Key Terms & Concepts — UPSC Mains
Monetary Policy Committee
"A six-member statutory body under the RBI Act that decides the policy repo rate to achieve India's inflation target"
The Monetary Policy Committee (MPC) is a statutory body constituted under Section 45ZB of the Reserve Bank of India Act, 1934 (as amended in 2016). It consists of six members — three from the RBI (the Governor as ex-officio chairperson, the Deputy Governor in charge of monetary policy, and one officer nominated by the RBI Central Board) and three external members appointed by the Central Government on the recommendation of a search-cum-selection committee. The MPC meets at least four times a year to decide the policy repo rate by majority vote; in case of a tie, the Governor has a casting vote. Decisions are published with individual member votes and minutes within 14 days.
The MPC is a core Prelims topic (composition, voting, statutory basis) and essential for Mains GS-3 (monetary policy framework, RBI independence, inflation management). The interplay between MPC decisions and fiscal policy is a recurring interview question.
- 1 Constituted under Section 45ZB of the RBI Act, 1934
- 2 Six members with equal voting rights (3 RBI + 3 external)
- 3 RBI Governor is ex-officio chairperson with a casting vote in case of tie
- 4 External members serve four-year terms and are not eligible for reappointment
- 5 First MPC meeting held in October 2016
- 6 Meets at least four times a year (currently meets six times)
- 7 Decisions taken by majority vote and published with individual member votes
In February 2026, the MPC cut the repo rate by 25 basis points to 5.25%, but the subsequent oil shock from the Hormuz crisis created a dilemma — Goldman Sachs projected a 50 bps rate hike reversal.