Question

Write an essay on the structure and importance of monetary system in the context of the Indian economy.

Answer 1

Monetary policy are steps taken by RBI to regulate supply and cost of money and credit in order to achieve socio economic goals of the economy. The tools that are used by RBI to regulate money supply are open market operations, cash reserve ratio, bank rate, repo rate, reverse repo rate and statutory liquidity ratio etc. Monetary policy is india is important to maintain price stability in country price is affected by money supply and monetory policy regulate money supply to maintain price stability. It is also important to promote economic growth and to promote saving and investment, to promote exports and substitute imports to promote employment and to develop infrastructure it provides concessional funds to promote infrastructure and provide concessional loans to productive sectors and provide loans scheme for unemployed to promote employment.

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