Monetary Policy Goals for Economic Stability in India

  • R Sumithra Assistant Professor, Department of Economics, SEA Group of Institution, Bangalore, Karnataka, India
Keywords: Monetary Policy, Inflation Rate, Economic Stability, Economic Growth, Repo Rate, Central Bank and Deflation Risk

Abstract

This paper focused on the goals of monetary policy on how to take action to reduce the inflation rate and achieve economic stability in India. The monetary policy the arm of public policy the usual goals of monetary policy are to achieve full employment, to achieve high rate of economic growth, and to stabilize prices and wages, to maintain equilibrium the balance of payment, influencing the cost and availability of credit and increasing the repo rate by central bank and Government of India. Every country needs to achieve price stability in economic development. The inflation rate below close to 2% is low enough to allow the economy to benefit fully from price stability and avoid deflation risk and, beyond the level of inflation above 3 to 10% in any economy of the country, it’s harmful to the economy. Present India’s consumer price inflation rate was (CPI) 3.9% and the whole sale inflation rate of (WPI) 1.8% in the Financial Year of 2019. According to Econometric models estimated in 2020, India’s inflation rate is projected around 4.5%. 

In this study, we study whether inflation is an effective tool for controlling inflation and achieving economic stability in India?

Published
2020-03-01
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How to Cite
Sumithra, R. (2020). Monetary Policy Goals for Economic Stability in India. Shanlax International Journal of Economics, 8(2), 5-11. https://doi.org/10.34293/economics.v8i2.2155
Section
Articles