Economic Reforms and Money-Output Relationship in Indian Economy
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Indian economy has been passing through various phases in building up its economy. Initially when the country got independence, it was essential to make the state an important entity and the planning was more coordinated and regulated. It was the demand of the time that the government should take a leading role in making decisions for the economy.As economic liberalization has improved the money-output relationship in India, therefore, it is suggested that economic liberalization should be speeded up and widened further in whole economy. However, capital formation should be given more importan...
Indian economy has been passing through various phases in building up its economy. Initially when the country got independence, it was essential to make the state an important entity and the planning was more coordinated and regulated. It was the demand of the time that the government should take a leading role in making decisions for the economy.As economic liberalization has improved the money-output relationship in India, therefore, it is suggested that economic liberalization should be speeded up and widened further in whole economy. However, capital formation should be given more importance than money supply in the rural sector to increase output. However, as a caution, a set of variables that relatively depend upon each other need to be targeted by the monetary authorities because no single variable can be targeted to have a desired impact. Though an attempt has been made to bring out the impact of economic reforms on the money-output relationship in Indian economy, there have still been some areas left to be further explored.
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