Skip to main content

How a monetary policy committee in India could look

(Reuters) - India's government and central bank are set to consider proposals for the formation of a monetary policy committee that would take key decisions like interest rate changes, but have raised concerns over the central bank's independence.
There are two competing proposals to establish a monetary policy committee, one from an external panel appointed by the finance ministry and another from the Reserve Bank of India.
Monetary policy committees (MPCs) are a common feature in central banks globally. Below are the main points of the two proposals being considered in India as well as examples of MPCs in Britain and Brazil.
RBI PANEL'S KEY PROPOSALS
- Five-member committee
Chairman: RBI Governor
Vice Chairman: Deputy Governor in charge of monetary policy
Executive Director in charge of monetary policy
Two external members picked by RBI Governor and Deputy Governor
- Each member has one vote
- No veto power for Chairman
FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION PROPOSALS
- Seven-member panel:
RBI Governor
1 executive member of RBI board
3 external members picked by the government
2 external members picked by the government in consultation with RBI Governor
- Government representative to attend meetings but would not vote
- RBI Governor would get power to override panel but would need to issue public statement detailing the reasons
- Each member has one vote
EXAMPLES OF MPCS WORLDWIDE
BANK OF ENGLAND
9-member panel:
Governor
3 deputy governors
Chief economist of the BOE
Four external members appointed by the Chancellor
- Each member has 1 vote
- Treasury representative attends, but has no vote
CENTRAL BANK OF BRAZIL
- 8-member panel:
Governor
7 deputy governors
- Governor holds deciding vote if committee is evenly split

- If target is missed, governor writes an open letter to finance minister citing reasons as well as remedial measures to reach inflation aim

Popular posts from this blog

SC asks Centre to strike a balance on Rohingya issue (.hindu)

Supreme Court orally indicates that the government should not deport Rohingya “now” as the Centre prevails over it to not record any such views in its formal order, citing “international ramifications”.

The Supreme Court on Friday came close to ordering the government not to deport the Rohingya.

It finally settled on merely observing that a balance should be struck between humanitarian concern for the community and the country's national security and economic interests.

The court was hearing a bunch of petitions, one filed by persons within the Rohingya community, against a proposed move to deport over 40,000 Rohingya refugees. A three-judge Bench, led by Chief Justice of India Dipak Misra, began by orally indicating that the government should not deport Rohingya “now”, but the government prevailed on the court to not pass any formal order, citing “international ramifications”. With this, the status quo continues even though the court gave the community liberty to approach it in …

Khar’s experimentation with Himalayan nettle brings recognition (downtoearth)

Nature never fails to surprise us. In many parts of the world, natural resources are the only source of livelihood opportunities available to people. They can be in the form of wild shrubs like Daphne papyracea and Daphne bholua (paper plant) that are used to make paper or Gossypium spp (cotton) that forms the backbone of the textile industry.

Nothing can compete with the dynamism of biological resources. Recently, Girardinia diversifolia (Himalayan nettle), a fibre-yielding plant, has become an important livelihood option for people living in the remote mountainous villages of the Hindu Kush Himalaya.

There is a community in Khar, a hamlet in Darchula district in far-western Nepal, which produces fabrics from Himalayan nettle. The fabric and the things made from it are sold in local as well as national and international markets as high-end products.

A Himalayan nettle value chain development initiative implemented by the Kailash Sacred Landscape Conservation and Development Initiati…

India’s criminal wastage: over 10 million works under MGNREGA incomplete or abandoned (hindu)

In the last three and half years, the rate of work completion under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has drastically declined, leading to wastage of public money and leaving villages more prone to drought. This could also be a reason for people moving out of the programme.

At a time when more than one-third of India’s districts are reeling under a drought-like situation due to deficit rainfall, here comes another bad news. The works started under the MGNREGA—close to 80 per cent related to water conservation, irrigation and land development—are increasingly not being completed or in practice, abandoned.

Going by the data (as on October 12) in the Ministry of Rural Development’s website, which tracks progress of MGNREGA through a comprehensive MIS, 10.4 million works have not been completed since April 2014. In the last three and half years, 39.7 million works were started under the programme. Going by the stipulation under the programme, close to 7…