UPSC Prelims 2022 GS Paper I · Q68 of 98 Economy easy

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

  1. (a) Department of Consumer Affairs
  2. (b) Expenditure Management Commission
  3. (c) Financial Stability and Development Council
  4. (d) Reserve Bank of India ✓ UPSC's answer

Why the answer is (d)

• Under the amended RBI Act (2016), the primary objective of monetary policy is to maintain price stability while keeping growth in mind; the RBI's Monetary Policy Committee targets CPI inflation at 4% with a 2–6% band — option (d).

• The Department of Consumer Affairs monitors prices of essential commodities but has no monetary tools.

• The Expenditure Management Commission (2014) advised on rationalising government spending, and the Financial Stability and Development Council coordinates regulators on systemic stability.

• The RBI is accountable to Parliament if inflation stays outside the band for three consecutive quarters.

• Hence option (d).

Why the other options are wrong

(a) Department of Consumer Affairs
The Consumer Affairs Department monitors prices but cannot control inflation.
(b) Expenditure Management Commission
The Expenditure Management Commission dealt with government spending, not inflation.
(c) Financial Stability and Development Council
The FSDC coordinates financial stability, not monetary policy.

Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2022, held on 5 June 2022. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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