The government is about to complete the setting up of the Monetary Policy Committee by appointing three of its nominees to it. The MPC has six members; three each from the RBI and the government.
RBI’ Governor is the ex-officio member of the Committee. Raghuram Rajan has nominated the Executive Director Michael Patra as one member and the remaining member from the RBI is to be selected from its Deputy Governors.
As a fresh mechanism to navigate monetary policy interventions, the role and functioning of the MPC will be keenly observed as it will substitute the existing Technical Advisory Committee.
Unlike the TAC, the MPC doesn’t gives any extra voting power to the Governors except that he will have a casting vote. Monetary policy measures will be decided by the voices of the members.
Though Raguram Rajan’s term is about to end on September 4, the next bi-month monetary policy announcement will occur only on October 4th. This means that the government has few weeks’ time appoint the remaining members. The nominated members shall be experts from the field of banking, finance and economics.
For the appointment of the three members, a search cum selection panel led by the Cabinet Secretary with the RBI Governor and Secretary of Economic Affairs has started its work.