Monetary Policy and Its Impact on Indian Economy: A Critical Analysis

Monetary Policy is a Policy made by the central bank (RBI) to control money supply in the economy and thereby to fight both inflation and deflation. It helps maintain price stability and achieve high economic growth. To Combat Inflation RBI reduces Money Supply (Tight/Dear Money Policy). To Combat Deflation RBI increases Money Supply (Easy/Cheap Money Policy). There are certain quantitative and qualitative tools of monetary policy adopted to achieve specified goals. This paper tries to study all the tools and critically analyze their impact on the growth of the Indian economy since 2011–2016. The objectives and the various issues concerned with this policy, their indicators and targets are being succinctly discussed here.