Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Q5. What is monetary policy? Assess the Monetary Policy Committee’s (MPC) performance in fulfilling its mandate since the 2016 amendment to the RBI Act, 1934. (250 words)
Difficulty level: Tough
Reference: IE, Insights on India
Why the question:
The Reserve Bank of India’s Monetary Policy Committee (MPC) has kept the repo rate steady at 6.5% for the ninth consecutive time due to persistent food inflation.
Key Demand of the question:
To write about the role of RBI especially as the ‘lender of the last resort’.
Structure of the answer:
Introduction:
Begin by defining the monetary policy.
Body:
First, in brief, write in brief about the various components of monetary policy.
Next, write about the monetary policy committee (MPC), its aims and objectives. By citing statistics, write the success and limitations of MPC in controlling inflation and in creating conducive atmosphere for growth.
Conclusion:
Conclude by writing a way forward to overcome the above-mentioned limitations.
