How monetary policy can help India regain its youth

Abstract

The economy has begun to show distressing results because of low growth impacted by high interest rates, arguably justified because of high inflation and the global financial crisis. Stringent monetary measures have not been able to tame inflation - which has been high not because of demand but supply-side and political economy factors - but slowed the overall growth of the economy, resulting in rising stressed assets.

In a close precedence, though Paul Volcker was successful in taming inflation by significantly tightening the monetary policy in the US in the 1980s, it led to recessionary pressures. Still earlier, one of the reasons for the Great Depression of the 1930s was tight monetary policy, according to Anna Jacobson Schwartz and Milton Friedman. In India, which lacks a seamless monetary transmission mechanism and a social safety net, such stringent policy measures also need to consider demographic factors of the economy. Read more at: https://www.business-standard.com/article/opinion/charan-singh-how-monetary-policy-can-help-india-regain-its-youth-114010801772_1.html