In India, which one of the following is responsible for maintaining price stability by controlling inflation ?

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Q: 68 (IAS/2022)
In India, which one of the following is responsible for maintaining price stability by controlling inflation ?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,234,30,8,2,20,234

keywords: 

{'price stability': [0, 0, 0, 1], 'financial stability': [0, 0, 0, 5], 'inflation': [0, 1, 0, 3], 'expenditure management commission': [0, 0, 0, 1], 'reserve bank': [1, 0, 3, 4], 'india': [8, 1, 7, 13], 'development council': [0, 0, 0, 4], 'consumer affairs': [0, 0, 1, 3]}

The correct answer is the Reserve Bank of India (RBI). It is the central bank of India and is responsible for maintaining price stability by controlling inflation. It uses various monetary policy tools such as repo rate, reverse repo rate, cash reserve ratio (CRR), statutory liquidity ratio (SLR), and open market operations to regulate the money supply in the economy and influence inflation.

The Department of Consumer Affairs is responsible for protecting the interests of consumers and promoting fair competition in the market.

The Expenditure Management Commission was set up in 2014 to suggest ways to improve the efficiency of government spending and rationalize subsidies.

The Financial Stability and Development Council (FSDC) was set up in 2010 to oversee the stability and development of the financial sector in India. It is chaired by the Finance Minister and includes heads of regulatory agencies such as the RBI, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), and Pension Fund Regulatory and Development Authority (PFRDA). The FSDC does not directly control inflation or maintain price stability, but its role is to ensure the stability of the financial system and support the overall economic growth of the country.

 

Preparing for Future Exams: Learning from the Analysis of Past Questions

Sources:

NCERT and reference book chapters:

  • NCERT Class 12 Economics, Chapter 6: Open Economy Macroeconomics
  • NCERT Class 11 Economics, Chapter 8: Infrastructure
  • Indian Economy by Ramesh Singh, Chapter 16: Monetary Policy

Related concepts:

  • Monetary policy tools (Repo rate, Reverse Repo rate, CRR, SLR, MSF)
  • Inflation targeting framework
  • Roles and functions of Reserve Bank of India (RBI)
  • Fiscal policy and its coordination with monetary policy
  • Exchange rate management and its impact on inflation