Mentor’s comment-
- https://indianexpress.com/
article/opinion/columns/rbi- inflation-7978621/ - In the body, mention the above normal inflation ailing the Indian economy.
- In the body mention that India’s non-oil and non-food component constitute only 47% of CPI underlining the limits of monetary policy for Inflation targeting. In the next part, mention that India’s foreign exchange reserves are required for both internal balancing and external balancing, unlike OECD countries.
- Conclude by mentioning that the different structure of Indian economy would require different approaches from the monetary authority in its inflation targeting.
Id – 217112573522
Akshada
Decent attempt, your knowledge is good, presentation is also fine.
Introduction is good.
Factors of difference have also been mentioned. In 2nd point you have talked about internal as well as external balance but explained only external balance. You can add that internal balance which once meant achieving full employment and low inflation using monetary and fiscal policies has now come down to mean just inflation management.
Next part about monetary policy management is also fine. However, after that you can mention some of the challenges involved with the process- This policy targets demand constraints but faces the problem of tackling Supply shocks (originating from food and oil, primarily); If output is stabilised using macroeconomic policies, it can lead to prices rise even at higher levels whereas on the other hand, if the authorities try to stabilise prices, it will lead to a fall in the output and employment in the country.
Conclusion is fine but you can’t say the economy has been stagnant, it dipped a lot and then rose again, can frame that sentence in a better way.
Keep practicing. 🙂
Id_ 216918855675
Khusboo
Your knowledge is decent but presentation can be improved here. Try to answer the question in parts, use subheadings for each part. Also, the content is a bit less for a 15 marker, ideal would be 2.5-3 pages.
In intro, after mentioning the rising inflation, mention some causes for the same- supply chain disruptions due to the pandemic, Russia-Ukraine war etc
Next you can give a subheading on how the Indian economy is different from OECD-points about non-food non-oil basket being only 47% of CPI and internal and external balancing can be mentioned there.
Next mention a section on the use of monetary policy by RBI and some of the challenges involved. In use, you can talk about when and how does the RBI increase or decrease rates, in challenges mention that the policy targets demand constraints but faces the problem of tackling Supply shocks originating from food and oil primarily.
Last two paragraphs are fine, points can be used to write a way forward.
Keep practicing. Read some other answers if possible. 🙂
5.5/15