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:

The correct option is 1 only.

Let us analyze each statement step-by-step to evaluate its correctness:

Statement 1 is correct:
The primary function of the Monetary Policy Committee (MPC) is to determine and fix the benchmark policy interest rate (Repo Rate) required to contain inflation within the specified target level and support economic growth.

Statement 2 is incorrect:
The MPC is a 6-member body (not a 12-member body). It comprises three members from the Reserve Bank of India (RBI), including the RBI Governor, and three external members appointed by the Central Government. The external members hold office for a period of four years.

Statement 3 is incorrect:
The MPC functions under the chairmanship of the Governor of the Reserve Bank of India, not the Union Finance Minister.

Therefore, only statement 1 is correct.