Monetry Policy
Y V Reddy: Parameters of Monetary Policy in India
Lecture by Dr Y V Reddy, Deputy Governor of the Reserve Bank of India, at the 88th Annual Conference of The Indian Econometric Society at Madras School of Economics, Chennai, 15 January 2002.
Dr Y V Reddy is grateful to Dr D V S Sastry, Shri Deepak Mohanty, Shri Indranil Bhattacharyya and Shri Kaushik Bhattacharya for their assistance
* Friends
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It is a great honour to be asked to deliver an invited lecture at the annual conference of the Indian Econometric Society and I am grateful to the organisers for this opportunity. For obvious reasons, including the growing interest in monetary policy, I intend presenting before you the parameters of monetary policy in India. In the first part of this lecture, I propose to give a general overview of the parameters of monetary policy. In the second part, I would touch upon the international experience in this regard with a particular focus on changing contours. The third part contains a description of evolving parameters of monetary policy in India beginning with a brief description of the process of policy making. The fourth part would highlight the impressive gains made dring the reform period so far, in regard to statutory preemptions, deregulation of interest rates, financial and external stability despite the persisting fiscal deficits and large market borrowing programmes. The concluding part sets forth immediate tasks before the Reserve Bank of India in its conduct of monetary policy.
Parameters of Monetary Policy Objectives It is generally believed that central banks ideally should have a single overwhelming objective of price stability. In practice, however, central banks are responsible for a number of objectives besides price stability, such as currency stability, financial stability, growth in employment and income. The primary objectives of central banks in many cases are legally and institutionally defined. However, all objectives may not have
Lecture by Dr Y V Reddy, Deputy Governor of the Reserve Bank of India, at the 88th Annual Conference of The Indian Econometric Society at Madras School of Economics, Chennai, 15 January 2002.
Dr Y V Reddy is grateful to Dr D V S Sastry, Shri Deepak Mohanty, Shri Indranil Bhattacharyya and Shri Kaushik Bhattacharya for their assistance
* Friends
*
*
It is a great honour to be asked to deliver an invited lecture at the annual conference of the Indian Econometric Society and I am grateful to the organisers for this opportunity. For obvious reasons, including the growing interest in monetary policy, I intend presenting before you the parameters of monetary policy in India. In the first part of this lecture, I propose to give a general overview of the parameters of monetary policy. In the second part, I would touch upon the international experience in this regard with a particular focus on changing contours. The third part contains a description of evolving parameters of monetary policy in India beginning with a brief description of the process of policy making. The fourth part would highlight the impressive gains made dring the reform period so far, in regard to statutory preemptions, deregulation of interest rates, financial and external stability despite the persisting fiscal deficits and large market borrowing programmes. The concluding part sets forth immediate tasks before the Reserve Bank of India in its conduct of monetary policy.
Parameters of Monetary Policy Objectives It is generally believed that central banks ideally should have a single overwhelming objective of price stability. In practice, however, central banks are responsible for a number of objectives besides price stability, such as currency stability, financial stability, growth in employment and income. The primary objectives of central banks in many cases are legally and institutionally defined. However, all objectives may not have