ACC to fix Govt nominees on Monetary Policy Committee
The six-member MPC will include RBI Governor and three nominees of the government, which has a mandate to bring consumer or CPI inflation to a pre-set target.
A committee headed by the Cabinet Secretary will hold its first meeting shortly to initiate the process of selection of government nominees, Economic Affairs Secretary Shaktikanta Das said here. "There is a committee which will do selection of the members.
The first meeting of the committee will be convened and then they will initiate the process of selection, but it will be done quickly," Das said.
The committee to select government nominees includes the DEA Secretary, RBI Governor or his nominee and three outside experts. The recommendation will be put up before the ACC, which will be the final deciding authority, another official said.
Besides the Prime Minister, ACC consists of home minister who gives only de-facto approval to the file from the Prime Minister's Office (PMO). The non-government nominees on MPC include the Governor himself, who is the the ex-officio chairman, a deputy Governor and an executive director of RBI.
Each member shall have one vote and in the case of a tie, the Governor shall have the casting vote. Members of the MPC will be appointed for four years and shall not be eligible for reappointment. The panel will meet at least four times in a year and the government may, if it considers necessary, convey its views in writing to the MPC from time to time.
Every six months, RBI will publish the Monetary Policy Report explaining sources of inflation and its forecast for 6-18 months. If RBI for some reason fails to meet inflation target, it shall give reasons in the report thereof, remedial actions as well as estimated time within which the target shall be achieved.
Under the current scheme of things, the Governor has overriding powers to accept or reject the recommendation of RBI's panel on monetary policy.