Question 2 from UPSC CSE 2016 - Economy

Question

With reference to 'Financial Stability and Development Council', consider the following statements:
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the economy.
Which of the statements given above is/are correct?

Accepted Answer

Correct Option: C. 2 and 3 only

Strategy: Identify the core functions and structure of the Financial Stability and Development Council (FSDC). For Statement 1, recognize the chronological and functional mismatch: the FSDC was established in 2010, while NITI Aayog began in 2015, and FSDC is an independent apex body, not a sub-organ of NITI Aayog. This immediately falsifies Statement 1. For Statement 2, recall the well-established fact that the Union Finance Minister chairs the FSDC. For Statement 3, associate FSDC with its primary objective of maintaining financial stability and monitoring macroprudential risks in the economy.

Key Info: **Financial Stability and Development Council (FSDC)**

**Establishment:** The FSDC was set up by the Government of India in December 2010 as an apex-level forum.

**Chairperson:** It is headed by the Union Finance Minister.

**Objectives/Functions:**
- To strengthen and institutionalize the mechanism for maintaining financial stability.
- To enhance inter-regulatory coordination and promote financial sector development.
- To monitor macroprudential supervision of the economy, including the functioning of large financial conglomerates.
- To address inter-regulatory issues and promote financial literacy and financial inclusion.
- To coordinate India's international financial sector engagements.

**Composition:** Its members include the heads of financial sector regulators (RBI, SEBI, PFRDA, IRDAI) and Secretaries from various ministries (Finance, Economic Affairs, Revenue, Financial Services), and the Chief Economic Advisor.

**Nature:** It is not a statutory body; it was created by an executive order.

**Relationship with NITI Aayog:** The FSDC is an independent body and not an organ or subordinate body of NITI Aayog. NITI Aayog was established in 2015, whereas FSDC predates it (2010).

Answer

Option A: 1 and 2 only

Answer

Option B: 3 only

Answer

Option D: 1, 2, and 3

With reference to 'Financial Stability and Development Council', consider the following statements: It is an organ of NITI Aayog. It is headed by the Union Finance Minister. It monitors macroprudential supervision of the economy. Which of the statements given above is/are correct?

With reference to 'Financial Stability and Development Council', consider the following statements:

It is an organ of NITI Aayog.

It is headed by the Union Finance Minister.

It monitors macroprudential supervision of the economy.
Which of the statements given above is/are correct?