Monetary Policy Transmission in India
| Monetary Policy Transmission Mechanism in India | Group 6 | Adarsh N (PGP/16/060)
Deepak Jangid(PGP/16/080)
Eshnna V P Ekka(PGP/16/081)
Gaurav Chand(PGP/16/082)
Hemant Kumar(PGP/16/083)
Nishanth S(PGP/16/096)
Adarsh N (PGP/16/060)
Deepak Jangid(PGP/16/080)
Eshnna V P Ekka(PGP/16/081)
Gaurav Chand(PGP/16/082)
Hemant Kumar(PGP/16/083)
Nishanth S(PGP/16/096) | | 12/22/2012 |
|
Abstract
This paper tries to explain the structure of monetary policies in India. Earlier shadowed by fiscal policies, monetary policies have evolved through many stages to gain significant influence over the economy. A major role was played by 1991 transformations which resulted into market forces showing great impact on the economy. A dire need was seen by RBI to make changes in the existing structure of policies. Some changes were followed in 1997-98 and 2004. Introduction of MSS (Market Stabilization Scheme) and FRBM (Fiscal Responsibility and Budget Management), Act allowed monetary policies to gain more autonomy and separation from the fiscal policies. Also, this report makes an effort to examine the transmission mechanism of monetary policy in India. The results lead to the conclusion that the lending rate initially increases in response to a monetary tightening. Bank lending channel play an important role in transmission of monetary policy shocks to the real sector. 1. Introduction
A key characteristic of the efficient transmission of monetary policy is the condition that it must extend a systematic influence on the economy in forward-looking sense. Broadly, vehicles of transmission are classified into financial market prices and financial market quantities.
These channels are not mutually exclusive in their performance, the effectiveness of these channels differ from one country to another country depending upon structural characteristics, state of development of financial markets, the monetary instruments available, the fiscal stance and the
Deepak Jangid(PGP/16/080)
Eshnna V P Ekka(PGP/16/081)
Gaurav Chand(PGP/16/082)
Hemant Kumar(PGP/16/083)
Nishanth S(PGP/16/096)
Adarsh N (PGP/16/060)
Deepak Jangid(PGP/16/080)
Eshnna V P Ekka(PGP/16/081)
Gaurav Chand(PGP/16/082)
Hemant Kumar(PGP/16/083)
Nishanth S(PGP/16/096) | | 12/22/2012 |
|
Abstract
This paper tries to explain the structure of monetary policies in India. Earlier shadowed by fiscal policies, monetary policies have evolved through many stages to gain significant influence over the economy. A major role was played by 1991 transformations which resulted into market forces showing great impact on the economy. A dire need was seen by RBI to make changes in the existing structure of policies. Some changes were followed in 1997-98 and 2004. Introduction of MSS (Market Stabilization Scheme) and FRBM (Fiscal Responsibility and Budget Management), Act allowed monetary policies to gain more autonomy and separation from the fiscal policies. Also, this report makes an effort to examine the transmission mechanism of monetary policy in India. The results lead to the conclusion that the lending rate initially increases in response to a monetary tightening. Bank lending channel play an important role in transmission of monetary policy shocks to the real sector. 1. Introduction
A key characteristic of the efficient transmission of monetary policy is the condition that it must extend a systematic influence on the economy in forward-looking sense. Broadly, vehicles of transmission are classified into financial market prices and financial market quantities.
These channels are not mutually exclusive in their performance, the effectiveness of these channels differ from one country to another country depending upon structural characteristics, state of development of financial markets, the monetary instruments available, the fiscal stance and the
References: 1. http://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2356 2. Bernanke, B. and M. Gertler (1995), ‘‘Inside the Black Box: the Credit Channel of Monetary Policy Transmission’’, Journal of Economic Perspectives 3. Monetary Policy Transmission in India (2004)- Rakesh Mohan 4. " Transmission mechanism of monetary policy in India" by Abdul Aleem, Journal of Asian Economics, Volume 21, Issue 2, (April 2010) 5. www.rbi.org.in 6. www.investopedia.com 7. Wikipedia