In macroeconomic management, what is generally regarded as the major objective of monetary policy pursued by the central bank?

Introduction / Context:
Monetary policy refers to actions taken by the central bank to regulate the money supply, credit conditions and interest rates in an economy. These actions influence inflation, growth, employment and the stability of the financial system. Exam questions often ask you to identify the central or primary objective of monetary policy, especially in the context of developing economies like India.

Given Data / Assumptions:
- The central bank can use instruments such as interest rates, reserve requirements and open market operations.
- The core goals discussed in theory include controlling inflation, supporting growth and maintaining financial stability.
- The options given include increasing tax revenue, revamping the Public Distribution System, promoting growth with price stability and eliminating corruption.

Concept / Approach:
Monetary policy primarily deals with the money and credit system, not with tax collection or direct anti corruption measures. In modern macroeconomics, the central objective is often framed as achieving price stability (low and stable inflation) while supporting sustainable economic growth. This dual or flexible inflation targeting approach recognises that very high inflation harms growth, but extremely tight policy can also suppress growth. Therefore, the most balanced way to state the objective is to promote economic growth with reasonable price stability.

Step-by-Step Solution:
Step 1: Examine option C, which explicitly mentions promoting economic growth with price stability. This matches the widely accepted goal of central banks: to create monetary conditions conducive to long term growth without allowing runaway inflation.Step 2: Consider option A. Increasing the government's tax revenue is primarily the role of fiscal policy, managed by the finance ministry through tax laws, not by the central bank through monetary policy.Step 3: Consider option B. Revamping the Public Distribution System is a specific administrative and welfare policy issue, again part of fiscal and food policy, not monetary policy.Step 4: Consider option D. Eliminating corruption is a governance and legal issue; while sound monetary policy can contribute to overall stability, it is not the main instrument for fighting corruption.

Verification / Alternative check:
You can verify by recalling official statements from central banks and standard macroeconomics textbooks. They consistently emphasise controlling inflation and supporting growth as the core objectives of monetary policy. For example, inflation targeting frameworks aim for a specified inflation rate while supporting the broader goal of output and employment stability. There is no mention of direct tax collection, PDS reform or corruption control as primary monetary policy objectives.

Why Other Options Are Wrong:
Option A is wrong because tax revenue depends on tax rates, base, compliance and economic activity, which are managed mainly via fiscal policy. Option B is wrong because the PDS is an instrument of food security and welfare policy, not of monetary policy. Option D is wrong because while macroeconomic stability can reduce some opportunities for rent seeking, monetary policy is not a targeted anti corruption tool.

Common Pitfalls:
Some candidates conflate the roles of fiscal and monetary policy, assuming that any economic objective can be pursued by either. It is crucial to remember that monetary policy focuses on money, credit and interest rates, whereas fiscal policy focuses on government spending and taxation. Another pitfall is to focus only on growth and forget price stability; in practice, an overheating economy with high inflation is not desirable, so both goals must be balanced.

Final Answer:
The major objective of monetary policy is To promote economic growth while maintaining reasonable price stability.