Civil Services Prep

Prelims 2022 · Economy · Question 68

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

Reserve Bank of India

  • (a) Department of Consumer Affairs: It monitors consumer welfare, essential commodities, and price monitoring of select goods, but it does not conduct monetary policy to control inflation. Verdict: Incorrect.
  • (b) Expenditure Management Commission: This is/was a body for reviewing public expenditure and fiscal management, not the authority for maintaining price stability. Verdict: Incorrect.
  • (c) Financial Stability and Development Council: It coordinates on financial stability and inter-regulatory issues; it does not directly control inflation through monetary policy. Verdict: Incorrect.
  • (d) Reserve Bank of India: Under the RBI Act, the RBI conducts monetary policy with the objective of maintaining price stability while keeping growth in mind; inflation targeting is done through the Monetary Policy Committee. Verdict: Correct.
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