Who among the following formulates the monetary policy in India?
- A.The Ministry of Statistics and Programme Implementation
- B.Finance Commission of India
- C.NITI Aayog
- D.Reserve Bank of India
Correct answer
Explanation
The correct answer is D, Reserve Bank of India. Monetary policy, the control of money supply and interest rates to keep prices stable, is the job of the central bank, the RBI, set up on 1 April 1935 under the RBI Act 1934 and nationalised on 1 January 1949. Since 2016 the policy repo rate is decided by the six-member Monetary Policy Committee, three from the RBI including the Governor, who chairs it, and three appointed by the Union Government, working to an inflation target set in 2016 at 4 per cent with a band of 2 per cent on either side. Option A is wrong because the Ministry of Statistics and Programme Implementation compiles data such as GDP and the CPI, it does not set policy. Option B is wrong because the Finance Commission, under Article 280, recommends how taxes are shared between the Centre and the States. Option C is wrong because NITI Aayog, formed on 1 January 2015, is a policy think tank that replaced the Planning Commission. Exam tip: monetary policy = RBI and its MPC, fiscal policy = Finance Ministry through the Budget.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. 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
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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