Q.3 What changes were made by the RBI in its monetary policy in the wake of Covid? Examine the steps taken by the RBI towards policy normalisation without causing disruption. (10 Marks)

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7 responses to “Q.3 What changes were made by the RBI in its monetary policy in the wake of Covid? Examine the steps taken by the RBI towards policy normalisation without causing disruption. (10 Marks)”

1. 

   December 13, 2021

   aarti bhimani

   Eco que

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   1. 

      December 17, 2021

      Staff @CD

      Aarti

      Please mention reference ID for further reviews.

      First part of your answer is fine, in intro it seems you have missed something in the 2nd line.
      Steps taken for recovery by RBI is fine..you can mention other things GSAP, long term repo operations etc to make it more technical.
      After that first mention, what do you understand by policy normalisation..going back to neutral or tighter policy after recovery.
      Talk about how we have seen a liquidity surplus in the economy after the accomodative monetary policy as well as increasing forex.
      Then mention steps taken by RBI to absorb this extra liquidity and bring things back to normal- stopped buying bonds under the Govt Securities Asset Purchase (GSAP) and done negligible Open Market Operations; used the reverse repo window ; allowed banks the option to prepay the outstanding borrowings from the TLTROs etc
      We need to talk about RBI measures rather than tax revenue, investment etc..Conclusion can also be better..RBI has done well atleast till now..greater vision etc can be avoided..just mention its role has been important.
      Keep writing. 🙂
2. 

   December 13, 2021

   muskan garg

   .

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   1. 

      December 17, 2021

      Staff @CD

      Muskan

      You have written well, broadly you have addressed how RBI helped in recovery after Covid. But the 2nd part of the question that how it is going back to policy normalisation has not been tackled adequately.
      Policy normalisation here means going back to neutral or tighter policy after recovery, so after keeping interest rates low, you can mention how a liquidity surplus situation has prevailed in the economy(increasing foreign currency is also a factor), then mention steps taken by RBI such as– stopped buying bonds under the Govt Securities Asset Purchase (GSAP) and done negligible Open Market Operations; used the reverse repo window ; allowed banks the option to prepay the outstanding borrowings from the TLTROs etc to absorb liquidity from the system and move towards normalisation.
      First part of the answer is good, intro is fine. In 3rd point of the next part, you can say maintaining balance rather than being keen on one over the other.
      For the next part, subheading can be changed to ‘ steps towards ensuring recovery’.
      Conclusion is fine but incorporate the above points, otherwise answer is incomplete.
      Keep practicing. 🙂

      3.5/10
3. 

   December 15, 2021

   Bhanu Joshi

   @Staff – ISyOdQANazdk6B

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   1. 

      December 16, 2021

      Bhanu Joshi

      *NOT CHECKED*
   2. 

      December 17, 2021

      Staff @CD

      Bhanu

      Decent attempt, you have understood the question well, presentation is also fine.
      Intro is good, steps taken for recovery has also been well written. Include monetary policy direction in that part only, accomodative, low repo/reverse repo rates etc.
      Other points are good.
      In next part, mention steps taken by RBI to absorb excess liquidity in the economy due to low interest rates for a long period and increase in foreign currency. You can mention that RBI has stopped buying bonds under the Govt Securities Asset Purchase (GSAP) and done negligible Open Market Operations; used the reverse repo window ; allowed banks the option to prepay the outstanding borrowings from the TLTROs etc
      Your points are more like a way forward in that part, need to mention the steps already taken.
      Conclusion is fine.
      Overall decent answer, just incorporate above points.
      Keep practicing. 🙂