Monetary Policy Instruments — Mains Questions

Critically analyze the evolution of monetary policy instruments in India, from direct controls to market-based tools. Discuss the effectiveness of the current framework in achieving price stability and supporting economic growth.

Examine the role of the Liquidity Adjustment Facility (LAF) and its components (Repo Rate, Reverse Repo Rate, MSF, SDF) in the RBI's daily liquidity management. How has the introduction of the Standing Deposit Facility (SDF) refined this framework?

Discuss the interplay between quantitative and qualitative monetary policy instruments. In what specific economic scenarios would the RBI prefer one over the other, or use them in conjunction?