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prelims Test Series 2019
बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. Issue in macro-economic stability: Discuss the issues of micro economic stability and suggest measures.
Jan 10, 2017 Related to : GS Paper- 3

Ans :


In a recent period of times RBI and government has undertaken various actions to realise macro-economic stability in general and inflation in particular through various monetary policy actions. But micro economic stability is much bigger aspect than mere taming inflation. 


  • Price stability is indeed an important function of monetary policy. But the formalisation via MPC of inflation targeting as the central objective of monetary policy is not exactly as desired.
  • Policy makers are not cribbing about growth being given short shrift. In a globalising world, in which India’s financial market is buffeted, even with partial convertibility of the rupee on the capital account, by the storms of global finance, financial stability is a prime concern. 
  • Interest rates are part of the armoury of macro prudential regulation. The goal of price stability is not necessarily misaligned with the goal of financial stability, but the pace of policy change required for pursuing either goal could be different from that required for the other. 


  • Instead of letting fiscal policy adjust to monetary policy taken as a given, there would be occasions when the RBI and the finance ministry have to work in tandem to check financial instability. 
  • A simple mandate to rein in prices elides the nuanced complexity of setting monetary policy in a financially interdependent world.
  • The consumer price index (CPI) is hardly the best guide for monetary policy. Food and fuels account for more than half its total weightage. Either can trigger a price spurt, due to a supply shock, which just cannot be addressed by a rate increase.


Taming the inflation is most necessary for overall macro-economic stability, but it won’t suffice. Hence it needs comprehensive approach than mere containing inflation. In this direction government and RBI should look into this so address the issues effectively.     

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