Govt appoints 3 academics to monetary policy panel - The Smart Investor

Govt appoints 3 academics to monetary policy panel - The Smart Investor:

MPC to strengthen RBI

This refers to the report “Three academics in monetary policy panel” (Business Standard, September 23). The constitution of the full-fledged Monetary Policy Committee (MPC) formalises and professionalises the existing Technical Advisory Committee (TAC) which has been advising RBI Governor on crucial issues concerning monetary policy. To the extent that TAC’s advice was made known to the public, RBI has been trying to be transparent even where Governor differed from the TAC’s
perceptions.  The present arrangement unburdens RBI Governor from individual responsibility in decisions on monetary policy and makes the MPC comprising experts more relevant.
The criticisms like, the possibility of MPC splitting into Team A (GOI nominees) and Team B (RBI representatives including Governor) and pressurising Governor to use the casting vote and the MPC’s suffering from imbalance of expertise as majority members happen to be professional economists should now fade out. While all the three GOI nominees are renowned economists, Governor, a Deputy Governor and an Executive Director (one a career central banker and another a career economist, both with decades of relevant experience) will be able to provide inputs on needs and expectations of banking sector and the economy in general.
In sum, the constitution of MPC sends out a clear signal that GOI is serious about retaining RBI’s status as an expert professional body. We can expect an Era of better relationship between RBI and GOI which is essential for smooth implementation of monetary and fiscal policies crucial for economic growth.

M G Warrier, Mumbai


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