10

Monetary and Credit Policy Reforms in India

V. R. Prabhakaran Nair

10.1 Introduction

The monetary and credit policies of the Reserve Bank of India (RBI), coupled with the fiscal policy of the Government of India, influence the pace and direction of the economic development. The comfortable liquidity, stable interest rate and timely flow of credit to the productive economic activities induce investment and production with the result that the growth process gets a stimulus. India’s Monetary and Credit Policy (MCP) in the reform period has attracted attention since it has undergone pertinent changes. Along with the financial sector reform adopted in 1991, the MCP reforms were initiated with the short-term interest rate playing a prominent role ...

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