Question:easy

The monetary policy of India is formulated by the

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Monetary policy means controlling interest rates and money supply, which is the central bank's (RBI's) job, not the finance ministry's.
Updated On: Jul 13, 2026
  • Reserve Bank of India
  • ministry of finance
  • Planning Commission
  • none of these
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The Correct Option is A

Solution and Explanation

Step 1: Understanding the Concept:
We need to find which body is in charge of setting India's monetary policy. First, recall what monetary policy actually controls.

Step 2: Key Formula or Approach:
Monetary policy uses tools such as the repo rate, reverse repo rate, and cash reserve ratio to control how much money flows in the economy and how expensive it is to borrow. A country's central bank is normally the body that manages these tools.

Step 3: Detailed Explanation:
In India, the Reserve Bank of India acts as the central bank, and it sets these interest rate and money supply tools to control inflation and support growth. The ministry of finance instead manages the government's own taxes and spending, which is fiscal policy, and the Planning Commission focuses on drafting five year plans, not on interest rates. So among the choices, only the RBI matches the role of setting monetary policy.

Step 4: Final Answer:
India's monetary policy is formulated by the Reserve Bank of India.
\[ \boxed{\text{Reserve Bank of India}} \]
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