Impact of Monetary Policy on Indian Economy in the Post-Reform Period

The present study was an attempt to analyze systematically the techniques of monetary control measures with its relevance and changing importance and to find out their effectiveness in the Indian context especially to achieve the thriving objectives of price stability and economic growth.There is definite and remarkable economic impact of monetary policy on Indian economy in the post-reform period. The importance of monetary policy has been increasing year after year. Its role is very relevant in attaining monetary objectives, especially in managing price stability and achieving economic growth. Along that, the use and importance of monetary weapons like Bank rate, CRR, SLR, Repo rate and Reverse Rate have increased over the years. Repo and Reverse Repo rates are the most frequently used monetary techniques in recent years. The rates are varied mainly for curtailing inflation and absorb the excess liquidity and hence to maintain price stability in the economy. Thus, this short-time objective of price stability is more successful on Indian economy rather than other long-term objectives of development.Monetary policy rules can be active or passive. The passive rule is to keep the money supply constant, which is reminiscent of Milton Friedman’s money growth rule. The second, called a price stabilization rule, is to change the money supply in response to changes in aggregate supply or demand to keep the price level constant. The idea of an active rule is to keep the price level and hence inflation in check. In India, this rule dominates our monetary policy. A stable growth is healthy growth.

Recession-induced societal changes- Challanges and Opportunities

The greatest damage inflicted by the recent recession has not necessarily been financial but emotional and psychological. There are a lot of direct and indirect societal challenges ,changes and oppurtunuties that were brought by recession everywhere including in India. In this paper an attempt is made to analyse such societal changes challenges and oppurtunities.

Arbitrage Pricing Theory and Return Generating Process: A Macroeconomic Approach to Indian Stock Market

A study focusing on the identification of return generating factors and to the extent of their influence on share prices the outcome will be a tool for investment analysis in the hands of investors portfolio managers and mutual funds who are mostly concerned with changing share prices. Since the study takes into account the influence of macroeconomic variables on variations in share returns by using the outcome the government can frame out suitable policies on long term basis and that will help in nurturing a healthy economy and resultant stock market. As every company management tries to maximize the wealth of the share holders a clear idea about the return generating variables and their influence will help the management to frame various policies to maximize the wealth of the shareholders.

Foreign exchange reserves in India and China

Professor Irma Glicman Adelman, an Irish Economist working in California University at Berkely, in her research work on ‘Development Over Two Centuries’, which is published in the Journal of Evolutionary Economics, 1995, has identified that India, along with China, would be one of the largest economies in this 21st Century. She has stated that the period 1700 - 1820 is the period of Netherlands, the period 1820 - 1890 is the period of England the period 1890 - 2000 is the period of America and this 21st Century is the century of China and India. World Bank has also identified India as one of the leading players of this century after China. India will be third largest economy after USA and China. India will challenge the Global Economic Order in the next 15 years. India will overtake Italian economy in 2015, England economy in 2020, Japan economy in 2025 and USA economy in 2050 (China will overtake Japan economy in 2016 and USA economy in 2027). India has the following advantages compared with other economies. India is 4th largest GDP in the world in terms of Purchasing Power. India is third fastest growing economy in the world after China and Vietnam. Service sector contributes around 57% of GDP. The share of agriculture is around 17% and Manufacture is 16% in 2005 - 2006. This is a character of a developed country. Expected GDP growth rate is 10% shortly (It has come down from 9.2% in 2006 - 2007 to 6.2% during 2008 - 2009 due to recession. It is only a temporary phenomenon). India has $284 billion as Foreign Exchange Reserve as on today. India had just $1 billion as Foreign Exchange Reserve when it opened its economy in the year 1991. In this research paper an attempt has been made to study the two booming economies of the globe with respect to their foreign exchange reserves. This study mainly based on secondary data published by respective governments and various studies done on this area