Tag: Monetary Policy

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 “Managing surplus liquidity requires the central bank to reconcile inflation control with financial-market stability.” Explain the challenges posed by persistent liquidity surplus. Evaluate the suitability of different absorption instruments. Suggest how their deployment may be sequenced.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Q5.  “Managing surplus liquidity requires the central bank to reconcile inflation control with financial-market stability.” Explain the challenges posed by persistent liquidity surplus. Evaluate the suitability of different absorption instruments. Suggest how their deployment may be sequenced. (15 M) Difficulty …

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Examine the role of monetary policy in ensuring price stability during periods of global uncertainty. Evaluate the limitations of monetary policy in addressing supply-side inflation. Suggest suitable policy interventions.

Topic: Indian Economy and issues relating to planning, mobilization of resources Q5.  Examine the role of monetary policy in ensuring price stability during periods of global uncertainty. Evaluate the limitations of monetary policy in addressing supply-side inflation. Suggest suitable policy interventions. (15 M) Difficulty Level: Medium Reference: IE Why the question The RBI’s recent monetary …

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Lower inflation alone does not guarantee sustained economic growth. Examine the factors that determine effective growth transmission in the Indian economy.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment Q5.  Lower inflation alone does not guarantee sustained economic growth. Examine the factors that determine effective growth transmission in the Indian economy. (10 M) Difficulty Level: Medium Reference: IE Why the question Recent moderation in global crude oil prices and …

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Discuss the significance of surplus transfers by the Reserve Bank of India in the contemporary fiscal framework. Analyse their impact on monetary-fiscal relations.

Topic: Indian Economy and issues relating to planning, mobilization of resources Q6. Discuss the significance of surplus transfers by the Reserve Bank of India in the contemporary fiscal framework. Analyse their impact on monetary-fiscal relations. (10 M) Difficulty Level: Difficult Reference: TH Why the question The record surplus transfer by the RBI to the Union …

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“Bond markets often act as silent referees of fiscal credibility.” Explain how government bond yields reflect investor confidence. Evaluate their significance for macroeconomic management.

Topic: Indian Economy and issues relating to planning, mobilization of resources. Q6. “Bond markets often act as silent referees of fiscal credibility.” Explain how government bond yields reflect investor confidence. Evaluate their significance for macroeconomic management. (10 M) Difficulty Level: Difficult Reference: IE Why the question Government bond yields are increasingly influencing fiscal policy, monetary …

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What is stagflation? Discuss the major economic factors responsible for stagflationary conditions in an economy.

Topic: Indian Economy and issues relating to planning, mobilization of resources Q6. What is stagflation? Discuss the major economic factors responsible for stagflationary conditions in an economy. (10 M) Difficulty Level: Medium Reference: NIE Why the question Rising geopolitical tensions, energy shocks and supply-chain disruptions have revived fears of stagflation across the global economy, making …

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Examine the role of inflation expectations in shaping monetary policy decisions in India. Analyse the challenges in anchoring expectations. Suggest measures to improve credibility.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment Q4. Examine the role of inflation expectations in shaping monetary policy decisions in India. Analyse the challenges in anchoring expectations. Suggest measures to improve credibility. (15 M) Difficulty Level: Medium Reference: IE Why the question Tests understanding of monetary policy …

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“Monetary easing without adequate liquidity is like pressing the accelerator with the handbrake on”. Analyse India’s recent experience of rate cuts with tight liquidity. Suggest measures to strengthen monetary transmission.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment Q4. “Monetary easing without adequate liquidity is like pressing the accelerator with the handbrake on”. Analyse India’s recent experience of rate cuts with tight liquidity. Suggest measures to strengthen monetary transmission. (15 M) Difficulty Level: Medium Reference: IE Why the …

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Economic Survey 2025-26: Complete Highlights and Summary for UPSC

Official Resource Economic Survey of India 2025–26 Download PDF UPSC Economy Special Economic Survey 2026 Highlights: Complete Summary The Economic Survey 2025–26 signals India’s transition towards becoming a systemically indispensable global power, combining strong growth with historically low inflation. Economic Survey 2025-26 Highlights | UPSC GS3 Economy | Nikhil Sir Insights IAS The Union Ministry …

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The stability of a modern economy depends less on the quantity of money and more on its credibility. Examine how these shapes monetary management in India.

Topic: Money and Banking Q5. The stability of a modern economy depends less on the quantity of money and more on its credibility. Examine how these shapes monetary management in India. (10 M) Difficulty Level: Medium Reference: InsightsIAS Why the question Because current monetary debates emphasise expectations, trust and institutional credibility over sheer money supply, …

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Explain the concept of demand psychology in inflationary cycles. Describe how it differs from conventional demand-pull inflation. Assess how monetary and fiscal authorities can respond when prices rise faster than fundamentals justify.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Q5. Explain the concept of demand psychology in inflationary cycles. Describe how it differs from conventional demand-pull inflation. Assess how monetary and fiscal authorities can respond when prices rise faster than fundamentals justify. (15 M) Difficulty Level: Medium Reference: TH …

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Analyse the phenomenon of stagflation in advanced economies. Evaluate the effectiveness of monetary policy in such contexts. What lessons can India draw for macroeconomic management?

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment Q6. Analyse the phenomenon of stagflation in advanced economies. Evaluate the effectiveness of monetary policy in such contexts. What lessons can India draw for macroeconomic management? (15 M) Difficulty Level: Medium Reference: NIE Why the question The US Fed’s 2025 …

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What role can monetary and fiscal policies play in safeguarding tariff-affected sectors? Analyse the limitations of RBI interventions. Suggest long-term institutional reforms for external sector stability.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment Q5. What role can monetary and fiscal policies play in safeguarding tariff-affected sectors? Analyse the limitations of RBI interventions. Suggest long-term institutional reforms for external sector stability. (15 M) Difficulty Level: Medium Reference: NIE Why the question RBI Governor assures …

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Inflation targeting and the test of credibility

Syllabus: Indian Economy Source:  IE Context The Reserve Bank of India (RBI) released its discussion paper (August 2025) on reviewing the flexible inflation targeting (FIT) framework. With the current 4% CPI target within a 2–6% tolerance band expiring in March 2026, the RBI has cautioned that raising the target could dilute credibility and reverse policy …

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Bear Market

Source:  FE Context: The S&P 500 briefly entered bear market territory, dropping over 20% due to escalating US tariffs under President Trump. This is the first such decline since 2022, triggering global recession fears and investor panic. About Bear Market: What is a Bear Market? A bear market refers to a situation where a stock …

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The ‘last mile’ of disinflation is becoming increasingly challenging in the current global economic environment. Discuss the implications of this phenomenon for India’s monetary policy.

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment Q5. The ‘last mile’ of disinflation is becoming increasingly challenging in the current global economic environment. Discuss the implications of this phenomenon for India’s monetary policy. (10 M) Difficulty Level: Medium Reference: TH Why the question As per RBI Bulletin- …

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Monetary and Fiscal Policy

Source:  TOI Context: A finance ministry report cited monetary policy, macroprudential measures, and structural factors as possible contributors to the demand slowdown, highlighting differing views with the RBI on growth and inflation. About Fiscal Policy: Definition: Fiscal policy refers to the government’s use of taxation, spending, and borrowing to influence economic activity. Tools of Fiscal …

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