The correct answer is 6. Explanation & Key Takeaways: • The Monetary Policy Committee (MPC) was established by the Reserve Bank of India (RBI) in 2016 to formalize inflation targeting and strengthen India's monetary policy framework. • The MPC is composed of a total of 6 members. Out of these, 3 members are from the RBI, including the Governor of RBI as the chairperson, and 3 are external members appointed by the Government of India. • The committee meets 4 times a year, and its primary objective is to set the policy interest rate (repo rate) to achieve the inflation target set by the government. • Each member of the MPC has one vote. In case of a tie, the RBI Governor has the casting vote. • The inflation target is set under the Reserve Bank of India Act, 1934, and the current target is 4% (+/- 2%) for the period 2021–2026. Related Concepts: • Composition of the MPC: • RBI Members: The Governor of RBI (Chairperson), the Deputy Governor in charge of monetary policy, and one officer nominated by the RBI. • External Members: Three external experts appointed by the Government of India for a term of 4 years. • Objective of the MPC: • The main goal of the MPC is to achieve price stability while also considering the objectives of economic growth. • The MPC is guided by the government’s inflation target, which is reviewed every 5 years. • Inflation Targeting in India: • India adopted inflation targeting as part of its monetary policy framework in 2016. • The inflation target is currently set at 4% with a permissible band of +/- 2%. • Decision-Making Process: • The MPC decides on the repo rate, which is the rate at which RBI lends money to commercial banks. • Decisions are made by a majority vote, and the RBI Governor has the casting vote in case of a tie. • Significance of the MPC: • Ensures transparency and accountability in setting monetary policy. • Strengthens the RBI’s ability to achieve its inflation-targeting goals. • Contributes to maintaining macroeconomic stability in India. Important Notes: • Historical Context: • The MPC was formed under the provisions of the Reserve Bank of India Act, 1934, following amendments made in 2016. • Before the MPC, monetary policy decisions were taken solely by the RBI Governor. • Global Context: • Inflation targeting is a widely adopted monetary policy approach globally, first implemented by New Zealand in 1990. • Countries like the United States, United Kingdom, and Canada also use inflation targeting frameworks. • Example of MPC Decision: • During the COVID-19 pandemic, the MPC reduced the repo rate to stimulate economic growth while keeping inflation within the target range.