Govt reconstitutes RBI’s monetary policy committee, notifies new members

Mumbai: The government has reconstituted the Reserve Bank of India’s Monetary Policy Committee (MPC), notifying the new members on 1 October.

The MPC consists of six members, three of whom are from the central bank. The other three are external members, appointed by the Union government for four years. 

New external members

The new external members are Ram Singh, director, Delhi School of Economics, University of Delhi; Saugata Bhattacharya, economist; and Nagesh Kumar, director and chief executive, Institute for Studies in Industrial Development, New Delhi.

They replace Ashima Goyal, emeritus professor, Indira Gandhi Institute of Development Research, Mumbai; Shashanka Bhide, honorary senior advisor, National Council of Applied Economic Research, Delhi; and Jayanth R. Varma, professor, Indian Institute of Management, Ahmedabad.

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Their four-year term is set to end on 4 October.

The RBI members of the committee include governor Shaktikanta Das, who is also the ex-officio chairperson of the MPC. The other members are deputy governor in charge of monetary policy Michael Debabrata Patra, and another RBI officer to be nominated by the Central Board of the regulator--a position currently held by Rajiv Ranjan, executive director, RBI.

The MPC was set up in June 2016 to periodically review monetary policy and broad-base monetary policy decisions by including external voices. 

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One of the key objectives of the MPC is inflation-targetting which involves guiding the India’s headline Consumer Price Index (CPI)-based inflation to a target of 4% with a lower tolerance level of 2% and upper level of 6%. In August 2024, the inflation was 3.65%, the second lowest in the last five years.

The MPC's next bi-monthly meeting is scheduled on 7-9 October. State Bank of India, in its ‘Ecowrap’ report earlier this month, said that minutes of the August MPC meeting suggested discussions on possible actions taken by the US Federal Reserve.

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“RBI may disassociate from the interest rate developments in the US and may take an independent view on domestic rates based on evolving conditions. Domestic conditions are paramount and with robust growth higher than potential output, case of pause exists,” the report said, adding that it does not anticipate any rate action by the RBI in calendar year 2024 and that a cut may only materialize by February 2025.