APSC Answer Writing (Daily) based on Assam Tribune – 06/08/2026

For APSC CCE and other Assam Competitive examinations aspirants, practicing Daily Answer Writing is vital. This blog covers the most important Main question and its model Answer from the Assam Tribune today (06-08-2026).

📘 GS Mains Model Question (APSC CCE)

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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