RBI policy review: Two dissenters at August MPC meet

Here is a closer look at Michael Patra and Ravindra Dholakia's past views

Two members of the Monetary Policy Committee (MPC) dissented with the committee's decision to cut rates. While RBI Executive Director Michael Patra voted for status quo, IIM-Ahmedabad professor and external member of the MPC Ravindra Dholakia wanted a 50-basis point rate cut. Here is a closer look at their past views: 

August 2017

Michael Patra: Status quo

Ravindra Dholakia: Reiterated his June 2017 view on reduction by 50 bps

June 2017

Michael Patra:

* Wait and watch incoming data 

* Near-term inflation outlook admittedly benign. Yet, in a situation in which transitory and structural factors are meshed and difficult to decouple, apparently divergent messages emanate from the few data points that are available at this stage 

* Without more clarity, it is possible to make policy errors that can be large and costly in the medium-term 

Ravindra Dholakia:

* Most opportune time for 50 basis points cut
 

* Prevailing inflation and output conditions and prospects are such that there is enough space for a substantial rate cut of 50 basis points if not more 
 

* Prudence lies in creating space when conditions are favourable and risks are not high than waiting and losing the opportunity 

April 2017

Michael Patra: Voted for no change in policy rate. But wanted 25 bps hike to target CPI inflation of 4% 

Ravindra Dholakia: The time not ripe for repo rate change as system still has surplus liquidity floating in the system

February 2017

Michael Patra:

* Voted for no change and sought shift towards neutral stance 

* Recent sharp disinflation is transitory 

* Reflationary effects of remonetisation are likely being underestimated 

* Focus on the mandated inflation target of 4%

Ravindra Dholakia:

* Firmly supported shift in stance from accommodative to neutral 

* The decline in overall CPI inflation is not reliably stable 

* Lending rate may move up marginally as demonetisation recedes and remonetisation sets in

December 2016

Michael Patra: Policy rate unchanged and maintain an accommodative stance 

Ravindra Dholakia: Favoured keeping repo rate constant as core inflation remained sticky. Expected banks to cut rates further

October 2016

Michael Patra: Voted for a 25-basis point cut in repo rate to reduce inflation and to support growth 

Ravindra Dholakia: Batted for a 25-basis point cut in repo rate to facilitate reduction in inflation, push for growth