Monetary policy of India and its objectives. - MAINS QUESTION - DAILY CURRENT AFFAIR QUESTIONS AND ANSWERS

Monday, September 14, 2020

Monetary policy of India and its objectives.

-The policy of controlling the flow of money in an economy is called monetary policy. Its aim is to ensure the economic development and economic stability of the state. In the form of monetary policy, either an expansion policy increases the supply of money in the economy more quickly than normal and the contractionary policy increases the money supply more slowly than normal or it also shrinks, where expansion or contractionary Is known for Expansionary policy has traditionally been used to try to deal with unemployment in a recession by lowering interest rates in hopes that easy credit expansion will entice businesses into contractual policy resulting from distortions and deterioration of asset values The intention is to slow inflation in order to escape. The central bank of all countries makes this policy. Monetary policy in India is made by the RBI.

Objectives of monetary policy

Controlling inflation and currency deflation is by controlling the flow of money.

The flow of money in the monetary system is between the borrower and the depositor and this work is done by financial institutions.

There are two types of financial institutions - banking and non-banking.

Banking and some non-banking institutions have RBI control.

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