Promise <strong>of</strong> New Perspective Belied‘. Economic and Political Weekly, November 20, p.3254-3260. 22. Manohar Rao, M.J. 1999. ‗Financial Programming and stabilization Policy options for Macro-Economic Adjustment‘. Economic and Political Weekly, 34(3- 4), January 16, p.99-114. 23. Rajwade, A.V., 1999. ‗Perspectives <strong>of</strong> Monetary Policy‘, Economic and Political Weekly, 34(48), November 27, p.3339-3340. 24. Reddy, Y.V. 1999. ‗Monetary Policy in India‘, A speech delivered on Fourth Securities Industry Summit, in Mumbai, on 26 May 1999, 53(7), p.945-950. 25. EPW Research Foundation, 2000. ‗Success on Interest Rates Front‘. Economic and Political Weekly, 35(3), January 15, p.82-88. 26. EPW Research Foundation, 2000. ‗Exchange Rate Management‘. Economic and Political Weekly, August 12, p.2891-2897 27. Manohar Rao, M.J. 2000. ‗On predicting exchange Rates‘. Economic and Political Weekly, January 29, p.377-386. 31
28. Manohar Rao, 2000. ‗Fiscal Deficits, Interest Rates and Inflation-Assessment <strong>of</strong> Monetization strategy‘. Economic and Political Weekly, July 22, p.2637-2645. 29. Michael Debabrata Patra and Sunando Roy, 2000. ‗Financial Stability: A Survey <strong>of</strong> the Indian Experience‘, RBI Occasional Papers, Summer, Vol. 21(1), www.rbi.org.in 30. Renu Kohli, 2000. ‗Aspects <strong>of</strong> Exchange Rate Behaviour and Management in India 1993-98‘, Economic and Political Weekly, January 29, p.365-372. 31. Suman Kumar Bhaumik and Hiranya Mukhopadhyay, 2000. ‗RBI‘s Intervention in Foreign exchange Market-An Econometric Analysis‘. Economic and Political Weekly, January 29, p.373-376. 32. Datar, M.K., 2001. ‗Interest Rates, on small savings and PF Schemes‘, Economic and Political Weekly, December 1, pp.4450-4451 33. Deepak Lal, Shashanka Bhide, and Deepa Vasudevan, 2001. ‗Financial Exuberance – Savings Deposits, Fiscal Deficits and Interest Rates in India‘. Economic and Political Weekly, November 3, pp.4196-4203. 34. EPW Research Foundation, 2001. ‗Imparting Dynamism to credit Delivery‘. Economic and Political Weekly, October 20, pp.3963-3967. 35. Errol D‘Souza, 2001. ‗The Changing Monetary Environment‘. Economic and Political Weekly, January 27, pp.299-301. 36. Kangasabapathy, R. 2001. ‗Monetary Policy Underpinnings – A perspective‘. Economic and Political Weekly, January 27, pp.303-310. 37. Rangarajan, C. 2001. ‗Some critical Issues in Monetary Policy‘. Economic and Political Weekly, June 16, pp.2139-2146. 38. Romar Correa, 2001. ‗Macro economic Policy and asset Markets‘. Economic and Political Weekly, January 27, pp.347-349. 39. Sitikantha Pattnaik and Arghya Kusum Mitra, 2001. ‗Interest Rate Defense <strong>of</strong> Exchange Rate – Tale <strong>of</strong> the Indian Rupee‘. Economic and Political Weekly, November 24, pp.4418-4427. 32
Page 1 and 2: IMPACT OF MONETARY POLICY ON INDIAN
Page 3 and 4: DECLARATION I declare that the thes
Page 5 and 6: Palayam, Centre for Development Stu
Page 7 and 8: 2.2.2. Contemporary Monetary Theory
Page 9 and 10: VI. MONETARY POLICY IN INDIA 268 6.
Page 11 and 12: Table No Title VI.18. Gross Domesti
Page 13 and 14: CHAPTER - I INTRODUCTION
Page 15 and 16: Money markets facilitate the conduc
Page 17 and 18: 2. To examine the effectiveness <st
Page 19 and 20: The last chapter provides the summa
Page 21 and 22: For sustaining the high growth path
Page 23 and 24: an instrument to generate additiona
Page 25 and 26: commercial sector. Otherwise, infla
Page 27 and 28: Ranjanendra Narayan Nag and Mallina
Page 29 and 30: the allowed objective of</s
Page 31 and 32: the foreign exchange market is at b
Page 33 and 34: Banking and stock market systems ar
Page 35 and 36: conduct of <strong
Page 37 and 38: Monetary policy is
Page 39 and 40: is a systematic response in the Res
Page 41 and 42: anking system. Monetary pol
Page 43: References 1. Reserve Bank
Page 47 and 48: 53. Shankar Acharya, 2002. ‗Macro
Page 49 and 50: CHAPTER -II MONETARY THEORY AND POL
Page 51 and 52: money. (4) Johnson (1969) distingui
Page 53 and 54: and liabilities increase by the sam
Page 55 and 56: money helps in equalizing the margi
Page 57 and 58: 5. As a means to capital formation
Page 59 and 60: 3. Interest rate ceiling was freed
Page 61 and 62: To conclude, the role of</s
Page 63 and 64: 2.1.7. Money Market in India The mo
Page 65 and 66: The 182-day Treasury bill was repla
Page 67 and 68: phased in such a manner that existi
Page 69 and 70: market, including issues comprising
Page 71 and 72: 2.1.9. The Financial Sector Reforms
Page 73 and 74: also the characteristic of<
Page 75 and 76: established demand-and supply analy
Page 77 and 78: The value of money
Page 79 and 80: level will be strictly proportional
Page 81 and 82: deposits (D) of a
Page 83 and 84: The money supply (M) consists <stro
Page 85 and 86: employment, rate of</strong
Page 87 and 88: A. Total Wealth The total wealth is
Page 89 and 90: Income Friedman‘s quantity theory
Page 91 and 92: ―An irregular simple empirical re
Page 93 and 94: Finally, even if there is the ‗li
Page 95 and 96:
this model as world occur in a syst
Page 97 and 98:
initial endowments of</stro
Page 99 and 100:
economists believe that like transa
Page 101 and 102:
Thus, the total demand for money ca
Page 103 and 104:
Income; where with the increase in
Page 105 and 106:
interest rate falls. People will, t
Page 107 and 108:
employment is liable to fluctuate.
Page 109 and 110:
atios among financial assets in the
Page 111 and 112:
But, defined in a narrow sense, <st
Page 113 and 114:
(2) Economic growth (3) Full employ
Page 115 and 116:
monetary p
Page 117 and 118:
Full Employment and Economic Growth
Page 119 and 120:
price stability along with distribu
Page 121 and 122:
This new set of fa
Page 123 and 124:
Market yield on Equity Tobin sugges
Page 125 and 126:
interest rate will rise again and s
Page 127 and 128:
thriftiness, could not, it was argu
Page 129 and 130:
Keynes emphasized that the liabilit
Page 131 and 132:
close and regular relationship betw
Page 133 and 134:
8. Friedman, M. 1970. The Counter R
Page 135 and 136:
40. Friedman, Milton. 1956. The qua
Page 137 and 138:
CHAPTER-III SIGNIFICANCE OF MONETAR
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3.1. ROLE OF MONETARY POLICY IN DEV
Page 141 and 142:
most of investment
Page 143 and 144:
many financial assets each differin
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composite or integrated system. Thi
Page 147 and 148:
Despite the general support and ind
Page 149 and 150:
is not just second best; it may eve
Page 151 and 152:
3.3. SOME MONETARY CONSTRAINTS Ther
Page 153 and 154:
countries. There is little reason t
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to monetary <stron
Page 157 and 158:
ultimate goal variables on the othe
Page 159 and 160:
CHAPTER- IV REVIEW OF MONETARY POLI
Page 161 and 162:
currency reserves to $6.4 billion a
Page 163 and 164:
public action. The balance
Page 165 and 166:
4.4. MONETARY POLICY 1994-95 The ye
Page 167 and 168:
of growth
Page 169 and 170:
control money growth. The cash rese
Page 171 and 172:
With regard to industrial productio
Page 173 and 174:
atio of 1.7 per ce
Page 175 and 176:
was restored with the sentiment imp
Page 177 and 178:
eserves by over US $ 2.4 billion du
Page 179 and 180:
government administrative departmen
Page 181 and 182:
1999-2000 and an increase o
Page 183 and 184:
has been significant deceleration i
Page 185 and 186:
and SDR) reached a record level <st
Page 187 and 188:
contribution of in
Page 189 and 190:
cent in June, 2003. Lending rates h
Page 191 and 192:
money as of that d
Page 193 and 194:
from late 2003, posed considerable
Page 195 and 196:
under pressure to reach 7.71 per ce
Page 197 and 198:
Inflation, with its roots in supply
Page 199 and 200:
The increasing trend in gross domes
Page 201 and 202:
The average growth of</stro
Page 203 and 204:
and 9.7 per cent in 2007-08 and 200
Page 205 and 206:
facilitating monetary</stro
Page 207 and 208:
world, for the better part
Page 209 and 210:
went up from around 8 per cent to 1
Page 211 and 212:
This is only a brief report <strong
Page 213 and 214:
CHAPTER - V MONEY MARKET INSTRUMENT
Page 215 and 216:
During 1961-85, the interest rates
Page 217 and 218:
Table: V.1 Lending Rate during the
Page 219 and 220:
ii) In the context of</stro
Page 221 and 222:
iv) The Reserve Bank advised that t
Page 223 and 224:
2004-05 2005-06 There was no releva
Page 225 and 226:
1992-93 i) Deposit interest rates w
Page 227 and 228:
domestic term deposit with a maturi
Page 229 and 230:
(B) deposits. This would apply in r
Page 231 and 232:
paying the depositors at the contra
Page 233 and 234:
ii) Entities other than authorized
Page 235 and 236:
iii) The interest rate ceiling on F
Page 237 and 238:
Facility) served as a transitional
Page 239 and 240:
were provided CLF and ACLF for the
Page 241 and 242:
2. In the case of
Page 243 and 244:
5.4. CALL MONEY MARKET The call mon
Page 245 and 246:
1998-99 i) To develop an efficient
Page 247 and 248:
Bank, an increased access over the
Page 249 and 250:
ii) With effect from the fortnight
Page 251 and 252:
5.5. CERTIFICATE OF DEPOSITS (CDS)
Page 253 and 254:
ii) With a view to provide flexibil
Page 255 and 256:
tend to raise amidst ample liquidit
Page 257 and 258:
iii) In November 1996, the extent <
Page 259 and 260:
as reflected in the close co-moveme
Page 261 and 262:
iii) Effective from November 2, 199
Page 263 and 264:
over the monthly average level <str
Page 265 and 266:
1996-97 PSCFC scheme was terminated
Page 267 and 268:
1999-2000 i) The general refinance
Page 269 and 270:
1992-93 Some of th
Page 271 and 272:
ii) As a measure to boost exports,
Page 273 and 274:
2003-2004 i) The interest rate ceil
Page 275 and 276:
1993-94 i) To provide flexibility t
Page 277 and 278:
2000-01 i) In order to impart great
Page 279 and 280:
viii) A fully functional RTGS syste
Page 281 and 282:
led to improvement in liquidity man
Page 283 and 284:
market and more or less stable inte
Page 285 and 286:
CHAPTER -VI MONETARY POLICY IN INDI
Page 287 and 288:
last resort‘, the central bank he
Page 289 and 290:
November 1951 and increases in the
Page 291 and 292:
the Bank Rate by 1 percentage point
Page 293 and 294:
well as prime Lending Rate. Thus, a
Page 295 and 296:
However, the method of</str
Page 297 and 298:
the 14 th day of t
Page 299 and 300:
1998 - 99 The CRR to be maintained,
Page 301 and 302:
With a view to provide further flex
Page 303 and 304:
2004-05 i) Cash reserve ratio (CRR)
Page 305 and 306:
v) The CRR was proposed (October 6,
Page 307 and 308:
Table VI.2(Contd.) Year Effective s
Page 309 and 310:
percentage of thei
Page 311 and 312:
September 1990. In view of<
Page 313 and 314:
2004-07 2007-08 correspondent banks
Page 315 and 316:
The Section 24 of
Page 317 and 318:
3) To stabilize the securities mark
Page 319 and 320:
Table: VI.4 Reforms in the Governme
Page 321 and 322:
Table: VI.4. (Contd.) Reforms in th
Page 323 and 324:
• Negotiated Dealing System (NDS)
Page 325 and 326:
debt manager the RBI is merely sell
Page 327 and 328:
anks and PDs, these policy<
Page 329 and 330:
automatically invested and can rema
Page 331 and 332:
1992-93 During the year, an active
Page 333 and 334:
1999-2000 i) The Reserve Bank annou
Page 335 and 336:
ii) It was decided that the facilit
Page 337 and 338:
ii) The repo rate under the LAF was
Page 339 and 340:
Year Effective since Table VI.5 Mov
Page 341 and 342:
During the year 1992-93, an active
Page 343 and 344:
Reserve Bank announced liquidity su
Page 345 and 346:
2007-08 i) Withdrawal of</s
Page 347 and 348:
Year Effective Date Table VI.6 (Con
Page 349 and 350:
money against securities. Banks do
Page 351 and 352:
According to Chandler, ―in many c
Page 353 and 354:
(3) Though the banks ensure that lo
Page 355 and 356:
term interest rate as their <strong
Page 357 and 358:
the Central Government. The supply
Page 359 and 360:
Chart VI.3. Annual Percentage Varia
Page 361 and 362:
Annual Variation (%) Chart VI.4. An
Page 363 and 364:
Table: VI.9 Money Multiplier during
Page 365 and 366:
Over a period of t
Page 367 and 368:
1977, the RBI has adopted four alte
Page 369 and 370:
(4) M3 Time deposits or fixed depos
Page 371 and 372:
Year Table VI.10 Net Bank Credit to
Page 373 and 374:
Table: VI.11 Total Bank Credit to C
Page 375 and 376:
Table: VI.12 Net Foreign Exchange A
Page 377 and 378:
liabilities to the public had only
Page 379 and 380:
Reserve money and Narrow Money exhi
Page 381 and 382:
supply in India, in almost all the
Page 383 and 384:
Output can be measured both in nomi
Page 385 and 386:
een facing a loss of</stron
Page 387 and 388:
decade of reform,
Page 389 and 390:
India has still a balance between o
Page 391 and 392:
Let us suppose that velocity is con
Page 393 and 394:
Table VI.21 provides the annual rat
Page 395 and 396:
India‘s inflation can also be mea
Page 397 and 398:
taking both the absolute value and
Page 399 and 400:
of other factors s
Page 401 and 402:
6.2.7. MONETARY POLICY AND ECONOMIC
Page 403 and 404:
Table: VI.27 Credit- Deposit Ratio
Page 405 and 406:
with other advanced and emerging ma
Page 407 and 408:
during 1996, 1998 and 2000-02 were
Page 409 and 410:
Table: VI.31 Net Domestic Capital F
Page 411 and 412:
was at the highest in 1991-92, with
Page 413 and 414:
December 2002, employment growth in
Page 415 and 416:
arising from the slowdown in growth
Page 417 and 418:
to the system by the end of
Page 419 and 420:
17. Reserve Bank of</strong
Page 421 and 422:
CHAPTER-VII SUMMARY, FINDINGS, CONC
Page 423 and 424:
6. It is objective and in discrimin
Page 425 and 426:
Most central banks have, therefore,
Page 427 and 428:
Monetarists believe that the econom
Page 429 and 430:
targets is not enough. Such achieve
Page 431 and 432:
3. In India, the opening up <strong
Page 433 and 434:
18. Given the random nature <strong
Page 435 and 436:
BIBLIOGRAPHY
Page 437 and 438:
Chowdhry, Vikram. 2002. Monetary Po
Page 439 and 440:
Keynes, J.M. 1923. A Tract on Monet
Page 441 and 442:
Van Caspel, Venita. 1988. Money Dyn
Page 443 and 444:
EPW Research Foundation, 2000. ‗S
Page 445 and 446:
Kannan, R., Indranil Sen Gupta and
Page 447 and 448:
Prasanth, V.P. and Shetty, S.A. 200
Page 449 and 450:
Smets, F. 1995. ‗Central Bank Mac
Page 451 and 452:
Kannan, R. ‗The Dimensions <stron
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