In India, which one of the following is responsible for maintaining price stability by controlling inflation?
Answer & explanation
Answer: (d) Reserve Bank of India
The Reserve Bank of India is responsible for price stability and for keeping inflation on target. Its Monetary Policy Committee sets the policy rate to meet the inflation target that the Central Government notifies.
- ✓ (d) Under the RBI Act, 1934 the primary objective of monetary policy is price stability, keeping growth in mind. The Act gives a statutory basis to flexible inflation targeting, and the RBI controls money supply through the bank rate, open market operations and reserve ratios.
- ✗ (a) The Department of Consumer Affairs is a government department and has no power over money supply or the policy rate, so it cannot be the body that controls inflation through monetary policy.
- ✗ (c) The Financial Stability and Development Council is a coordination forum for financial-sector regulators; the inflation target and policy rate are the RBI's job.
Remember · Price stability and the inflation target (4 per cent CPI, with a 2-6 per cent band) are the RBI's mandate, delivered by its six-member Monetary Policy Committee.
📘 Read it in NCERT: Class 12 Introductory Macroeconomics, Ch 3 (practise this chapter)
Sources
- Reserve Bank of India: Monetary Policy overview ↗ “RBI is entrusted with the responsibility of conducting monetary policy in India with the primary objective of maintaining price stability while keeping in mind the objective of growth.”
- NCERT Class 12 · Introductory Macroeconomics, Chapter 3 “It controls money supply of the country through various methods, like bank rate, open market operations and variations in reserve ratios.”
Question and answer: UPSC's official GS Paper I (2022, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·