rbi controls the indian economy by introducing the concept of repo rate and reverse repo rate. repo rate:- it is the rate at which banks borrow from rbi and reverse repo rate is the rate at which rbi lends money from banks. an increase in repo arte and reverse repo rate means an increase in interest rate which causes lower demand and which in turn causes lower inflation.
cash reserve ratio:- banks has to keep some money with rbi as per this policy. by increasing crr, banks has to keep more amount of money with rbi . this results in lowering of liquidity in the market. lowering of liquidity in the market means less money to borrow or to invest which means less demand which finally causes decrease of inflation.
higher growth means higher demand for credit which means higher inflation. rbi regulate the indian market by regulating the repo rate and reverse repo rate,crr and slr(slr does not mean self loading rifle but statuary liquidity ratio).
In order to sustain indian economy, monsoon this year play a vital role । Al nino effect which was prevelant during 2009 will not happen this year. Strong monsoon result in good production during kharif and rabi seasons which will bring huge agricultural prduction which again will boost the demand and finally the prices of food will go down leading to decrease in inflation.
Sunday, January 30, 2011
Saturday, January 29, 2011
Inclusive growth
India is a country having world second largest population. still, only 50 to 60 % population avail the facilities of banking . The excluded population includes underprivileged class, people under BPL etc. with the concept of financial inclusive growth, banks can provide services to them in terms of lending, financing loans, credit schemes etc. This helps in reducing the number of persons below poverty line. It also helps in locating the areas where developments is required. In developed economies, financial inclusion includes small population. whether in india, it includes large excluded populations. It helps in overall growth of the society. It helps in terms of social growth, political awareness and economic growth also. The initiatives taken by rbi regarding financial inclusion is reaally praiseworthy.
India is a country having world second largest population. still, only 50 to 60 % population avail the facilities of banking . The excluded population includes underprivileged class, people under BPL etc. with the concept of financial inclusive growth, banks can provide services to them in terms of lending, financing loans, credit schemes etc. This helps in reducing the number of persons below poverty line. It also helps in locating the areas where developments is required. In developed economies, financial inclusion includes small population. whether in india, it includes large excluded populations. It helps in overall growth of the society. It helps in terms of social growth, political awareness and economic growth also. The initiatives taken by rbi regarding financial inclusion is reaally praiseworthy.
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