Consider the following statements: 1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India. 2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population. Which of the statements given above is/are correct?

Statement 1 is correct because the repo rate is the interest rate at which the Reserve Bank of India provides overnight liquidity to commercial banks against approved government securities under the Liquidity Adjustment Facility (LAF) — effectively the rate at which banks borrow from the RBI [1]. Statement 2 is incorrect: the Gini coefficient ranges from 0 to 1, where 0 denotes perfect equality (everyone has the same income) and 1 denotes perfect inequality (one person has all the income) — thus a value of 1 does not imply perfect equality but the opposite [2]. Therefore, only statement 1 is correct.

Sources

1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > The following are the major instruments/tools that RBI uses for conducting its monetary policy: > p. 61
2. [2] https://apps.bea.gov/scb/issues/2025/08-august/0825-gini-primer.htm