Role of Monetary Policy during Financial Crisis and its Impact in India

Abstract

In this paper we are going to see what is mean by Sub Prime Crisis, how it started, its impacts on BRIC economics, Impact of crisis on the Indian Economy and Lessons to be learned. In the evolution of any economy, monetary policy is critical. If a country's monetary policy is sound and effective, it will be less affected by the crisis. India has a more stable and effective monetary policy framework, which has protected us from the worst effects of the crisis. The recent Economic Crisis which was also called as “Sub Prime Crisis” or “Global Financial Crisis” has started way back at the end 2007. It was first started as “Sub Prime Crisis” in U.S.A. later spread all over the world as Global Financial Crisis”. The Global Catastrophe is an important part of modern economics because it not only explains the necessity of policy framework in an economy, but it also demonstrates how resilient an economy is in the face of a crisis. To withstand any financial storm, each economy requires a sound monetary policy. This study concludes by stating that policy is intended to promote growth rather than hinder it.