Economic Implications of Money Supply in India: An Analysis
Dr.R. KARTHIKEYAN
, Dr.B.KUMUTHA , Dr.B.SUMATHI
Money Supply, Interest Rate, Inflation, Growth Rate, Monetary Policy
Abstract The causality, direction and strength of relationship between money, output and prices has always been a frequently debated topic among policy makers. This issue deserves this attention because it reveals implications of monetary policy. The relationship between these variables has been a debated widely among different schools of thought of economics. The Monetarists claim that money plays an important role and leads to changes in nominal income and prices. The Keynesians, on the other hand, argue that stock of money supply does not play an active role in changing the income and prices. This paper aims to make an empirical analysis on the Changes in Money Supply and its Causes and Consequences in India. However, the specific objectives are to trace the trends in component wise Money Supply in India; to analyse the causes responsible for and the effects of the changes in Money Supply in India; and to explore the Macro Economic Implications of changes in Money Supply in India. This analysis found that the Money Supply in India during the study period has been tremendously increased from Rs. 11020 crs to Rs. 188.46 lakh crs, while the Currency in Circulation has also been increased merely from Rs. 4557 crs in 1970 - 71 to Rs. 28.54 Lakh crs in 2020–21. It is known from the table that as the money supply in India during the study period increases the price level have also changes positively for all commodities invariably except Fuel and Power. But the rate of change differs with commodities. It is a fact that the changes in Money Supply have its influence on the unemployment/employment in an economy through, inflation, GDP, Capital Formation, and others. It is concluded that neither Monetary Policy management nor Fiscal Policy management can bring the effectiveness in the money supply in the economy, but the judicious mix of management of both Monetary Policy and Fiscal Policy can facilitate for effectiveness in the money supply in the economy.
"Economic Implications of Money Supply in India: An Analysis", IJSDR - International Journal of Scientific Development and Research (www.IJSDR.org), ISSN:2455-2631, Vol.8, Issue 10, page no.248 - 254, October-2023, Available :https://ijsdr.org/papers/IJSDR2310044.pdf
Volume 8
Issue 10,
October-2023
Pages : 248 - 254
Paper Reg. ID: IJSDR_208855
Published Paper Id: IJSDR2310044
Downloads: 000347489
Research Area: Social Science and Humanities
Country: Mayiladuthurai, , Tamil Nadu, India
ISSN: 2455-2631 | IMPACT FACTOR: 9.15 Calculated By Google Scholar | ESTD YEAR: 2016
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 9.15 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publisher: IJSDR(IJ Publication) Janvi Wave
