RBI cancels monetary policy committee meeting, adding delay to economic uncertainty

Adding further uncertainty on economic front, the RBI has cancelled its three-day monetary policy committee (MPC) meeting scheduled from Tuesday, apparently due to lack of quorum. The RBI rules require at least four members to be present in the meeting.

But three external members -- Ravindra Dholakia, Pami Dua and Chetan Ghate -- of the six-member MPC are retiring on September 30. The government has not yet been able to find replacements for these three members. These external representatives are appointed by the government for a fixed term of four years.

The rules of the MPC do not allow reappointment. The upcoming monetary policy review on October 1 was important because the RBI, besides deciding on the interest rate, was also likely to provide its first economic projections since Covid-19 hit the economy. The RBI did not give any reasons for the postponement but this is for the first time in recent history that a scheduled monetary policy review has been deferred.

The central bank had given its last forecast on the economy in February and the RBI Act requires it to publish its forecasts every six months. In the midst of the pandemic, Governor Shaktikanta Das had then said that economic growth will be negative in the current year but there was no official forecast.