Paving the way for a Monetary Policy Committee (MPC)-led setting of policy interest rates, the government on Thursday appointed three members to the panel.
The panel will have six members, of which, three will be from the RBI, including Governor Urjit Patel, who will have the casting vote in case of a tie.
The government named three academicians — Chetan Ghate, Pami Dua and Ravindra Dholakia — as members of the panel. While Ghate is a professor at the Indian Statistical Institute in Delhi, Dua is a director at the Delhi School of Economics, and Dholakia is professor at IIM, Ahmedabad.
Ghate had been a member of technical advisory committee, which aided former governor Raghuram Rajan on interest rates ahead of each policy review. The MPC members will serve for a four-year term “or until further orders, whichever is earlier”, according to an official statement. The members will not be eligible for re-appointment.
The statement did not elaborate whether the committee will set next interest rates on October 4, RBI policy review. Analysts, however, expected the coming policy review to be done by MPC. The MPC will work with regard to setting up of interest rate to meet the inflation target fixed by the government.
Under the agreement with the government, the RBI is committed to anchoring retail inflation at 4% (+/- 2%), and has set itself a target of 5% by next March, as part of a ‘glide path’ to achieving the median mark.
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