Maharashtra- llegal Activity

THE central problem or monetary policy is a perennial one. As the Reserve Bank Governor's letter to scheduled commercial hanks this week puts it, "it is ,_ necessary that monetary policy continues to be directed towards restraining monetary expansion to the maximum extent possible but [is] at the same time oriented towards promoting investment, aiding production.." In practice, however, while investment and production have been bashful, monetary expansion has been unrestrained. As the RBI Governor himself admits, "the growth rate of the economy in 1976-77 has been somewhat modest but this has coincided with a large expansion of almost 19 per cent in money supply". The expansion in bank credit to the commercial sector, excluding credit for food procurement, was Rs 2,078 crores in 1976-77 compared