Vol: 11, Issue: 3 2021

Page: 063-077

Monetary Policy and Contemporary Status

Dr Suhasini Parashar

Monetary policy , a process by which the monetary authority of a country, generally the central bank ,Reserve Bank of India (RBI), controls the supply of money in the economy by its control over interest rates so as to maintain price stability and achieve high economic growth . RBI the apex institute of India which monitors and regulates the monetary policy of the country, stabilize the price by controlling inflation . Monetary operations involve monetary techniques which operate on monetary magnitudes such as money supply, interest rates and availability of credit aimed to maintain price stability, stable exchange rate, healthy balance of payment , financial stability, and economic growth. The Government of India, in consultation with RBI, notified the Inflation Target in the Gazette of India Extraordinary dated 5 August 2016 for the period beginning from the date of publication of the notification and ending on the March 31, 2021 as 4% . At the same time , lower and upper tolerance levels were notified to be 2% and 6% respectively. Inflation rate in 2020 is 6.2% . RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) kept its estimate for economic growth unchanged at 10.5 per cent for the current fiscal. Central bank to maintain accommodative monetary policy stance to support growth, keep inflation at targeted level .