New Delhi, Sep 29 (IANS) The central government here on Thursday notified the constitution of the Monetary Policy Committee (MPC) well ahead of the Reserve Bank of India monetary policy review on October 4.
"In exercise of the powers conferred by the Reserve Bank of India Act, 1934, the Central Government has accordingly constituted, through a gazette notification dated September 29, 2016, the Monetary Policy Committee of RBI," the Finance Ministry said in a statement.
With the notification of MPC and full membership of the panel in place, the next bi-monthly monetary policy update of the Reserve Bank of India (RBI) is expected to go by the recommendations of this panel, including a call on interest rates.
Three academics from the country's top institutions have been named the government nominee members to the Monetary Policy Committee that has been mandated to ensure the country's retail inflation stays within a band of four per cent, plus or minus two percentage points.
The names, cleared by the Appointments Committee of the Cabinet, are: Chetan Ghate, Professor at the Indian Statistical Institute; Pami Dua, Director at Delhi School of Economics; and Ravindra Dholakia, Professor at the Indian Institute of Management, Ahmedabad.
"The members of the Monetary Policy Committee appointed by the Central Government shall hold office for a period of four years, with immediate effect or until further orders, whichever is earlier," the statement said.
On its part, the RBI has also named its set of three representatives to the six-member committee -- the Governor, at present Urjit Patel who is also the chair with a casting vote, Deputy Governor R. Gandhi and Executive Director Michael Patra.
The Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level.
"A committee-based approach for determining the monetary policy will add lot of value and transparency to monetary policy decisions. The meetings of the Monetary Policy Committee shall be held at least four times a year and it shall publish its decisions after each such meeting," it said.
The Reserve Bank of India Act, 1934, (RBI Act) was amended by the Finance Act, 2016, to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability.
