Impact of Money Supply on Wholesale Prices During 2005-2015

Abstract

Conventional linkages in economic parameters are intricate yet incontrovertible in functioning of the economy of a country. The infusion of money by the Reserve Bank of India into the country’s economy is the consequence of highly sophisticated mechanism and pragmatic wisdom   although they remain undisclosed in the public interest. The aggregate supply of money, according to the principles of monetary economics, has the conceivable and substantive impact on the wholesale price index numbers. This paper is an attempt to unfold the degree of sensitivity of the whole price index numbers with reference to the aggregate money supply.  The    decadal mean degree of sensitivity as worked out arrived at 1.871 while the co-efficient of co-relation for the same decade was around + 1.149. Assuredly, the impact was compatible and in conformance of the generally accepted propositions in the free economic system. The results were based on the reported data in the authoritative publications.