To neutralise the effect of monetisation on the price level, the RBI, in turn, had to intermittently increase the Cash Reserve Ratio (CRR) requirements of the banking sector. This phase was charaterised by several features to indicate considerable influence or dominance of Government over the RBI.
On the basis of one of the criteria (Cukierman, 1992) to measure the degree of independence of various central banks during the ‘eighties, the RBI was ranked marginally below the median level of a list of about seventy countries (including twenty-one industrialised countries).