Monetary Policy Committee (MPC): Functions and Constitution
GS Prelims 2019, GS Mains paper III
Economy, Monetary Policy Committee
Why in news?
The six-member monetary policy committee (MPC) of the Reserve Bank of India (RBI) on 6th June, 2018 increased the repo rate by 25 basis points to 6.25%.
Functions of the MPC:
The Reserve Bank of India Act, 1934 (RBI Act) was amended by the Finance Act, 2016, to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth.
The Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level.
The committee was created in 2016 to bring transparency and accountability in fixing India’s Monetary Policy.
The meetings of the Monetary Policy Committee shall be held at least 4 times a year and it shall publish its decisions after each such meeting.
Constitution of MPC:
As per the powers conferred by section 45ZB of the Reserve Bank of India Act, 1934, the Central Government will constitute the members of the MPC.
There will be 6 members of the MPC.
3 Members will be from the RBI and the other 3 Members of MPC will be appointed by the Central Government.
The external members (appointed by the central government) will have a four year term.
The Governor of Reserve Bank of India is the chairperson ex officio of the committee.
Following are the members of the first and current MPC:
The Governor of the Bank—Chairperson, ex officio;
Deputy Governor of the Bank, in charge of Monetary Policy—Member, ex officio;
One officer of the Bank to be nominated by the Central Board—Member, ex officio;
Shri Chetan Ghate, Professor, Indian Statistical Institute (ISI) —Member
Professor Pami Dua, Director, Delhi School of Economics (DSE) — Member
Ravindra H. Dholakia, Professor, Indian Institute of Management (IIM), Ahmedabad— Member
India’s Changing Foreign Policy
GS Mains Paper- 2
Why in news?
In recent times union government has shifted considerably in its policy signaling with his neighboring nations.
What are India’s recent stands on foreign policies?
Indian Prime Minister visited Indonesia, Malaysia and Singapore, three of India’s most important partners in Southeast Asia recently for foreign policy positioning.
In the past few months, the government has shifted considerably in its signaling, with China and Russia for informal summits.
These measures have taken place at a time the U.S. administration has sharpened its aim at China and Russia with sanctions and threats of a trade war.
India tries for a strategic posturing on the global stage, and striving for a more balanced approach in what it increasingly sees as an uncertain world.
What are the significant foreign policy improvements?
India has maintained its commitment to relations with the U.S. in order to build a “free and open” Indo-Pacific region, maintain the “international rules-based order”.
It plans to work together to combat terrorism and terror financing as they have done more recently at the UN and the Financial Action Task Force.
India’s has showed its interest in membership of the Quadrilateral with the U.S., Japan and Australia to tackle Chinese influence in south Asian region.
At the same time India has also ready to co-operate in Shanghai Cooperation Organisation the Russia-China-led grouping of Central Asian countries.
It is significant that in Singapore India chose the platform of the Shangri-La Dialogue of defence leaders of the Asia-Pacific region to emphasise Indian “strategic autonomy”.
What is India’s plan on Shangri-La dialogue?
The Shangri-La Dialogue (SLD) is a “Track One” inter-governmental security forum held annually by an independent think tank International Institute for Strategic Studies (IISS).
It is attended by defence ministers, permanent heads of ministries and military chiefs of 28 Asia-Pacific states.
The summit serves to cultivate a sense of community among the most important policymakers in the defence and security community in the region.
In the recent meet India has referred the concept of the “Indo-Pacific” to India’s relations with Russia, the U.S. and China.
India used the dialogue to unveil a seven-point vision for the Indo-Pacific region.
While warning the world about the possible return of “great power rivalries”, India emphasised the importance and centrality of the ASEAN in the concept of the Indo-Pacific.