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The basic advantage of such an index is that it provides a time series of values summarising monetary policy stance. There has been a plethora of studies in generating such indices, particularly in the US, providing a unique set of data, which, with appropriate statistical techniques can be used to verify the potency of monetary policy actions. Economic And Political Weekly pdf free download. Download or Buy eBook Here.

Leave a Comment Cancel reply. Go to mobile version. However, Quantum and Cost of Refinance adequately designed, they are helpful for prudential purposes in less developed economies, and can make the banking system more The refinance mechanism is often used by central banks to resilient to a crisis when the central bank has limited lender of last influence the level of bank reserves and short-term interest rates. Thus, the lags of monetary policy operations are of end-of-day imbalances.

The design of refinance instruments considerably reduced through OMO [Mishkin ]. In India, must take into account the exchange rate regime, the stage of with increases in capital inflows since the mids, OMO have development of the inter-bank market and the need to minimise also served the added purpose of sterilising inflows to mitigate central bank credit risk in refinance operations [Laurens ].

However, the relative importance has varied depending on the Selective Credit Control degree of liquidity constraints in the banking system. Recourse to higher levels of refinance beyond certain limits flow of credit to the desired sectors while preventing excessive entailed higher rates of interest. The graduated system of higher credit withdrawal for less essential economic activities. It was rates sought to exercise a quantitative check on the quantum of usually applied to achieve a reduction in excessive advances refinance combined with a measure of cost escalation for such against certain sensitive commodities in short supply and to borrowing.

Selective credit control was operated through one, or a combi- Interest on Deposits nation, of the techniques of i minimum margin for lending against the value of specified securities ii ceiling on the level Changes in deposit rates are indicative of the overall stance of credit and iii minimum rate of interest on advances.

While of monetary policy, which affects the cost of funds of banks and the first two measures sought to control the quantum of credit, its profitability. During periods of financial fragility, active the third had a bearing on the cost of credit. The margin control competition among banks is discouraged by the imposition of was intended to act on the demand side by making such bor- a ceiling rate on deposits.

In India, interest rates were largely administered in the the s. Post-reform, there was a concerted effort substantially reduced. With regard to non-resident deposits, there Construction of a Narrative Measure are still some restrictions on tenure or cost.

During the period under study i e, , the Indian Interest on Lending economy can be broadly categorised into four phases from growth and inflation considerations, viz, i low growth and high infla- Lending rates have an impact on the demand for credit and tion; ii low growth and low inflation; iii high growth and high the investment scenario of the economy.

While high lending rates inflation and; iv high growth and low inflation. In the pre period, lending rates were also sub- phase was typically the years of the oil shocks, viz, , jected to a host of regulations. Central banks use OMO as a key in- Reactivated since strument in managing liquidity conditions in the system. Low High growth and 3 Minimum net liquidity ratio raised to 39 per cent. Thereafter, for every high fall of 1 percentage point in net liquidity ratio, borrowing rate will Inflation per cent.

Growth per cent 5 Small-scale industry and agriculture will be exempted from the. The second phase were the years of , 7 Maximum rates on all other export credit excepting on deferred payment will be stepped up from 7 to 8 per cent.

The third phase was evidenced during 8 The present minimum rate of 8 per cent on bill finance will be fixed , and post-reform The fourth phase 1 per cent below the minimum lending rates for advance, i e, at 9 per cent. In this 3 April 1 SLR raised from 32 to 33 per cent. BoP crisis years was of paramount importance as these shocks 4 The total sanction bill rediscount limit is reduced to about 40 per impinged on an economy having surplus liquidity; hence mon- cent of the existing level for the system as a whole.

Taking into account the relentless 9 per cent per annum. The measures were 3 Minimum lending rate raised from 11 per cent to Similarly, in the wake of domestic political per cent to 11 per cent. Bank, in this context, were aimed at restricting the flow of credit 4 Minimum margins of select commodities under selective credit to the commercial sector. Accordingly, the level of refinance control raised by 10 basis points. In a similar 3 Interest rates on refinance on days Treasury Bills raised from Moreover, the east Asian crisis of 6 Rate of interest on term deposits is increased.

The episodes of strong contractionary measures 9 October 1 Bank rate raised by 1 percentage point. While monetary tightening measures were introduced to stem 3 Deposits rates of banks raised by per cent for various maturity. Illus- 10 January 1 Bank rate raised from 9 per cent to 11 per cent. We selective credit control measures in order to restrict credit flow have chosen a scale of five -2, -1, 0, 1, 2 representation, to sensitive commodities during this decade.

The aggregate demand. Consequently, the monetary impact of greater index ranges from —2 through 2, with a value of —2 being monetisation was sought to be neutralised by raising the CRR indicative of a strong policy emphasis on monetary control and while unbridled credit expansion in the commercial sector was a value of 2 reflective of the policy authorities intent on monetary checked through the imposition of a higher SLR.

Inflation during expansion. This classification scheme has been employed be- the mids continued to be demand driven but the source of cause the policy statements clarified the policy objectives and liquidity overhang was a large increase in capital inflows, which rationale in terms of its prospective impact on monetary expan- supplanted monetisation of deficits as the primary driver of sion and, hence, inflation and economic activity.

Further, while liquidity expansion. As a result, the RBI took greater recourse policy shift towards growth promotion was usually accompanied to OMO in mopping up liquidity from the system besides raising the CRR.

Thus, the choice of and emphasis on a particular Table 3: Dates of Strong Expansionary Monetary Measures monetary policy instrument has varied across the decades, par- No Dates Measures ticularly, in the context of inflation emanating from different 1 October 1 Reduction in SLR by 0. Post reforms, 5 Reduction by 1 percentage points in lending and deposit rates of banks. Not surprisingly, therefore, the strongly expansionary 3 Reduction in deposits rates of NRE accounts.

Similarly, measures were initiated to 2 Reduction in saving deposits rates of banks. Finally, 4 April 1 Bank rate reduced by 1 percentage point. This momentum was maintained in the subsequent October policy 5 October 1 Bank rate reduced by 1 per cent. These measures did not necessarily reflect a shift in monetary policy stance arising out of a change in policy priorities Table 4: Dates of Mild Contractionary and Expansionary Monetary Measures but have been more in the nature of regular central banking operations.

In this regard, while tightening measures often re- Nature of Dates Monetary Policy flected sector specific squeezing of liquidity, monetary easing measures were supportive of the process of institutional, instru- Mild contraction , , , , , , , mental and market reform. After the neglected till the s. With Austria, the Russian revolution of and the Chinese revo- the elevation of the status of the area, the responsibility and lution. AAPSU has been the have brought significant social and political changes in the strongest, oldest and the apex body having linkage with students midth century.

Thus, participation of young people in mass movement in Arunachal Pradesh as this year showed a drastic movements has been common and noteworthy [Dutta ].

Until role during the freedom struggle. Its main mode of restricts entrance of even Indian citizens to Arunachal Pradesh activities was to pray with petitions and for partnership with the without valid inner-line permit in accordance with the Bengal government to draw attention to some of the problems of the Eastern Frontier Regulation Act of BEFRA.

The meeting student community, in particular, the people of the state in feels that the settlement of refugees in Arunachal Pradesh for a general. In the meantime, with the creation of the union territory prolonged period may be risky to security and hamper the inte- gration of the territory in due course.

Further, in certain areas the and its corollary side effects, the demands of the APPSU became concentration of refugees and the speedy growth of their population more specific and broad-based. Some of the important ones were have threatened to change the demographic picture of the area. The meeting now resolves to urge the government for immediate 4 Effective checks against further infiltration of foreign nationals. The territory [ibid: 32].

The meeting urges the government to take effective in the subsequent years [ibid: 27]. Arunachalees, stoppage of allotment of contract to non- The meetings observed that while the chief minister assured Arunachalees, etc. In support of these demands, the AAPSU in his broadcast on April 23, that no land allotment has organised a series of district-level bandhs from August , been made to non-Arunachalees on a permanent basis, there were The government was therefore urged to check and taken the shape of a widespread mass movement.

The more or less identical problems faced by the two of the state. In , again the religious persecution of the Chakmas Here it would be relevant to analyse the roots of the Assam- and Hajongs of the tract in East Pakistan compelled them to leave Arunachal boundary and refugee problems of Arunachal Pradesh, their country to join their refugee brethren in Tripura.

Pakistan government showed no signs of taking their people back As far as boundary problem of Assam and Arunachal is con- and as the Tripura government had to take a tough stand because cerned, it arises because of the very fact that the states of of the heavy burden of refugees there, the refugees moved further Arunachal Pradesh, Meghalaya, Nagaland and Mizoram were east.

Mahavir Tyagi, the then union relief and rehabilitation part of the composite Assam state. The boundary was not properly minister, tried to settle them in Bihar by offering cash doles.

But defined and demarcated and to claims and counter-claims on this the majority of the Chakmas refused to move to Bihar on the issue are persisting.

The problem from Arunachal can be best plea that the climate of that state would not suit them. These a plan of settling these refugees in NEFA. Thereafter, the history resolutions were adopted in the meeting held in Pasighat on of settlement of Chakma and Hajong refugees in NEFA began.

August 26, , which was attended by the representatives of Even those refugees who went to Bihar for settlement at Gaya tribes from different districts and various political leaders. It was district came back to join their brothers in NEFA in Some of the most important resolutions settled in the three districts of Tirap, Lohit and Changlang. The Indo- Arunachal Pradesh. Interestingly, once statehood was granted to Arunachal Though the Tibetans were settled in Changlang and Lohit, their Pradesh in February , the AAPSU did not pursue its stand main concentration remained confined to Kameng and Tawang of opposing the bill by demanding a few amendments to the district of Arunachal Pradesh.

Thus it appears that the vehement opposition The Chakmas, Hajongs and the Tibetans were allowed to settle was neither called for nor with proper and calculated discourse in NEFA when it was under the ministry of external affairs MEA and thought on the matter [Dutta op cit: 41].

Thus while the seeds of a critical problem election, the AAPSU toned down its activities to a great extent, were sown in the area, neither the people of NEFA nor their but it continued pursuing its demands submitted in earlier representatives were consulted in settling refugees in the area.

It also organised a dharna before the state legislative assembly The Assam Accord of August 15, seemed to have en- in February to pressurise the state government. This time the demand for job reservation was increased were still unsolved. However, the government had again come into the limelight for its serious agitational refused to accept these demands. Kipa Kache, a student of Nyapin secondary school, ministers, chief secretaries and commissioners, in which many was killed in police firing on February 3, A tripartite committee had Pasighat on August 17, and decided to erect a memorial also been constituted to go into the details of the problem to find for Kipa Kashe in every educational institution [ibid: 39].

In the last meeting of the chief ministers The AAPSU decided to further intensify the agitation and of the two states, it was resolved to constitute a boundary chalked out a year-long programme for it by deciding to have committee of equal ratio of representatives from both the sides a poster campaign on October 25 which was to be followed by by involving the local elected representatives, deputy commis- a statewide hunger-strike on November 5, and a march to sioners and superintendent of police wherever it was found to the legislative assembly on a subsequent date.

Besides, they also be necessary. The election manifesto of the Congress-I for the decided to submit an ultimatum to the government to concede election of the legislative assembly of Arunachal Pradesh in to their demands by September Since the Chinese aggres- the central and the Assam governments the importance and sion in , the question of statehood to the union territory was urgency of coming to the negotiating table to find an acceptable gaining ground in the minds of the Arunachalees.

During a visit and permanent solution to this burning problem. The decision of the central government to grant rallies and stayed there for about a month to attract the attention statehood of Mizoram as per the terms of the Mizo Accord of the central leaders to the problem.

In spite of their month- inspired the people of Arunachal Pradesh to intensify their long efforts to meet the prime minister it has been reported that demands, when the cabinet went to Delhi to discuss the possibility the prime minister refused to meet the delegates.