The monetary policy in India uses which of the following tools? 1. Bank rate 2. Open market operations 3. Public debt 4. Public revenue Select the correct answer using the code given below.

Monetary policy in India is formulated and executed by the Reserve Bank of India (RBI) to regulate money supply and credit [1]. The primary tools used for this purpose include the Bank Rate and Open Market Operations (OMO). The Bank Rate is a quantitative tool used to influence interest rates and credit expansion. Open Market Operations involve the buying and selling of government securities by the RBI to manage liquidity and the monetary base. In contrast, Public Debt and Public Revenue are instruments of Fiscal Policy, which is managed by the Government of India rather than the monetary authority. While the RBI acts as a debt manager for the government, debt management is distinct from the core objectives of monetary policy, which focus on price stability and inflation targeting [3]. Therefore, only Bank Rate and Open Market Operations are monetary policy tools.

Sources

1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > MONETARY POLICY IN INDIA > p. 165
2. [3] https://www.sciencedirect.com/science/article/pii/S0970389615000087