Abstract: The objective of this paper is to analyze and discuss the impacts of monetary policy on India inflation, identify the major drawbacks of the policies in minimizing the inflation rate and suggest policy recommendations on some key issues of India inflation. To estimate the effects of the monetary policy in India, at first the impact of different monetary policy tools used by the “Reserve Bank of India” Next, the impact of the monetary policy of India‘s bank and government have been analyzed for which the data on money supply, growth of the GDP, changes in the price level, and changes in the unemployment rate have been quantitatively analyzed. We mainly used Consumer Price Index to determine the level on inflation in India. We have further analyzed whether there is any correlation between (a) inflation rates and money supply, and (b) inflation rates and growth of GDP. The conclusions drawn are grounded in the results of comprehensive qualitative and quantitative analyses.  We have found the correlation, the impacts of monetary policy and inflation, their drawbacks and possible solutions such as independence of the monetary policy from the fiscal policy and enhancing the transparency, communication and signaling effect of policy moves, and control money supply through various open market operations. Due to limited access to comprehensive data, some of our analysis relies on hypotheses and models, resulting in variations depending on the model used. Recently, several attempts by the RBI to control inflation through restrictive monetary policies have led to a slowdown in economic growth, sparking ongoing debates among academics and policymakers regarding the effectiveness of monetary policy in India. In this context, the current study aims to assess the causal relationship between monetary policy and its primary objectives—economic growth and inflation control in India. The methodology employed is Granger Causality testing in the frequency domain, as developed by Lemmens et al. (2008), with the weighted average call money rate serving as a proxy for monetary policy. In view of the fact that output gap is one of the determinants of future inflation, an attempt has also been made to study the causal relationship between output gap and inflation. The results of empirical estimation show a bi-directional causality between policy rate and inflation and between policy rate and output, which implies that the monetary authorities in India. Policymakers are equally focused on both inflation and output growth when formulating policy. Moreover, efforts to control inflation often impact output to the same extent, or even more, than inflation itself, thereby hindering the growth process. Previous studies on India have also found a positive relationship between the output gap and inflation.. Furthermore, the output gap causes inflation only in the short-to medium-term

Keywords: Monetary Policy, Inflation, Output Gap, Granger Causality, Frequency Domain.