Adjudicating a Forwarded General Awareness One-Liner List with Two Hidden Errors
A study group preparing for SSC JE General Awareness circulates a forwarded "one-liner" list. The group admin writes: "Only one statement below is wrong - memorise the rest." The five statements are:
- The repo rate is the rate at which the RBI lends short-term funds to banks against government securities, and raising it is expected to slow inflation.
- The reverse repo rate is the rate at which the RBI lends short-term funds to banks.
- The Monetary Policy Committee (MPC) has six members, and the RBI Governor has a casting vote in case of a tie.
- Decisions of the MPC require the unanimous consent of all six members.
- The Finance Commission is constituted by the President every fifth year under Article 280. Two aspirants disagree: one trusts the admin's count, the other suspects the list carries two errors. They have no book at hand and must settle the matter from internal consistency plus what they already know.
1. Identify every incorrect statement, correct it, and comment on the admin's claim that only one statement is wrong.
Read the worked answer
Statement 2 is wrong. The rate at which the RBI lends short-term funds to banks against government securities is the repo rate; the reverse repo is the rate at which the RBI absorbs liquidity, that is, borrows from banks. The direction of the funds flow is reversed.
Statement 4 is wrong. MPC decisions are taken by a majority of the members present (quorum four), not unanimously; the Governor exercises a casting vote only when the votes are tied.
Statements 1, 3 and 5 are correct. On 5, the Finance Commission is constituted by the President under Article 280 every fifth year, or earlier if needed.
So the admin's "only one is wrong" is itself false - two statements fail. In an objective paper, once two errors are established the option "only one of the above is incorrect" must be rejected, however confidently it is worded. A one-line claim's confidence is not evidence of its accuracy.
2. Show how statement 4 can be eliminated without memorising the RBI Act, using only the other statements in the list.
Read the worked answer
Use statement 3 as the anchor. It says the Governor has a casting vote "in case of a tie". A tie can arise only when a body decides by majority - with an even number of members, a 3–3 split is exactly the situation a casting vote exists to resolve. If decisions required unanimous consent, no division would ever be taken, no tie could occur, and the casting vote provision would be meaningless.
Statements 3 and 4 therefore cannot both describe the same committee. Since 3 is the accurate one (six members: Governor, Deputy Governor in charge of monetary policy, one RBI officer, and three government nominees), statement 4 falls.
This "mutual contradiction" test is worth carrying into one-liner revision: even-numbered committees with tie-breaking devices always decide by majority, so any option pairing "six members" with "unanimous decision" is internally inconsistent regardless of recall.
3. Explain briefly why swapping repo and reverse repo is a costly error rather than a harmless slip.
Read the worked answer
The two rates describe opposite operations, so the error flips the entire causal chain. A rise in the repo rate makes borrowing from the RBI dearer; banks pass on the higher cost, credit growth slows, demand cools and inflation is pulled down. That is the standard anti-inflation signal.
The reverse repo is the RBI's absorption window: banks park surplus funds with the RBI and earn this rate. A rise in the reverse repo encourages banks to park more and lend less, again draining liquidity. So the two rates are used at opposite ends of the liquidity cycle, and any statement pairing "reverse repo" with "RBI lends to banks" inverts the policy direction.
In a one-mark question this single inversion can turn a correct-sounding sentence into a wrong option, and because the rest of the sentence - "short-term funds", "banks" - is accurate, it survives a quick reading. Rate definitions should be revised as fund-flow arrows, not as names.