UPSC Prelims 2016 · Question 81 of 98
UPSC Prelims 2016 question on Financial Stability Development Council
- ExamUPSC CSE
- Year2016
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicBanking
- DifficultyMedium
- TypeStatement
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?
Show answer
Answer: C. 2 and 3 only
Verdict
The answer is 2 and 3 only. The Financial Stability and Development Council is headed by the Finance Minister and handles macroprudential supervision, but it is not an organ of NITI Aayog.
Analysis
Statement 2 is CORRECT. The Council was set up in December 2010 as the apex level forum under the chairmanship of the Union Finance Minister, with the heads of the financial sector regulators as members. Statement 3 is CORRECT. Macroprudential supervision of the economy, including monitoring the functioning of large financial conglomerates and systemic risk, is its core function. Statement 1 is INCORRECT. It is a body under the Ministry of Finance and predates NITI Aayog by four years, so it cannot be an organ of it.
Source
Press reporting on Council meetings on bad loans and global uncertainty.
How to crack it
Use the date test, since a body created in 2010 cannot be an organ of an institution created in 2015, and that ordering falsifies statement 1 without any knowledge of the Council. Chronological impossibility is one of the cleanest disproofs available and UPSC leaves it open surprisingly often. Then note the design logic: a council coordinating several regulators must be chaired by someone above all of them, which points to the Finance Minister.