Govt finally appoints 3 new members to RBI's Monetary Policy Committee

New Delhi: The government on Monday appointed three eminent economists Ashima Goyal, Jayanth R Varma and Shashanka Bhide as members of the rate-setting Monetary Policy Committee of the RBI, sources said.

The Appointments Committee of the Cabinet (ACC), headed by the prime minister, approved the names, the sources said.

As per the RBI Act, the three new members would have four-year terms.

The RBI had postponed the last meeting of the MPC, which must have a quorum of four, as the appointment of independent members was delayed.

“The meeting of the Monetary Policy Committee (MPC) during September 29, 30 and October 1, 2020 is being rescheduled. The dates of the MPC’s meeting will be announced shortly,” the Reserve Bank of India (RBI) had said in a statement on September 28.

The government moved the interest rate setting role from the RBI Governor to the six-member MPC in 2016. Half of the panel, headed by the RBI governor, is made up of external independent members.

Bhide is senior advisor at the National Council for Applied Economic Research, while Goyal is a professor at the Indira Gandhi Institute of Development Research.

Varma is professor at the Indian Institute of Management, Ahmedabad.

The new members replace Chetan Ghate, professor at the Indian Statistical Institute; Pami Dua, director at the Delhi School of Economics (DSE); and Ravindra Dholakia, professor at the Indian Institute of Management, Ahmedabad.

As per the RBI Act, the external members can hold office for a period of four years and are not eligible for re-appointment.

The other ex-officio members of the MPC are Reserve Bank Governor, Deputy Governor (in-charge of monetary policy) and one RBI officer to be appointed by the central board.

The MPC has been given the mandate to maintain annual inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent.

The external members of the MPC are appointed by the central government from amongst persons of ability, integrity and standing, having knowledge and experience in the field of economics, banking, finance or monetary policy.

The last meeting of the MPC was held from August 4 to 6, 2020. It was the 24th meeting of the rating-setting panel.