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Consider the following statements about the Monetary Policy Committee:
It seeks to set targets for inflation in India.
Governor of the RBI is the ex-officio Chairperson of the Committee.
Which of the statements given above is/are not correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements about the Monetary Policy Committee...
Monetary Policy Committee of India is constituted under 45ZB of the RBI Act, 1934 by notification in Official Gazette by Central Government.
- The Monetary Policy Committee of India is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting.
- The quorum for a meeting of the Monetary Policy Committee 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 Monetary Policy Committee.
- The committee comprises six members - three officials of the Reserve Bank of India and three external members nominated by the Government of India, which are nominated for 4 years and not eligible for re-appointment and shall not have completed 70 years of age.
- The Members of the Monetary Policy Committee shall be appointed by the Central Government on the recommendations made by Search-cum-Selection Committee consisting of the following members, namely:–– (a) Cabinet Secretary— Chairperson; (b) Governor of the Reserve Bank of India— member; (c) Secretary, Department of Economic Affairs— member; (d) three experts in the field of economics or banking or finance or Monetary policy to be nominated by the Central Government— members.
- They need to observe a "silent period" seven days before and after the rate decision for "utmost confidentiality".
- The Governor of Reserve Bank of India is the ex officio chairperson of the committee. Hence, statement 2 is correct.
- Decisions are taken by the majority with the Governor having the casting vote in case of a tie.
- The Bank shall appoint a Secretary to the Monetary Policy Committee to provide secretariat support to the said Committee.
- The Secretary shall perform such functions and in such manner as may be specified by the regulations made by the Central Board.
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Consider the following statements about the Monetary Policy Committee...
Statement 1: It seeks to set targets for inflation in India.
Statement 2: Governor of the RBI is the ex-officio Chairperson of the Committee.
To determine whether the statements are correct or not, let's analyze them one by one:
Statement 1: It seeks to set targets for inflation in India.
Explanation:
The Monetary Policy Committee (MPC) is a committee constituted by the Reserve Bank of India (RBI) to determine the monetary policy of the country. One of the main objectives of the MPC is to maintain price stability, which includes targeting inflation within a specific range. Therefore, statement 1 is correct.
Statement 2: Governor of the RBI is the ex-officio Chairperson of the Committee.
Explanation:
The Monetary Policy Committee consists of six members, including three members from the RBI and three external members appointed by the government. The Governor of the RBI is one of the members from the RBI, but he/she is not the ex-officio Chairperson of the Committee. The Chairperson of the Committee is appointed by the government from among the external members. Therefore, statement 2 is not correct.
In conclusion, only statement 1 is correct, and statement 2 is not correct. Hence, the correct answer is option A) 1 only.
Statement 2: Governor of the RBI is the ex-officio Chairperson of the Committee.
To determine whether the statements are correct or not, let's analyze them one by one:
Statement 1: It seeks to set targets for inflation in India.
Explanation:
The Monetary Policy Committee (MPC) is a committee constituted by the Reserve Bank of India (RBI) to determine the monetary policy of the country. One of the main objectives of the MPC is to maintain price stability, which includes targeting inflation within a specific range. Therefore, statement 1 is correct.
Statement 2: Governor of the RBI is the ex-officio Chairperson of the Committee.
Explanation:
The Monetary Policy Committee consists of six members, including three members from the RBI and three external members appointed by the government. The Governor of the RBI is one of the members from the RBI, but he/she is not the ex-officio Chairperson of the Committee. The Chairperson of the Committee is appointed by the government from among the external members. Therefore, statement 2 is not correct.
In conclusion, only statement 1 is correct, and statement 2 is not correct. Hence, the correct answer is option A) 1 only.
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Consider the following statements about the Monetary Policy Committee: It seeks to set targets for inflation in India. Governor of the RBI is the ex-officio Chairperson of the Committee. Which of the statements given above is/are not correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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