In India, which one of the following is responsible for maintaining price stability by controlling inflation ?
- (a) Department of Consumer Affairs
- (b) Expenditure Management Commission
- (c) Financial Stability and Development Council
- (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.