Question

Which of the following bodies decide the monetary policy in India?

• A. Reserve Bank of India
• B. Ministry of Finance
• C. Ministry of Commerce
• D. Ministry of Finance and Commerce
• E. Planning Commission

Hint:

Monetary policy is managed by the central bank (RBI in India), while fiscal policy is handled by the Ministry of Finance.

Answer 1

The Correct Option is A

Step 1: Understand the role of monetary policy.
Monetary policy involves controlling money supply and interest rates to achieve economic stability, a function typically managed by a central banking authority.
Step 2: Identify the responsible body.
In India, the Reserve Bank of India (RBI) is the central bank responsible for formulating and implementing monetary policy.
Step 3: Eliminate distractors.
(B) Ministry of Finance frames fiscal policy, not monetary policy.
(C) and (D) Ministry of Commerce and related combinations focus on trade, not monetary policy.
(E) Planning Commission deals with economic planning, not monetary policy.
Therefore: The correct answer is (A). \[ \boxed{\text{A}} \]