UPSC Exam > UPSC Questions > Consider the following statements regarding t...
Start Learning for Free
Consider the following statements regarding the inflation targeting in Indian economy:
1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.
2. Inflation target is set up by the RBI in consultation with the central government.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Consider the following statements regarding the inflation targeting in...
- In 2016, the Reserve Bank of India Act, 1934 (RBI Act) was amended to provide for a statutory and institutionalised framework for a Monetary Policy Committee (MPC). The Preamble in the RBI Act, as amended by the Finance Act, 2016, now provides that the primary objective of the monetary policy is to maintain price stability, while keeping in mind the objective of growth, and to meet the challenge of an increasingly complex economy. RBI would, accordingly, operate a Monetary Policy Framework. Thus, now there is a statutory basis for a Monetary Policy Framework and the MPC. Hence statement 1 is correct.
- A Committee-based approach will add lot of value and transparency to monetary policy decisions. Out of the six Members of MPC, three Members will be from the Reserve Bank of India (RBI), including the Governor, RBI, who will be the ex-officio Chairperson, the Deputy Governor, RBI and one officer of RBI. The other three Members of MPC will be appointed by the Central Government, on the recommendations of a Search-cum-Selection Committee. These three Members of MPC will be experts in the field of economics or banking or finance or monetary policy and will be appointed for a period of 4 years and shall not be eligible for re-appointment. The meetings of the MPC shall be held at least 4 times a year and it shall publicise its decisions after each such meeting.
- Under the new statutory framework, the central government would, in consultation with the Reserve Bank of India (RBI), set an inflation target based on the consumer price index (CPI) once every five years. The RBI was entrusted with the responsibility of meeting this target (“accountability”), for which it would be given “independence” in the conduct of monetary policy. Hence statement 2 is not correct. The inflation target of the Reserve Bank of India is 4 percent, with a 2 per cent extension in the upper bound and 2 per cent in the lower bound.
Free Test
FREE
| Start Free Test |
Community Answer
Consider the following statements regarding the inflation targeting in...
Explanation:
Inflation targeting is a framework in which a central bank, such as the Reserve Bank of India (RBI), uses an explicit target for the inflation rate to guide monetary policy decisions.
1. Statement 1:
- This statement is correct. Inflation targeting in India is a statutory and institutionalized framework under the RBI Act, 1934. The Reserve Bank of India Act, 1934 was amended in 2016 to provide a statutory basis for the implementation of the inflation targeting framework.
2. Statement 2:
- This statement is incorrect. The inflation target is set by the Monetary Policy Committee (MPC) of the Reserve Bank of India and not in consultation with the central government. The MPC is responsible for setting the inflation target and making decisions on monetary policy based on achieving that target.
Therefore, the correct answer is option 'A' - 1 only. Inflation targeting in India is a framework mandated by law and implemented by the RBI through the MPC, without direct consultation with the central government.
Inflation targeting is a framework in which a central bank, such as the Reserve Bank of India (RBI), uses an explicit target for the inflation rate to guide monetary policy decisions.
1. Statement 1:
- This statement is correct. Inflation targeting in India is a statutory and institutionalized framework under the RBI Act, 1934. The Reserve Bank of India Act, 1934 was amended in 2016 to provide a statutory basis for the implementation of the inflation targeting framework.
2. Statement 2:
- This statement is incorrect. The inflation target is set by the Monetary Policy Committee (MPC) of the Reserve Bank of India and not in consultation with the central government. The MPC is responsible for setting the inflation target and making decisions on monetary policy based on achieving that target.
Therefore, the correct answer is option 'A' - 1 only. Inflation targeting in India is a framework mandated by law and implemented by the RBI through the MPC, without direct consultation with the central government.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Similar UPSC Doubts
Top Courses for UPSCView all
Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
Question Description
Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?.
Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?.
Solutions for Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?, a detailed solution for Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? has been provided alongside types of Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Consider the following statements regarding the inflation targeting in Indian economy:1. Inflation targeting is a statutory and institutionalised framework under the RBI Act, 1934.2. Inflation target is set up by the RBI in consultation with the central government.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup