Reserve Bank of India Governor Duvvuri Subbarao said India must move towards a monetary policy committee structure.
Subbarao said this in reply to a question following a speech at the Bank of Mauritius, which has such a committee in place.
The governor said RBI must have more independence in order to have a monetary policy committee structure.
It may be noted that RBI is one of the few major central banks where monetary policy decisions rest in the hands of the governor, as opposed to a committee. While RBI is not statutorily independent, in practice it has wide latitude in setting monetary policy.
The proposal to move towards a more powerful monetary policy committee is also being advocated by IndiaÂ’s Chief Economic Advisor, Raghuram Rajan.
In 2009, RBI set up a technical advisory committee on monetary policy, which is a precursor to a formal policy committee. However, the committee has only an advisory role and Subbarao has in several instances made policy decisions that went against the majority view of the panel.
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