Disha Tandon, Pune
A significant change has been made at the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) as the centre has appointed three new external members: Economist Ram Singh, Saugata Bhattacharya and Nagesh Kumar. The change is effective immediately, and it arrives just a week before the MPC’s next scheduled meet on 7-9 October 2024.
The six-member MPC, set up in June 2016, is an integral part of India’s monetary policy framework. Three members come from the RBI and three are appointed by the government. They will be a part of the team for the next four years. They will replace outgoing members Ashima Goyal, Jayanth Varma, and Shashanka Bhide whose terms end on 4th October. New faces on the MPC can inject some new views and insights into the committee guiding India’s strategy for an inflation-targeting central bank.
Ram Singh is an associate professor at the Delhi School of Economics, University of Delhi. His areas of specialization include contract theory, law and economics, and public economics. He has done large-scale research in infrastructure development and liability rules. Dr Saugata Bhattacharya is an economist with more than three decades of experience in economic analysis and policy advocacy. Known for his contributions to deliberations on industrial policy, Nagesh Kumar is the director and chief executive of the Institute for Studies in Industrial Development (ISID).
The major goal of the MPC is keeping inflation at 4% based on a Consumer Price Index inflation target, with a tolerance range of 2% to 6%. India’s inflation, up to August 2024, is at 3.65%, which means a stable economic environment. Briefings over discussions regarding interest rate decisions during the forthcoming MPC meeting are likely to be briefed.
Recent MPC decisions have been greatly influenced by the outgoing members. While both Goyal and Varma were earlier advocates of rate cuts, under the committee structure, RBI members hold considerable sway, with Governor Shaktikanta Das the casting vote in case of a tie.
With the new inductees assuming the office, India will need their deep insight to navigate the complex scenario of economic revival in the aftermath of the pandemic. Analysts and market players will closely watch the deliberation set by the MPC in the context of surmounting global economic challenges and the Reserve Bank’s commitment to autonomous monetary policy.
RBI’s recent appointment of individuals to the Monetary Policy Committee heralds a new chapter in India’s monetary governance and hopes through innovative policy discussions with the ultimate aim of bringing much-needed economic stability and growth.