Q.1)The Monetary Policy Committee (MPC) has recently decided to keep policy rates unchanged. In this context, discuss the functions and significance of MPC.
Why this question:
An important part of GS paper III and has been in the news recently.
Key Demand of the question:
Functions and significance of MPC, along with its challenges and solutions
Discuss- back up the answer by carefully selected evidence to make a case for and against an argument, or point out the advantages and disadvantages of the given context and finally arrive at a conclusion.
Briefly introduce MPC and its composition.
In the first part, categorically highlight the functions of the MPC.
In the next part, write the issues with the MPC like those related to its composition, lack of its consultation with the market, etc.
Conclude with a way forward.