Which of the following statements is/are correct regarding the Monetar

Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC) ?

1. It decides the RBI’s benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.

Select the correct answer using the code given below :

[amp_mcq option1=”1 only” option2=”1 and 2 only” option3=”3 only” option4=”2 and 3 only” correct=”option1″]

This question was previously asked in

UPSC IAS – 2017

The correct answer is A, stating that only statement 1 is correct.

The Monetary Policy Committee (MPC) was established to fix the benchmark policy interest rate (repo rate) to achieve the inflation target set by the government.

Statement 2 is incorrect. The MPC in India is a six-member body. Three members are from the RBI (including the Governor, who is the ex-officio Chairperson) and three members are appointed by the Central Government. The terms of government-appointed members are typically fixed (e.g., four years) and not necessarily reconstituted every year. Statement 3 is incorrect; the MPC functions under the chairmanship of the Governor of the Reserve Bank of India, not the Union Finance Minister.

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