Correct Option (A)
Statement 1 is correct. The Monetary Policy Committee (MPC) is statutorily mandated to determine the Reserve Bank of India's (RBI) benchmark interest rates, specifically the policy repo rate. This decision-making process is central to achieving the inflation target set by the Government of India.
Incorrect Options:
Statement 2 is incorrect. The MPC is a six-member body. It comprises three officials from the RBI, including the Governor of the RBI who serves as its ex officio Chairperson, the Deputy Governor in charge of monetary policy, and one officer of the RBI nominated by the Central Board. The remaining three members are appointed by the Central Government. The committee is not reconstituted annually; members serve fixed terms.
Statement 3 is incorrect. The MPC functions under the chairmanship of the Governor of the Reserve Bank of India. The Union Finance Minister is not involved in the direct functioning or chairmanship of the MPC.