APSC Current Affairs: Assam Tribune Notes with MCQs and Answer Writing (06/08/2026)
For APSC CCE and other Assam competitive exam aspirants, staying consistently updated with reliable current affairs is essential for success. This blog provides a well-researched analysis of the most important topics from The Assam Tribune dated 6 August 2026. Each issue has been carefully selected and explained to support both APSC Prelims and Mains preparation, ensuring alignment with the APSC CCE syllabus and the evolving trends of the examination.
✨ APSC CCE Mains Course, 2026
ISRO Flood Inundation Maps & National Database for Emergency Management (NDEM)
Syllabus Mapping
- GS Paper III: Science & Technology, Disaster Management, Space Applications.
- GS Paper V (Assam Specific): Disaster Management in Assam, Flood Management, Technology in Governance.
- Prelims: Current Events of National & International Importance, General Science (Space Tech), Environment & Disaster Management.
- Why in News?: The Union Government informed Parliament that ISRO provided 33 flood inundation maps and value-added products (using SAR and optical satellite data) to the Assam State Disaster Management Authority (ASDMA) under the National Database for Emergency Management (NDEM) to improve flood forecasting and disaster response in Assam.
Introduction
The integration of ISRO’s space technology and geospatial tools via the National Database for Emergency Management (NDEM) enables near real-time satellite mapping to transform disaster governance from reactive relief to proactive, climate-resilient flood mitigation.
Prelims Perspective
- ISRO: Established in 1969; HQ in Bengaluru; functions under the Department of Space; Chairperson appointed by the Government of India.
- National Database for Emergency Management (NDEM): Centralized geospatial database managed by ISRO; integrates satellite imagery, GIS layers, weather data, and administrative maps to support NDMA and SDMAs.
- Disasters Tracked by NDEM: Floods, cyclones, landslides, forest fires, earthquakes, droughts, tsunamis, and Glacier Lake Outburst Floods (GLOFs).
- Synthetic Aperture Radar (SAR): Active microwave remote sensing system; operates independent of solar light (day/night capability) and penetrates cloud cover and rain; critical for monsoon flood mapping.
- Optical Satellite Sensors: Passive sensors requiring sunlight; high spatial resolution for land classification and damage assessment; ineffective during heavy rainfall or dense cloud cover.
- Key Satellite Missions Used: RISAT (Radar Imaging/SAR), Cartosat (High-res mapping), Resourcesat (Agriculture/Land), Oceansat (Oceanography), INSAT (Weather), and GISAT/EOS (Continuous Earth observation).
- Remote Sensing & GIS: Remote sensing gathers data without physical contact; Geographical Information System (GIS) analyzes and visualizes spatial geographic data.
- Statutory Disaster Bodies:
- NDMA: Established under the Disaster Management Act, 2005; chaired by the Prime Minister.
- ASDMA: State-level authority established under the Disaster Management Act, 2005; coordinates disaster response in Assam.
- Assam Flood Vulnerability: Heavily impacted by the Brahmaputra and Barak river systems; key high-risk districts include Lakhimpur, Dhemaji, Majuli, Dibrugarh, Sivasagar, and Golaghat.
Mains Perspective
Importance
- Proactive Disaster Governance: Shifts the paradigm from post-disaster relief to evidence-based early warning, search-and-rescue (NDRF/SDRF), and efficient relief material allocation.
- Socio-Economic Mitigation: Facilitates rapid compensation by assessing cropland loss, evaluating infrastructure damage, and informing flood zoning and embankment design.
- Assam-Specific Utility: Monitors dynamic riverbed morphology, riverbank erosion, and vulnerable riverine islands (chars) along the Brahmaputra system.
Challenges
- Sensor & Terrain Limitations: Persistent monsoon cloud cover blinds optical sensors, while rapid channel shifts in the Brahmaputra reduce the longevity of flood maps.
- Validation & Connectivity Gaps: Satellite imagery requires ground truth verification, which is delayed by last-mile digital connectivity issues in remote rural areas.
- Inter-Agency Coordination: Administrative bottlenecks in synchronizing real-time data flow among ISRO, NDMA, CWC, IMD, ASDMA, and district authorities.
Government Initiatives
- Institutional Mechanisms: Disaster Management Act, 2005, NDMA, ASDMA, and National Disaster Response Force (NDRF).
- Geospatial & Technical Platforms: NDEM, National Remote Sensing Centre (NRSC), Bhuvan Geoportal, and National Hydrology Project.
- Early Warning Systems: Integrated Flood Warning System, Common Alerting Protocol (CAP), and National Monsoon Mission.
Way Forward
- Predictive AI Integration: Merge satellite inputs with IMD rainfall forecasts and CWC river gauge levels using Artificial Intelligence and Machine Learning for accurate flood modeling.
- Last-Mile Tech Deployment: Deploy drones for localized damage verification and develop multilingual mobile apps for village-level alerts.
- Capacity Building: Train local administration and SDRF personnel in GIS decision tools, while incorporating inundation maps into climate-resilient infrastructure planning.
Value Addition (Global Frameworks & SDGs)
- Policy Frameworks: Aligns with the Sendai Framework for Disaster Risk Reduction (2015–2030), National Disaster Management Plan (NDMP), and National Policy on Disaster Management (2009).
- Sustainable Development Goals: Directly advances SDG 11 (Sustainable Cities and Communities) and SDG 13 (Climate Action).
Conclusion
Institutionalizing ISRO’s space-based outputs within local administrative workflows is essential to building an end-to-end, climate-resilient disaster management framework in flood-prone states like Assam.
Illegal Rat-hole Mining, Environmental Degradation & Internal Security (Nagaland–Assam Border)
Syllabus Mapping
- GS Paper III: Environment & Ecology, Conservation, Disaster Management, Internal Security, Natural Resource Management.
- GS Paper V (Assam Specific): Environment of Assam, Security Challenges in Assam, Disaster Management, Geography of Assam.
- Prelims: Environment & Ecology, Biodiversity Conservation, Disaster Management, Internal Security, Geography of North-East India, Current Affairs.
- Why in News?: A report in The Assam Tribune highlighted concerns that unchecked rat-hole and opencast coal mining in Nagaland’s border areas has contributed to environmental degradation, worsening floods in Upper Assam, while security agencies have alleged links between illegal mining networks and insurgent groups.
Introduction
Unregulated rat-hole and opencast coal mining along the Assam-Nagaland border poses a dual threat by triggering severe ecological degradation, downstream flooding in Assam, and fueling insurgent networks through illegal trade.
Prelims Perspective
- Rat-hole Mining: A primitive, unscientific coal extraction method involving manually excavated horizontal or vertical tunnels without structural or environmental safeguards.
- Geographical Hotspots: Extensively practiced in the Jaintia Hills of Meghalaya and border districts of Nagaland (Mon, Wokha, Tuensang, Mokokchung).
- Acid Mine Drainage (AMD): Formation of highly acidic water when sulphide minerals (like pyrite) react with air and water, drastically lowering river pH and releasing toxic heavy metals.
- National Green Tribunal (NGT): A statutory body under the NGT Act, 2010, resolving environmental disputes based on the Precautionary Principle, Polluter Pays Principle, and Sustainable Development.
- Supreme Court/NGT Stance: The NGT banned rat-hole mining in Meghalaya in 2014 due to safety and environmental risks; the Supreme Court permits only scientifically regulated mining with statutory clearances.
- Impacted River Systems: Pollutants and sediments from border mining directly affect the Dikhow, Dhansiri, and Doyang rivers, which flow into the Brahmaputra.
- Opencast Mining: A surface mining technique that yields higher productivity but causes immense landscape and forest disturbance if poorly managed.
Mains Perspective
Importance
- Ecological & Disaster Resilience: Transitioning to scientific mining mitigates Acid Mine Drainage (AMD), limits deforestation, and reduces downstream flood risks in Upper Assam.
- Internal Security: Dismantling illegal mining syndicates cuts off crucial funding networks for cross-border organized crime and insurgent groups.
- Inter-State Governance: Promotes essential federal cooperation between Assam and Nagaland for sustainable, transboundary natural resource management.
Challenges
- Topography & Enforcement: Difficult, remote forested border terrain and cross-border jurisdictional hurdles severely restrict law enforcement and monitoring.
- Socio-Economic Dependency: Informal mining serves as a primary livelihood for impoverished local communities, making blanket bans difficult to implement without creating alternative employment.
- Ecological Rehabilitation: Restoring drastically degraded landscapes and polluted transboundary rivers is highly resource-intensive and technically complex.
Government Initiatives
- Statutory Laws: Governed by the MMDR Act, 1957, and the National Mineral Policy, 2019.
- Environmental Safeguards: Enforced through the EIA Notification, 2006, Forest (Conservation) Act, 1980, NGT Act, 2010, and the Disaster Management Act, 2005.
Way Forward
- Technology-Driven Surveillance: Deploy ISRO remote sensing, drones, and GIS for real-time tracking of illegal mines and transport networks.
- Transboundary Basin Management: Institute joint Assam-Nagaland task forces for integrated river basin management and intelligence-sharing.
- Sustainable Transitions: Implement community-based monitoring, promote scientific mining compliance, and provide alternative livelihood options for vulnerable workers.
Value Additions (Global Frameworks & SDGs)
- Sustainable Goals: Aligns with SDG 12 (Responsible Consumption), SDG 13 (Climate Action), and SDG 15 (Life on Land).
- International Frameworks: Supports the ecosystem restoration objectives of the Kunming-Montreal Global Biodiversity Framework.
Conclusion
Achieving sustainable mineral governance in Northeast India requires replacing hazardous rat-hole mining with technology-enabled scientific extraction, backed by robust inter-state coordination to secure both ecological integrity and internal security.
Need for a New Disaster Management Doctrine: From Reactive Relief to Anticipatory Resilience
Syllabus Mapping
- GS Paper III: Disaster Management, Climate Change, Science & Technology in Disaster Management, Infrastructure & Disaster Resilience.
- GS Paper V (Assam Specific): Floods and Erosion in Assam, Disaster Management in Assam, Governance.
- Prelims: Disaster Management, Environment & Ecology, Climate Change, NDMA/SDMA & Disaster Management Act, 2005.
- Why in News?: An editorial in The Assam Tribune argued that Assam should move beyond a relief-centric disaster management model and adopt a new disaster management doctrine based on anticipatory preparedness, scientific planning, community participation and resilience-building, especially in view of the recurring floods in Upper Assam.
Introduction
Shifting from reactive post-disaster relief to an anticipatory disaster management doctrine leverages predictive technology, nature-based solutions, and community action to build climate-resilient governance.
Prelims Perspective
- Disaster Management Act, 2005: Legal framework defining disaster management as a continuous 7-stage cycle (Prevention, Mitigation, Preparedness, Response, Relief, Rehabilitation, Reconstruction); established NDMA, SDMAs, and DDMAs.
- National Disaster Management Authority (NDMA): Apex disaster management body chaired by the Prime Minister; SDMA is chaired at the state level by the Chief Minister.
- National Disaster Response Force (NDRF): Specialised force for disaster response operating under the statutory mandate of the DM Act, 2005.
- Sendai Framework (2015–2030): UN global agreement featuring 4 priorities: understanding risk, strengthening governance, investing in resilience, and “Build Back Better”.
- Coalition for Disaster Resilient Infrastructure (CDRI): Global partnership launched by India in 2019 to promote climate- and disaster-resilient infrastructure.
- Flood Plain Zoning: Regulatory land-use mechanism designed to restrict human settlements and critical infrastructure in high-risk inundation zones.
- Key Institutional Monitoring Bodies: ISRO (satellite inundation mapping & NDEM portal), IMD (meteorological forecasts), and Central Water Commission (CWC) (river gauge monitoring & flood forecasting).
- Global Best Practices: Netherlands (“Room for the River” adaptive floodplain management), Japan (earthquake-resilient structural codes and community drills), Bangladesh (cyclone shelter and volunteer networks).
Mains Perspective
Importance
- Socio-Economic Safeguards: Proactive risk reduction prevents massive capital losses, safeguards agricultural livelihoods, and dramatically reduces post-disaster recovery costs.
- Climate Adaptation & Governance: Enhances resilience against climate-induced extreme events through evidence-based, multi-agency decision-making.
- Ecosystem & Life Protection: Early warnings and nature-based solutions protect human lives, critical public infrastructure, and vulnerable biodiversity.
Challenges
- Policy-Implementation Gap: Persistent encroachment on wetlands/floodplains and poor enforcement of floodplain zoning regulations.
- Institutional & Financial Deficits: Fragmented inter-agency coordination (IMD, CWC, ISRO, ASDMA) coupled with capital constraints for resilient infrastructure.
- Climate Uncertainty & Awareness: Erratic weather patterns complicate forecasting models, while vulnerable communities lack systematic preparedness training.
Government Initiatives
- Statutory Frameworks & Plans: Disaster Management Act, 2005, National Disaster Management Plan (NDMP), and National Disaster Mitigation Fund.
- Operational Platforms: Assam State Disaster Management Authority (ASDMA), National Database for Emergency Management (NDEM), and Common Alerting Protocol (CAP).
- Global & Technical Alliances: Coalition for Disaster Resilient Infrastructure (CDRI), CWC Flood Forecasting, and ISRO Flood Mapping.
Way Forward
- Anticipatory Tech Integration: Combine AI/ML, ISRO satellite imagery, CWC gauges, and drones for real-time predictive flood modeling and last-mile alerts.
- Nature-Based Solutions (NbS): Restore urban wetlands (e.g., Deepor Beel), protect river corridors, and execute catchment area treatment alongside physical embankments.
- Community-Led Resilience: Institutionalize Village Disaster Management Committees, conduct school safety drills, and train local volunteers in flood-prone districts (Majuli, Dhemaji, Lakhimpur).
Value Addition (Global Frameworks & SDGs)
- International Commitments: Directly aligns with the Sendai Framework (2015–2030) and India’s CDRI vision.
- Sustainable Development Goals: Supports SDG 11 (Sustainable Cities and Communities), SDG 13 (Climate Action), and SDG 15 (Life on Land).
- High-Yield Quote: “The cost of preparedness is far lower than the cost of recovery.”
Conclusion
Adopting an anticipatory disaster management doctrine that fuses space technology, nature-based solutions, and community action is vital for securing long-term climate resilience in Assam.
RBI Keeps Repo Rate Unchanged: Monetary Policy, Inflation & Economic Growth
Syllabus Mapping
- GS Paper III: Indian Economy, Inclusive Growth, Monetary Policy, Inflation Management, Financial Markets.
- Prelims: Indian Economy, Reserve Bank of India (RBI), Monetary Policy, Inflation, Banking System, Current Affairs.
- Why in News?: The Reserve Bank of India (RBI), in its latest Monetary Policy Committee (MPC) meeting, kept the repo rate unchanged, maintaining a neutral policy stance. The RBI highlighted moderation in inflation, resilient domestic demand, and global uncertainties while balancing price stability with economic growth. (Source: The Assam Tribune article)
Introduction
The Reserve Bank of India’s decision to maintain an unchanged repo rate with a neutral stance underscores its mandate to anchor price stability while sustaining resilient domestic economic growth amidst persistent global uncertainties.
Prelims Perspective
- Reserve Bank of India (RBI): Established on April 1, 1935 (under the RBI Act, 1934); nationalized in 1949; headquartered in Mumbai.
- Monetary Policy Committee (MPC): Constituted in 2016; a 6-member body (3 from RBI including the Governor with a casting vote, 3 external experts appointed by the Central Govt.); decisions made by majority vote.
- Flexible Inflation Targeting (FIT): RBI targets a CPI inflation of 4%, with a tolerance band of 2% to 6%, as notified by the Central Government.
- Repo Rate: The short-term interest rate at which RBI lends funds to commercial banks against government securities.
- Reverse Repo Rate: The rate at which RBI borrows money from commercial banks to absorb excess market liquidity.
- Standing Deposit Facility (SDF): Introduced in 2022; allows RBI to absorb liquidity without collateral and serves as the floor of the Liquidity Adjustment Facility (LAF) corridor.
- Marginal Standing Facility (MSF): An emergency overnight borrowing window for banks, generally set at a rate higher than the Repo Rate.
- Bank Rate: The rate at which RBI lends long-term funds to banks without any repurchase agreement.
- Reserve Ratios: CRR (percentage of deposits kept as cash with RBI) and SLR (percentage of deposits maintained in approved liquid assets like G-Secs).
- Inflation Measurement: CPI (Consumer Price Index) measures retail inflation and is compiled by the NSO (used for MPC targets); WPI (Wholesale Price Index) is compiled by DPIIT.
- Neutral Stance: Indicates the RBI is data-dependent and not pre-committed to either hiking or cutting policy rates in the near future.
Mains Perspective
Importance
- Macroeconomic Anchor: Ensures price stability to protect consumer purchasing power while maintaining predictable interest rates to spur long-term investment.
- Systemic Stability: Curbs excessive market liquidity and speculative bubbles, thereby ensuring confidence in the Indian Rupee and the banking sector.
- Growth-Inflation Balance: Facilitates sustainable economic growth and employment generation without triggering demand-pull inflation.
Challenges
- External Vulnerabilities: Global geopolitical conflicts, fluctuating crude oil prices, and supply chain disruptions continuously threaten to import inflation.
- Climate-Induced Shocks: Extreme weather events disrupt agricultural yields, leading to highly volatile domestic food inflation.
- Asymmetric Transmission: Commercial banks frequently delay passing on RBI policy rate cuts to retail borrowers, diluting the intended economic stimulus.
Government & RBI Initiatives
- Institutional Frameworks: Adoption of Flexible Inflation Targeting (FIT) and the establishment of the Monetary Policy Committee (MPC).
- Liquidity & Regulatory Tools: Implementation of the Standing Deposit Facility (SDF), Liquidity Adjustment Facility (LAF), and the Prompt Corrective Action (PCA) framework.
- Financial Innovation: Launch of the Digital Rupee (CBDC) and massive financial inclusion drives like PM Jan Dhan Yojana.
Way Forward
- Fiscal-Monetary Synergy: Institutionalize seamless coordination between RBI’s monetary tightening and the Government’s supply-side interventions.
- Supply-Side Resilience: Upgrade agricultural logistics to contain food inflation and rapidly diversify energy sources to shield against global oil shocks.
- Regulatory Oversight: Mandate tighter banking regulations to ensure swift, symmetrical transmission of policy rates to consumers.
Value Addition (Reports & Frameworks)
- Key Institutions: RBI, NSO, IMF, World Bank.
- Relevant Reports: Economic Survey, Union Budget, OECD Economic Outlook.
- Impactful Quote: “Price stability is the foundation of sustainable economic growth.”
Conclusion
Navigating a complex global landscape, the RBI’s data-driven, neutral monetary policy successfully anchors inflation expectations, but achieving long-term economic resilience requires complementing these rate decisions with robust, structural supply-side reforms.
APSC Prelims MCQs
Topic 1: ISRO Flood Inundation Maps & National Database for Emergency Management (NDEM)
Q1. With reference to the National Database for Emergency Management (NDEM), consider the following statements:
- It is a geospatial platform developed by ISRO for disaster management.
- It provides flood inundation information at district and sub-district levels.
- It uses only optical satellite imagery for flood mapping.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A
Explanation: NDEM is an ISRO-developed geospatial platform supporting disaster management. It provides district/sub-district level flood information using both Synthetic Aperture Radar (SAR) and optical satellite data, not only optical imagery.
Q2. Synthetic Aperture Radar (SAR), frequently used by ISRO during floods, is preferred because it:
A. Uses visible light to generate high-resolution images only during daytime.
B. Can penetrate clouds and capture images irrespective of weather conditions.
C. Measures groundwater quality directly through satellite sensors.
D. Operates only in cloud-free atmospheric conditions.
Answer: B
Explanation: SAR is an active microwave sensor capable of imaging during day/night and through clouds, making it ideal for flood monitoring.
Q3. Which of the following organisations are directly associated with flood forecasting and flood management in India?
- Central Water Commission (CWC)
- Indian Space Research Organisation (ISRO)
- National Disaster Management Authority (NDMA)
Select the correct answer using the code below.
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: CWC provides flood forecasts, ISRO supplies satellite-based flood information, and NDMA coordinates disaster management.
Q4. Which one of the following is the most important advantage of integrating GIS with satellite remote sensing in disaster management?
A. It completely eliminates the need for field surveys.
B. It enables spatial analysis for planning, monitoring and response.
C. It replaces weather forecasting systems.
D. It predicts earthquakes with certainty.
Answer: B
Explanation: GIS integrates spatial data for hazard mapping, planning, monitoring and disaster response; it complements rather than replaces field surveys and forecasting.
Topic 2: Illegal Rat-hole Mining, Environmental Degradation & Internal Security
Q5. With reference to Rat-hole Mining, consider the following statements:
- It involves extraction of coal through narrow horizontal or vertical tunnels.
- It is generally considered an unscientific mining practice.
- It is associated with risks such as land degradation and water pollution.
Which of the statements given above is/are correct?
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: Rat-hole mining uses narrow tunnels, lacks scientific safeguards, and causes serious environmental damage including land degradation and water pollution.
Q6. Acid Mine Drainage (AMD), often associated with coal mining, primarily results from:
A. Excessive groundwater extraction
B. Reaction of sulphide minerals with air and water
C. High concentration of organic matter in rivers
D. Volcanic activity
Answer: B
Explanation: Oxidation of sulphide minerals (especially pyrite) forms sulphuric acid, lowering water pH and releasing heavy metals.
Q7. Illegal mining in border regions poses an internal security concern mainly because it may:
- Finance insurgent groups.
- Promote organised criminal networks.
- Increase cross-border smuggling.
Select the correct answer using the code below.
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: Illegal mining networks may generate illicit finances, facilitate smuggling and strengthen organised criminal or insurgent activities.
Q8. Which of the following principles are followed by the National Green Tribunal (NGT)?
- Precautionary Principle
- Polluter Pays Principle
- Sustainable Development Principle
Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: These three environmental principles guide the functioning and decisions of the National Green Tribunal.
Topic 3: Need for a New Disaster Management Doctrine
Q9. Which of the following best describes the concept of ‘Anticipatory Disaster Management’?
A. Providing compensation after disasters.
B. Focusing only on relief and rehabilitation.
C. Taking preventive actions based on risk assessment and early warning.
D. Rebuilding infrastructure after disasters.
Answer: C
Explanation: Anticipatory disaster management emphasises preparedness, early warning and risk reduction before disasters occur.
Q10. The Sendai Framework for Disaster Risk Reduction (2015–2030) emphasises:
- Understanding disaster risk.
- Strengthening disaster risk governance.
- Investing in disaster risk reduction.
- Enhancing disaster preparedness and “Build Back Better”.
Select the correct answer using the code below.
A. 1 and 2 only
B. 1, 2 and 3 only
C. 2, 3 and 4 only
D. 1, 2, 3 and 4
Answer: D
Explanation: These are the four priority areas of the Sendai Framework adopted by UN member states.
Q11. Which of the following institutions have been established under the Disaster Management Act, 2005?
- National Disaster Management Authority (NDMA)
- State Disaster Management Authority (SDMA)
- National Disaster Response Force (NDRF)
Select the correct answer using the code below.
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: The Disaster Management Act, 2005 provides the legal framework for NDMA, SDMAs and the National Disaster Response Force.
Q12. Which one of the following measures represents a Nature-based Solution (NbS) for flood management?
A. Construction of concrete embankments alone
B. River interlinking projects alone
C. Wetland restoration and floodplain conservation
D. Increasing the height of highways in flood-prone areas
Answer: C
Explanation: Nature-based solutions use ecosystems such as wetlands and floodplains to reduce disaster risks sustainably.
Topic 4: RBI Keeps Repo Rate Unchanged
Q13. With reference to the Monetary Policy Committee (MPC) of India, consider the following statements:
- It consists of six members.
- The RBI Governor acts as its Chairperson.
- Decisions are taken by majority vote.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: The MPC has six members, is chaired by the RBI Governor, and decisions are made by majority.
Q14. If the Reserve Bank of India increases the Repo Rate, which one of the following is the most likely immediate effect?
A. Commercial banks generally reduce lending rates.
B. Borrowing becomes costlier, reducing money supply.
C. Inflation rises immediately due to higher liquidity.
D. Government expenditure automatically declines.
Answer: B
Explanation: A higher repo rate increases borrowing costs for banks, leading to tighter liquidity and helping control inflation.
Q15. In the context of the Liquidity Adjustment Facility (LAF), which of the following instruments are currently used by the RBI?
- Repo Rate
- Standing Deposit Facility (SDF)
- Marginal Standing Facility (MSF)
Select the correct answer using the code below.
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2 and 3
Answer: D
Explanation: The LAF framework includes Repo operations, the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MSF) for liquidity management.
Q16. Which of the following statements correctly distinguishes the Consumer Price Index (CPI) from the Wholesale Price Index (WPI)?
A. CPI measures wholesale inflation, while WPI measures retail inflation.
B. CPI is used by the RBI for inflation targeting, whereas WPI measures price changes at the wholesale level.
C. Both CPI and WPI are compiled by the Reserve Bank of India.
D. WPI includes only agricultural commodities, whereas CPI includes only manufactured goods.
Answer: B
Explanation: The RBI uses CPI as the nominal anchor for monetary policy under the Flexible Inflation Targeting framework. WPI measures changes in wholesale prices and is compiled separately by the Office of the Economic Adviser.
APSC Mains Practice Question
📘 GS Mains Model Question (APSC CCE)
📝 Question
Q. “The Reserve Bank of India’s monetary policy seeks to strike a balance between price stability and economic growth.” Discuss the role of the Monetary Policy Committee (MPC) in achieving this objective. Also examine the challenges faced by monetary policy in the current global economic environment.
The Monetary Policy Committee (MPC), established under the Reserve Bank of India Act, 1934 (amended in 2016), is responsible for formulating India’s monetary policy under the Flexible Inflation Targeting (FIT) framework. By adjusting policy rates such as the Repo Rate, the MPC aims to maintain price stability while supporting sustainable economic growth.
Role of the MPC in Balancing Inflation and Growth
1. Maintaining Price Stability
- Targets Consumer Price Index (CPI) inflation at 4% (±2%).
- Controls inflation through policy rate adjustments.
- Anchors inflation expectations of households and businesses.
2. Promoting Economic Growth
- Reduces policy rates during economic slowdowns to stimulate:
- Investment
- Consumption
- Employment
- Industrial production
3. Liquidity Management
- Uses instruments such as:
- Repo Rate
- Standing Deposit Facility (SDF)
- Marginal Standing Facility (MSF)
- Ensures adequate liquidity without fuelling excessive inflation.
4. Strengthening Financial Stability
- Provides predictable monetary policy, enhancing investor confidence.
- Supports stability in banking and financial markets.
5. Improving Monetary Policy Transparency
- Decisions are based on majority voting by the six-member MPC.
- Publication of policy statements enhances accountability and policy credibility.
Challenges Before Monetary Policy
Global Challenges
- Volatile crude oil prices.
- Geopolitical conflicts disrupting supply chains.
- Tight monetary policies by major central banks leading to capital flow volatility.
- Exchange rate pressures due to a stronger US dollar.
Domestic Challenges
- Climate-induced food inflation.
- Incomplete monetary policy transmission by banks.
- Balancing inflation control with employment and growth.
- High dependence on imported energy.
Way Forward
- Strengthen coordination between monetary and fiscal policies.
- Improve transmission of policy rate changes across the banking system.
- Enhance agricultural productivity and supply-chain efficiency to reduce food inflation.
- Increase renewable energy adoption to reduce imported inflation.
- Continue a data-driven and forward-looking monetary policy supported by high-frequency economic indicators.
The RBI’s recent decision to keep the repo rate unchanged reflects a calibrated approach to balancing inflation with growth amid global uncertainties. Going forward, a credible, transparent and flexible monetary policy, supported by prudent fiscal management and structural reforms, will be essential for achieving macroeconomic stability and inclusive economic growth. As observed in the Economic Survey, sustained price stability remains a prerequisite for long-term investment, employment generation and resilient economic development.
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