Economic Stability and Inclusive Growth in India: Monetary Policy, Employment Generation and the Challenge of Structural Transformation

Ranjith

doi:10.36948/ijfmr.2026.v08i05.90604

Economic Stability and Inclusive Growth in India: Monetary Policy, Employment Generation and the Challenge of Structural Transformation

Author(s)	Dr. Ranjith
Country	India
Abstract	Abstract: Economic stability is fundamental to sustainable economic growth, employment generation and improvements in social welfare. Nevertheless, stable prices and rising aggregate output do not necessarily translate into secure livelihoods, equitable income distribution or productive employment, particularly in developing economies undergoing structural transformation. The 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, awarded to Robert E. Hall and Michael Woodford for their contributions to the microeconomic foundations of macroeconomic stabilisation, reinforces the importance of understanding how household decisions, business expectations and policy interventions interact to shape aggregate economic outcomes. This paper examines the implications of these theoretical contributions for India's macroeconomic management, focusing on inflation, monetary policy, fiscal sustainability, employment generation and inclusive growth. The study adopts a theory-informed, descriptive and policy-analytical approach based on established macroeconomic literature and official Indian economic statistics. The Government of India's Economic Survey 2025–26 reported a first advance estimate of 7.4 per cent real GDP growth for FY2025–26, while average consumer price inflation declined to approximately 1.7 per cent during April–December 2025. These indicators demonstrate the importance of examining growth and inflation jointly. However, assessing the inclusiveness of economic performance also requires information on labour-force participation, employment quality, real wages, household purchasing power and regional disparities. The paper develops a multidimensional framework for evaluating economic stability through five interconnected dimensions: price stability, output stability, employment security, productive investment and distributional outcomes. It argues that credible monetary policy, sustainable fiscal management and productive public investment should be coordinated rather than treated as competing policy objectives. The study concludes that India's long-term economic resilience depends on translating macroeconomic stability into productive employment, stronger supply capacity and broadly shared improvements in living standards. The proposed framework also establishes an agenda for future empirical research using consistent time-series and state-level panel data.
Keywords	Keywords: Economic Stability; Inclusive Growth; Monetary Policy; Inflation; Employment Generation; Fiscal Policy; Public Investment; Structural Transformation; India.
Field	Sociology > Economics
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-10-24
DOI	https://doi.org/10.36948/ijfmr.2026.v08i05.90604

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Economic Stability and Inclusive Growth in India: Monetary Policy, Employment Generation and the Challenge of Structural Transformation

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