In India, which one of the following is responsible for maintaining price stability by controlling inflation ?
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Answer: D. Under the amended RBI Act, 1934 (Section 45ZA, from 2016), the RBI is responsible for keeping inflation within the target set by the government, currently 4 percent with a band of 2 to 6 percent. Its Monetary Policy Committee sets the repo rate to achieve this.
Watch for: The Department of Consumer Affairs tracks prices, which makes students think it controls inflation.
Why the other options are wrong
- A. Wrong because the Department of Consumer Affairs monitors prices of essentials but does not run monetary policy.
- B. Wrong because the Expenditure Management Commission was a 2014 panel on government spending.
- C. Wrong because FSDC deals with financial stability and coordination, not inflation targeting.
Source to check: Reserve Bank of India Act, 1934, Sections 45Z to 45ZO (inserted by Finance Act, 2016); RBI website (Monetary Policy)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.