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Q38 (IAS/2022) Economy › Money, Banking & Inflation › Inflation and policy Official Key

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

Result
Your answer: —  ·  Correct: D
Explanation

The correct answer is Option 4: Reserve Bank of India (RBI).

The Reserve Bank of India Act, 1934, was amended in 2016 to provide a statutory basis for the implementation of the Flexible Inflation Targeting Framework. Under Section 45ZB of the Act, the primary objective of the RBI’s monetary policy is to maintain price stability while keeping in mind the objective of growth. The RBI targets a Consumer Price Index (CPI) inflation rate of 4% with a tolerance band of +/- 2%.

  • Option 1 is incorrect as it focuses on consumer protection and monitoring essential commodity prices, not systemic monetary control.
  • Option 2 is incorrect as it deals with reviewing the government's expenditure pivot points.
  • Option 3 is incorrect as the FSDC focuses on financial sector development and stability across regulators, not inflation management.

Therefore, the RBI, through its Monetary Policy Committee (MPC) and tools like the Repo Rate, is the sole authority responsible for controlling inflation in India.

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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. In India, which one of the following is responsible for maintaining price stability by controlling inflation ? [A] Department of Consume…
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 2.5/10 · 7.5/10
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This is a 'Sitter'—a fundamental question that defines the baseline for clearing Prelims. It stems directly from the RBI Act amendment and the Monetary Policy Framework Agreement. If you get this wrong, you are likely reading the wrong sources or missing the core definitions of Indian Economy.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
In India, is the Reserve Bank of India responsible for maintaining price stability by controlling inflation?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.13 Monetary Policy > p. 60
Presence: 5/5
“As per the new monetary policy framework agreement, following are the important points: - • The objective of the monetary policy is to primarily maintain price stability, while keeping in mind the objective of growth• The monetary policy framework is operated by RBI• The inflation target is 4% with a band of +/- 2%• The inflation target is decided by the Government of India in consultation with RBI. The central government has notified the above inflation target for the period till March 31, 2026.”
Why this source?
  • Explicitly states the primary objective of monetary policy is to maintain price stability.
  • States the monetary policy framework is operated by the RBI and specifies an inflation target (4% ±2%).
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.13 Monetary Policy > p. 59
Presence: 5/5
“Monetary Policy is the process by which monetary authority (RBI) of a country controls the creation and supply of money in the economy. Over time, the objectives of monetary policy in India have evolved to include maintaining price stability, ensuring adequate flow of credit to productive sectors of the economy for”
Why this source?
  • Defines monetary policy as the process by which the monetary authority (RBI) controls creation and supply of money.
  • Notes that maintaining price stability is an objective of monetary policy.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 2.14 RBI and its Functions > p. 65
Presence: 5/5
“The objective of RBI is "to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage; to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth; to maintain macroeconomic stability and financial stability." The RBI affairs are governed by a central board of directors (Maximum 21 in number including the governor and four deputy governors who are also on the central board) who are appointed by the government of India in keeping with the Reserve Bank of India Act 1934 for a period of 4 years.”
Why this source?
  • Lists RBI's objective to maintain price stability while considering growth and to secure monetary stability.
  • Positions RBI as the institution operating the currency and credit system to the country's advantage.
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Statement analysis

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Statement analysis

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SIMILAR QUESTIONS

IAS · 2015 · Q87 Relevance score: 3.75

With reference to inflation in India, which of the following statements is correct?

IAS · 1994 · Q35 Relevance score: 3.14

Which one of the following governmental steps has proved relatively effective in controlling the double-digit rate of inflation in the Indian economy during recent years ?

CDS-I · 2017 · Q100 Relevance score: 2.37

Which one of the following indices is now used by the Reserve Bank of India to measure the rate of inflation in India?

IAS · 1997 · Q67 Relevance score: 0.95

In India, inflation is measured by the

CDS-I · 2023 · Q31 Relevance score: 0.82

Which one of the following is a measure that can be used by the Government for combatting inflation?