In India during the planning period the basic objective of monetary policy has been to meet the requirement of the planned development of the economy. With this broad and basic objective the monetary policy has been pursued to achieve the following objective of the economic policy of the Government of India:-
- To accelerate the process of economic growth:- one of the twin aims of the economic policy is to accelerate the process of economic growth with a view to raise the national income. the Reserve Bank has made the allocation of fund to the various sector according to the priorities laid down in the plants and requirement of day to day development
- Control expansion:- the second objective is to control the price and reduce the inflationary pressures in the economy. the monetary policy of The Reserve Bank during the planning period is appropriately termed as that of the "controlled expansion" every economy face two conflicting interests
- Expansion of money supply to finance the process of economic development
- control of money supply to check inflation arey pressure generated in the economy as a result of what development and non development expenditure
Thus, control expansion of money supply was essential for growth with reasonable price stability in the country.
