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UPSC Prelims 2022 Paper-1 📅 05 Jun, 2022

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

A
(a) Department of Consumer Affairs
B
(b) Expenditure Management Commission
C
(c) Financial Stability and Development Council
D
(d) Reserve Bank of India
Result Summary
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APEDIA

UPSC Prelims
2022 • 05 Jun, 2022 • Paper-1
In India, which one of the following is responsible for maintaining price stability by controlling inflation?
Correct Answer
(d) Reserve Bank of India
Statutory Mandate: Under the heavily amended provisions of the Reserve Bank of India Act, 1934 (specifically the 2016 amendments), the primary, legislatively ma......
Ref/Book : UPSC Prelims 2022
Ref. Subject Economy
Chapter -
Ref. Topic Monetary Policy
Pg. No -
💡 Analysis & Explanation
Statutory Mandate ▼
Under the heavily amended provisions of the Reserve Bank of India Act, 1934 (specifically the 2016 amendments), the primary, legislatively mandated objective of monetary policy is explicitly stated as maintaining overarching price stability while keeping in mind the objective of growth.
Operational Mechanism ▼
The RBI, executing this mandate through its specialized Monetary Policy Committee (MPC), aggressively targets a specific consumer price index (CPI) inflation rate (currently set at 4% with a tolerance band of +/- 2%) by actively adjusting key macroeconomic policy rates like the repo rate and managing systemic liquidity.
Conclusion ▼
Thus, the Reserve Bank of India stands as the sole institutional authority legally mandated to strictly control inflation and secure price stability.
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