What is monetary policy committee and its functions ecnomics clss 12?
Answers
Monetary Policy Committee (MPC) is a 6 member committee formed after the amendment in the RBI Act, 1934 through the Finance Act, 2016. The basic objective of MPC is to maintain price stability while accelerating the growth rate of the economy.Monetary policy refers to the policy of the Reserve Bank of India with regard to the use of monetary instruments under its control to achieve the goals of GDP growth and lower inflation rate. The RBI is authorised to made monetary policy under the Reserve Bank of India Act, 1934.
Hence monetary policy refers to the credit control measures adopted by the Central Bank of a country.
The Chakravarty committee has emphasized that price stability, economic growth, equity, social justice, promoting and nurturing the new monetary and financial institutions have been important objectives of the monetary policy in India.
RBI tries always tries to reduce rate of inflation or keep it within a sustainable limit while on the other hand government of India focus to accelerate the GDP growth of the country.