Reason and Assertion type : Assertion [A] : RBI Act, 1934 was amended in 2016. Reason [R] : To implement flexible inflation targeting framework.
Both [A] and [R] are true; and [R] is the correct explanation of [A]
The Reserve Bank of India Act, 1934 was amended through the Finance Act, 2016, which inserted a new chapter (Section 45ZA onwards) on monetary policy.
The amendment gave a statutory basis to the flexible inflation targeting framework: the Centre fixes an inflation target (4% CPI with a band of 2% to 6%) in consultation with the RBI, and a six-member Monetary Policy Committee sets the policy rate to achieve it.
Thus the amendment was made precisely to implement flexible inflation targeting, so both statements are true and the Reason explains the Assertion.
Hence, Both [A] and [R] are true; and [R] is the correct explanation of [A].
Important Questions from Inflation
- Which of the following goods are included to estimate food inflation in India?
1. Wheat
2. Paddy
3. Tobacco
4. Sugar
Select the correct answer using the code given below : - The amount by which the equilibrium level of real GDP exceeds the full employment level of GDP is called
With respect to inflation in the Indian context, consider the following statements:
1. Retail inflation, measured by the Consumer Price Index (CPI), is the primary metric used by the Reserve Bank of India (RBI) for monetary policy formulation.
2. Core inflation includes volatile components like food and fuel prices, providing a more stable measure of underlying inflationary pressures.
3. Supply-side factors, such as monsoons affecting agricultural output and global crude oil prices, play a significant role in India's inflation dynamics.
4. Headline inflation refers to the total inflation in an economy, including volatile components such as food and energy prices.
Which of the above statements are correct?
- Which one of the following is not the anti-inflationary measure in India?
- A persistent fall in the general price level of goods and services is known as
