With reference to Indian economy, consider the following:

1. Bank rate
2. Open market operations
3. Public debt
4. Public Revenue

Which of the above is/are component/components of Monetary Policy?

[UPSC Civil Services Exam – 2015 Prelims]

(a) 1 only

(b) 2, 3 and 4

(c) 1 and 2

(d) 1, 3 and 4

Answer: (c)        

Explanation:

• The Reserve Bank of India (RBI) utilizes various tools to implement monetary policy, including open market operations, bank rate, cash reserve ratio (CRR), statutory liquidity ratio (SLR), repo rate, and reverse repo rate.
• The bank rate refers to the interest rate at which the RBI lends loans to commercial banks. Open market operations involve the buying and selling of government securities (G-Secs) by the RBI to manage liquidity in the market.
• These tools are employed by the RBI to regulate and adjust the flow of money within the economy as part of its monetary policy measures.