Effectiveness of Indian Monetary Policy in Present Context (An analytical appraisal)

In the content of developing economy like India the main motive of monetary policy is to stablize and fulfilling the infied balancing process. For this, R.B.I. has time to time used and tested various quality controls for the use of currency. These controls can vary according to circumstances. In other words the quantitative and selective approaches has always changed due to changing scenarios because India has its own limitations for finance and economy. These limitations are on the one hand due to the characteristics of developing economy and on the other hand due to the present state of economy. In the present context, the Indian monetary policy runs under the various limitations such as nature, structure, parallel economy and currency market etc. Other than these limitations the effectiveness of financial equipments are minimised by certain other forces like public expenses, taxes, agricultural policies, foreign business and investment policies etc. Though a developing country has very limited area of monetary policy for its development, but it does not mean that it has no roll in developing countries. It is true that the huge problem of economic growth can’t be rectified by economic respecffling because the economic growth depends on man power, capital, land and other such resources. But the monetary policy can help to a great extent in the conomic growth by supply of credit and minimisation the inflation that’s why the monetary policy is considered as the base for economic growth. By analysing the Indian monetary policy we can conclude that it has a very strong fundamental back ground but when it is practically applied various problems are generated that are given in the above analysis. This is the reason that monetary policy can’t achieve more success in its goals.