Centre, RBI have reached monetary policy panel consensus, claims FinMin

The government and the Reserve Bank have reached a consensus on the structure for the proposed Monetary Policy Committee and Public Debt Management <g data-gr-id="71">Agency,</g> said Finance Secretary Rajiv <g data-gr-id="19">Mehrishi</g>. “Monetary Policy Committee (MPC) and Public Debt Management Agency (PDMA) are two sides of same coins. There is <g data-gr-id="29">consensus</g> (with the RBI). I am hoping it (amendments) can come to Parliament in Winter session in December,” he said. The setting up of both MPC and PDMA would require amendments to the RBI Act. 

“This (MPC) will have to be in alignment with PDMA. This will happen in a couple of days,” <g data-gr-id="20">Mehrishi</g> added. He, however, refused to share details of the composition as well as voting rights of the RBI governor on the MPC, which is to replace the current practice of RBI Governor deciding on interest rate on advice of technical advisory committee. <g data-gr-id="21">Mehrishi</g> said the details would <g data-gr-id="22">be shares</g> when the Bill is introduced in Parliament. 

The government has been trying to set up MPC, an interest rate setting panel which will comprise representatives from the Finance Ministry and the RBI, to decide on <g data-gr-id="28">interest</g> rate. The revised draft of the Indian Financial Code (IFC), released by the Finance Ministry last month, had suggested doing away with RBI Governor’s veto power and wants a 7-member MPC to take decisions by a majority vote. Of the seven members, four would be government nominees and the rest from the Reserve Bank.