monetary

Role and Functions of Reserve Bank of India and commercial banks

Role of RBI Pre-reform Post-reform Developmental Role: the developmental role has increased in view of the changing structure of the economy with a focus on SMEs and Financial Inclusion Priority Sector Lending: Introduced from 1974 with Public Sector Banks. Extended to all Commercial Banks by 1992 In the revised guidelines for PSL the thrust is … Read more

Inflation & Control Mechanism

Inflation is a sustained increase in the general price level of goods and Services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services.It is the Percentage change in the value of the Wholesale Price Index (WPI) on a year-on year basis. It effectively … Read more

Quick Revision- MONETARY POLICY TOOL

Monetary Policy TOOL: There are several direct and indirect instruments that are used for implementing monetary policy. Repo rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the Liquidity Adjustment facility (LAF). Reverse Repo Rate: The (fixed) interest rate … Read more

Open Market Operation (OMO)

Open Market Operations: The Central Bank’s Powerful Tool for Monetary Policy Open market operations (OMOs) are a cornerstone of modern monetary policy, providing central banks with a powerful tool to influence interest rates, money supply, and ultimately, economic activity. This article delves into the intricacies of OMOs, exploring their mechanisms, objectives, and impact on the … Read more

Monetary Policy Committee (MPC)

The Monetary Policy Committee: Guardians of Economic Stability The Monetary Policy Committee (MPC) plays a crucial role in shaping the economic landscape of a nation. This independent body, often composed of economists and financial experts, is tasked with setting interest rates and managing the money supply to achieve specific macroeconomic objectives. This article delves into … Read more

Disinflation

Disinflation: A Deeper Dive into the Economic Phenomenon Disinflation, a term often used interchangeably with deflation, is a crucial concept in macroeconomics. While both terms relate to a decrease in the general price level, they differ in their nuances and implications. This article delves into the intricacies of disinflation, exploring its causes, effects, and potential … Read more

Economic Reforms

Economic Reforms In India New Industrial Policy Under Industrial Policy, keeping in view the priorities of the country and its Economic Development, the roles of the public and private sectors are clearly decided. Under the New Industrial Policy, the industries have been freed to a large extent from the licenses and other controls. In order … Read more

GDP Deflator

The following are subtopics of GDP deflator: Definition Formula Calculation Uses Limitations Examples Related topics The GDP deflator is a measure of the level of prices of all final goods and services produced in an economy in a given year compared to a base year. It is calculated by dividing the nominal GDP by the … Read more