Monetary policy transmission in India refers to the process through which policy actions by the Reserve Bank of India (RBI), such as changes in the repo rate, influence the broader economy, particularly inflation and growth. This transmission occurs through various channels including interest rates, credit availability, exchange rates, asset prices, and expectations. When the RBI changes the repo rate, it affects the cost of borrowing for commercial banks, which in turn impacts the lending rates for businesses and consumers. This influences spending, investment, and savings behavior in the economy. However, the effectiveness of this transmission is often influenced by several factors such as the rigidity in bank lending rates, the dominance of public sector banks, the health of the banking and financial sector, the extent of financial market development, inflation expectations, and the overall fiscal policy stance. Structural issues like high non-performing assets (NPAs) and limited competition in the banking sector can also dampen the speed and impact of policy transmission in India.

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