UPSC CSE Prelims
Question 24
Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC) ?
- It decides the RBI's benchmark interest rates.
- It is a 12-member body including the Governor of RBI and is reconstituted every year.
- It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below :
View correct answer and explanation
Correct answer: A
Correct Option: A
Explanation: The statutory six-member MPC sets the RBI’s policy repo rate under the inflation-targeting framework. It is headed by the RBI Governor, not the Finance Minister.
Statement/Pair-wise Analysis:
Statement/Item 1: Correct - MPC votes on the policy interest rate used by the RBI to meet its inflation target.
Statement/Item 2: Incorrect - The MPC has six members, not twelve; appointments do not require annual reconstitution.
Statement/Item 3: Incorrect - The RBI Governor chairs the committee, not the Union Finance Minister.
Option-wise Analysis:
A: Correct - includes all and only the true statements/items.
B: Incorrect - includes incorrect statement/item 2.
C: Incorrect - includes incorrect statement/item 3; omits correct statement/item 1.
D: Incorrect - includes incorrect statement/items 2, 3; omits correct statement/item 1.