Analysis of Monetary Policy and its Impact on Indian Economy

Abstract

Monetary policy matters for growth both in the short-run and long-run. This study focuses on theevaluation of monetarypolicyandits impact on Indian economy. Via monitoring the level of money supply, the central bank strives to protect price stability. The study is done using various indicators and factors such as Gross domestic product as dependent variable and repo rate, reverse repo rate, unemployment, Foreign direct investment and inflation as independent variable. Using these variables, it was found out that the economy of a nation is totally dependent on these factors. The parameter of calculating GDP was different. The objective of the research is to know effectiveness of monetary policy in India and to analyze the impact of selected monetary instruments on Indian Economy.