Monetary Policy

tery poliY V Reddy: Monetary policy developments in India – an overview

Address by Dr Y V Reddy, Governor of the Reserve Bank of India, at the Sveriges Riksbank, Stockholm, 7 September 2007. * Friends, I am honored by the kind invitation of Governor Stefan Ingves to visit Riksbank and give an address at the central bank. It is a great privilege to address an august gathering in the oldest central bank in the world, Riksbank. I came in close contact with Governor Ingves when he was working with the IMF. As a Director in the Executive Board of IMF, I have been an admirer of Mr. Ingves when he headed the Monetary and Exchange Affairs Department, which has now become the Monetary and Capital Markets Department. During his tenure in the IMF, he was instrumental in spearheading the Financial Sector Assessment Programme, which stands today as an important tool for crisis prevention. His comments in recent years on various fora as Governor reflect both his excellent professionalism and proven pragmatism. We, in the Reserve Bank, look forward to continued collaboration with Riksbank. Thank you Governor, for inviting me to your wonderful country, which I visited as a student on vacation in 1968. My address today is on a theme traditionally close to the heart of any central banker. A review of the recent developments in the Indian Economy would be done in the first section. Second, I would review the trends in monetary policy challenges globally and for emerging market economies (EMEs) in particular. In the third section, I would explain the monetary policy framework in India. Some issues in the conduct of monetary policy in India would be covered in the fourth section followed by a few concluding observations. I. A review of outcomes * *

Growth with stability The average growth rate of the Indian economy over a period of 25 years since 1980-81 has been impressive at about 6.0 per cent, which is a significant improvement over the previous three decades, when the annual...