ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Dear Money Policy, Rising Yields and High Interest Costs

Increases in yields on government securities are indicative of a dear money policy of the central bank, which has decided to base its actions on market signals and on assigning "more weight to global factors than before while formulating the policy stance". This is to be contrasted with the earlier policy which had resisted such pressures with a view to establishing an environment conducive to economic recovery. The current policy thus makes a determined effort to push up interest levels. Apart from the adverse consequences on the economy, this will also have a possible serious impact on central and state government finances.

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