Reforms in the monetary policy framework The basic emphasis of monetary policy since the initiation of reforms has been to reduce market segmentation in the financial sector through increased interlinkages between various segments of the financial market including money, government security and forex market.
The key policy development that has enabled a more independent monetary policy environment as well as the development of Government securities market was the discontinuation of automatic monetisation of the government's fiscal deficit since April 1997 through an agreement between the Government and the Reserve Bank of India in September 1994.