Correct Option
The correct option is (d).
Explanation
Price stability is the primary objective of monetary policy in India. This mandate is statutorily defined under the Reserve Bank of India Act, 1934, which establishes the framework for flexible inflation targeting.
Detailed Analysis
- Option (a) is incorrect: The Department of Consumer Affairs (under the Ministry of Consumer Affairs, Food and Public Distribution) monitors the prices of essential commodities and implements the Essential Commodities Act. While it intervenes to check price rises in specific goods (like pulses or onions), it is not responsible for the overall macroeconomic management of inflation or price stability.
- Option (b) is incorrect: The Expenditure Management Commission was constituted to recommend structural changes in the fiscal management of the government, specifically regarding the rationalization of public expenditure. It does not have a mandate to control inflation.
- Option (c) is incorrect: The Financial Stability and Development Council (FSDC) is an apex-level body chaired by the Finance Minister. Its mandate includes financial stability, financial sector development, inter-regulatory coordination, and financial literacy. It does not formulate monetary policy to control inflation.
- Option (d) is correct: The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. The Preamble of the RBI Act, 1934, explicitly states that the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Under the flexible inflation targeting framework adopted in 2016, the RBI (through the Monetary Policy Committee) is legally mandated to keep inflation within a target band (currently 4% with a tolerance band of +/- 2%).
Key Takeaway: The Reserve Bank of India is the sole authority responsible for maintaining price stability and controlling inflation in the economy through the operation of the Monetary Policy Committee (MPC) and the use of monetary policy instruments.