The Impact of Monetary Policy on Economic Growth: An Empirical Study of India

Monetary policy plays a central role in stabilising price levels and supporting economic growth in emerging economies. In India, the Reserve Bank of India (RBI) uses various monetary tools to influence inflation, liquidity, and credit availability, which ultimately affect economic activity. This study empirically examines the relationship between monetary policy indicators—such as the repo rate, cash reserve ratio (CRR), and money supply (M3)—and economic growth, measured by Gross Domestic Product (GDP). Using secondary data from 2000–2016, the research applies correlation and regression analyses to explore the dynamic interactions between monetary policy and growth. The findings reveal that repo rate and CRR are negatively associated with GDP growth, while money supply shows a strong positive relationship. The study concludes that accommodative monetary policy contributes significantly to economic expansion. Recommendations emphasize the importance of maintaining balanced policy frameworks to sustain growth while controlling inflation.