GS-III: Economy, Environment, S&T
Monetary policy
Not met yet — counts as met once you answer a question on it.
India's monetary policy operates through the RBI's Monetary Policy Committee (MPC) framework under amended RBI Act, 1934 (Sections 45ZA–45ZI), with a CPI headline inflation target of 4% ±2%. Key instruments include the repo rate, reverse repo rate, Standing Deposit Facility (SDF), and the Liquidity Adjustment Facility, deployed under stances such as accommodative, neutral, calibrated tightening, or withdrawal of accommodation. When inflation overshoots the target, rate hikes raise borrowing costs and compress demand, creating a wedge between nominal household expenditure growth and real consumption — distinguishing price-level effects from volume-based growth signals.