How Effective is Monetary Policy in India?

Abdenor BRAHMI Conseiller financier, Ambassade de France en Inde.

Kavdamane ETOILE Économiste en charge des questions de développement, Ambassade de France en Inde.

The resurgence of inflation in India since 2009 leads us to examine the steps taken by the Reserve Bank of India, its priorities and objectives. These are multiple: monetary stability and economic growth, but also exchange rate management. The paper assesses the recent activity of the central bank as well as the results from the point of view of its objectives. A restrictive monetary policy has no doubt curtailed activity but, in so doing, has enabled it to check an inflationary spiral from building. Nonetheless, structural economic reforms are necessary so that monetary policy can effectively meet the given objectives.