Question

UPSC Prelims 2022 Question:

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

1. Department of Consumer Affairs
2. Expenditure Management Commission
3. Financial Stability and Development Council
4. Reserve Bank of India

Answer (Detailed Solution Below)

Option 4: Reserve Bank of India

Detailed Solution

Explanation:

In India, the Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934. The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth. In May 2016, the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework. The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every five years.

Therefore, option (4) is the correct answer.

Subject: Economics|Inflation

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