Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
4. Examine the factors as to why Reserve Bank of India’s (RBI’s) monetary policy committee, maintained status quo on benchmark interest rates. Do you think this is a right move? (250 words)
Difficulty level: Moderate
Why the question:
RBI Monetary Policy Highlights: In line with expectations, the RBI MPC keeps key rates unchanged. This is the ninth consecutive time since the rate remains unchanged
Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
Begin by giving the mandate of the Reserve Bank of India’s (RBI’s) monetary policy committee.
In the first part, mention the reasons for the status quo – rise in commodity prices, possible supply-side disruption due to the spread of the new coronavirus variant and moderation in global growth and international trade, reinforced inflationary pressures., A possible faster normalization by the Federal Reserve etc.
Next, bring out the pros and cons of the above move.
Conclude by giving a balanced opinion about the move to continue with status quo