Consider the following statements regarding the Monetary Policy Committee (MPC) in India:

1. The MPC is a statutory body established under the Reserve Bank of India Act, 1934.

2. It consists of six members, with the RBI Governor as the ex-officio Chairperson.

3. Each member has one vote, and in case of a tie, the RBI Governor has the casting vote.

4. The decisions of the MPC are taken by a two-thirds majority of the members present and voting.

How many of the above statements are correct?

The correct answer is option 2

Key Points

•  The Monetary Policy Committee (MPC) is a statutory body established under the RBI Act, 1934 (amended in 2016). Hence, Statement 1 is correct.
• The MPC has six members:
  • RBI Governor (Chairperson)
  • RBI Deputy Governor in charge of monetary policy
  • One RBI official nominated by the central bank
  • Three external members appointed by the Government of India.
  •  Hence, Statement 2 is correct.
• Each member has one vote, and in case of a tie, the RBI Governor has the casting vote.Hence, Statement 3 is correct.
• MPC decisions are taken by a simple majority (not a two-thirds majority) of the members present and voting.  Hence, Statement 4 is incorrect.

Additional Information

• The MPC is entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. 
• The quorum for a meeting shall be four Members, at least one of whom shall be the Governor and, in his absence, the Deputy Governor, who is the Member of the MPC.
• The decision of the MPC would be binding on the RBI.