The government reconstitutes the composition of the RBI’s monetary policy committee and notifies new members

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

The Monetary Policy Council consists of six members, three of whom come from the central bank. The remaining three are external members, appointed by the Union government for four years.

New external members

The new external members are Ram Singh, director of the Delhi School of Economics at the University of Delhi; Saugata Bhattacharya, economist; and Nagesh Kumar, Director and CEO, Institute of Industrial Development Studies, New Delhi.

They replace Ashima Goyal, professor emeritus of the 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.

Their four-year term will end on October 4.

The RBI committee includes Governor Shaktikanta Das, who is also the ex-officio chairman of the MPC. The other members are deputy governor in charge of monetary policy Michael Debabrata Patra and another RBI official to be appointed by the regulator’s Central Board – a position currently held by Rajiv Ranjan, executive director of the RBI.

The Monetary Policy Council was established in June 2016 to periodically review monetary policy and broad-based monetary policy decisions, taking into account external voices.

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

The next two-month meeting of the Monetary Policy Council is scheduled for October 7-9. State Bank of India, in its Ecowrap report earlier this month, said the minutes of the August MPC meeting suggested a discussion on possible actions taken by the US Federal Reserve.

“The RBI can decouple itself from US interest rate developments and can take an independent view on domestic rates based on changing conditions. “Domestic conditions are paramount and with strong growth above potential output there is a case of pause,” the report said, adding that no action by the RBI on interest rates is expected for calendar year 2024 and that a cut may only occur by February 2025.