Mains Answer Writing - 8 Oct, 2026

GS3

Economy

15 marks

How does a repo rate hike help control inflation? Discuss its impact on the Indian economy.

Distinguish between demand-side inflation, which monetary tightening can address, and supply-side inflation, where repo rate hikes have limited effectiveness.
Facts to remember: RBI raised the repo rate by 25 basis points to 5.5% in October 2026.
Do not assume that higher repo rates directly control food or crude-oil prices; explain the monetary-policy transmission mechanism.

7.5/15

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