Monetary Policy committee of RBI E BAN By- Pratik Sir
, Key decisions pertaining to benchmark interest rates used to be taken by the Governor of Reserve Bank of India alone This led to uncertainty and resulted in friction between the Government and the RBI Before the constitution of the MPC, a Technical Advisory Committee (TAC) on monetary policy advised the Reserve Bank on the stance of monetary policy
Suggestions for setting up a Monetary policy committee is not new and goes back to 2002 when YV Reddy committee proposed to establish a MPC, then Tarapore committee in 2006, Percy Mistry committee in 2007, Raghuram Rajan committee in 2009 and then Urjit Patel Committee in 2013.
MPC- Structure 1. 6 Member Committee 2. 3 Members from RBI & 3 Members from Govt. 3. Governor of RBl is ex-officio Chair person 4. Decisions are taken by Majority votes 5. Governor having the Casting Vote in case of Tie
The composition of the current and first monetary policy committee is as o follows I) Governor of the Reserve Bank of India Chairperson, ex officio - Urjit Patel 2) Deputy Governor of the Bank, in charge of Monetary Policy-Member, ex officio - Viral Acharya 3) One officer of the Reserve Bank of India to be nominated by the Central Board Member; - Michael Patra 4) Chetan Ghate, Professor, Indian Statistical Institute (ISI) Member; 5) Professor Pami Dua, Director, Delhi School of Economics - Member; 6) Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management, Ahmedabad Member Members referred to at 4 to 6 above, will hold office for a period of four years from the date of appointment while the other three members are official.
Monetary Policy Committee 1. RBI act is amended by Finance act 2016 to provide Framework 2. Bringing transparency & accountability in monetary policy formation 3. Entrusted with the task of fixing policy rate (Repo rate) 4. Meet at lest 4 times a year and publish its decisions
Current targets Maintain 4 % annual inflation rate till March 31 2021 Upper tolerance of 6 % Lower tolerance of 2 % Bi Monthly Monetary Policy CPI Based Policy Formation
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