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Monetary Policy in India is regulated by :
  • a)
    Ministry of Finance
  • b)
    R.B.I
  • c)
    Planning Commission 
  • d)
    SEBI
Correct answer is 'B'. Can you explain this answer?
Verified Answer
Monetary Policy in India is regulated by :a)Ministry of Financeb)R.B.I...
The Reserve Bank of India (RBI) uses the monetary policy to regulate liquidity in a manner that balances inflation and help in GDP growth and development.
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Monetary Policy in India is regulated by :a)Ministry of Financeb)R.B.I...
Role of RBI in Regulating Monetary Policy in India
Monetary policy in India is primarily regulated by the Reserve Bank of India (RBI), which is the central banking institution in the country. The RBI plays a key role in formulating and implementing monetary policy to achieve various macroeconomic objectives.

Key Functions of RBI in Monetary Policy
- Formulation of Monetary Policy: The RBI formulates the monetary policy of India with the objective of controlling inflation, maintaining price stability, and promoting economic growth.
- Implementation of Monetary Policy: The RBI implements the monetary policy through various tools such as repo rate, reverse repo rate, cash reserve ratio (CRR), and statutory liquidity ratio (SLR).
- Regulation of Money Supply: The RBI regulates the money supply in the economy by controlling the availability of credit and liquidity in the financial system.
- Management of Interest Rates: The RBI manages interest rates in the economy to influence borrowing and lending activities, which in turn impact consumption and investment levels.
- Monitoring Inflation: The RBI closely monitors inflation levels in the economy and adjusts its monetary policy stance accordingly to keep inflation in check.

Importance of RBI in Monetary Policy
- The RBI plays a crucial role in maintaining financial stability and economic growth in the country.
- By regulating the money supply and interest rates, the RBI can influence economic activities and steer the economy towards its desired goals.
- The RBI's monetary policy decisions have a significant impact on various sectors of the economy, including banking, investment, and consumption.
In conclusion, the RBI's role in regulating monetary policy in India is pivotal for achieving sustainable economic growth and stability. Its proactive measures and interventions help in maintaining a conducive environment for investment and development in the country.
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Monetary Policy in India is regulated by :a)Ministry of Financeb)R.B.Ic)Planning Commissiond)SEBICorrect answer is 'B'. Can you explain this answer?
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