The correct statement is "1. It decides the RBI’s benchmark interest rates." The Monetary Policy Committee (MPC) is a six-member body established by the Reserve Bank of India (RBI) to formulate monetary policy and manage inflation targeting, with the primary objective of maintaining price stability while ensuring adequate flow of credit to productive sectors. It consists of three RBI officials and three external members appointed by the government, but it does not include the Union Finance Minister, and it is not reconstituted annually, making statements 2 and 3 incorrect. Therefore, the sole correct statement reflects the MPC's critical role in influencing the country's economic stability through interest rate decisions.