Importance of Economy has increased in the past few years for the UPSC Prelims Exam. Usually 15 to 20 questions asked  in the UPSC Preliminary Examination Of Civil Services.The nature of Economy subject is more dynamic rather than static as the changes are quite volatile. Keeping this in mind a UPSC aspirant should prepare economy carefully. Monetary policy and Banking is an important section in Economy and ignoring or skipping this section can cost you heavily in UPSC Prelims Exam. In today’s article we will have a look upon the strategy and resources for preparing this particular section in Economy that often leave student helpless and confused if not prepared well.

Before looking at the Monetary Policy and Banking preparation tips lets have a look at the terms first and how the Monetary Policy impacts the country economics. The rules that are made to regulate the economy of any country are called monetary policy. Monetary policy is prepared by the Monetary policy committee (MPC). The money flow in any country is controlled through monetary policy. Through these rules, the entire banking system of the economy is controlled.

In simple terms, monetary policies are formulated to control the supply, cost and utilization of money and credit and to promote growth with low and stable inflation.

Now if we talk about India, the Reserve Bank of India acts as the monetary authority in India and functions and regulates the monetary policies formulated by the MPC through which the money supply and interest rate. etc. is controlled. Based on these economic policies, the government fulfills Macroeconomic Objectives like inflation, consumption, growth and liquidity.

Importance of monetary policy

Efforts are made to accomplish the following important tasks through monetary policies. It also affects the economy:

• It supplies the money in the economy.
• It is their job to control inflation and bring price stability.
• To achieve the goal of economic growth.
• Creating employment opportunities.
• Through these rules, the cost of loan can be increased or reduced through Repo Rate and Reverse Repo Rate.
• When RBI lowers key interest rates in monetary policy. So the money supply increases. The economy grows rapidly due to the increase in cash in the market.
• When RBI raises key interest rates in monetary policy. So the money supply decreases. Due to this, the economy slows down due to the decrease in cash in the market.

Books and Resources to  Cover Monetary Policy and Banking:

Analyzing the Question Papers Of Previous Years, it is known that most of the questions in the economy are related to Current Affairs. Therefore, the Newspaper should be studied regularly. Newspapers provide the latest updates on all sectors of the economy. Editorials help candidates to build their analytical abilities. Business Standard can be read in the newspaper, by which better preparation can be done for the latest part of the economy. Also, the Annual Budget and Economic Survey and 'India Yearbook' help the candidates to develop information about the working of the Indian Economy.

The previous year's question paper should be practiced regularly. This helps the students to understand the nature of the questions and at the same time, there is clarity in understanding the concept. NCERT books can be used for the basic definition of monetary policy and banking related terms.The latest updates could be prepared through daily news papers and current affairs from the websites of coaching institutes.

However the entire practice could be eased through following Sampoorna Fact File on Monetary Policy and Banking released by GS Score. This fact file has been compiled by experienced scholars and teachers . This fact file will not only ease your preparation but will help you to revise the entire content in short span of time