With reference to Sukumar Mukhopadhyay's letter, "Think of RBI's future" (August 11), the writer's misgivings about government nominees on the monetary policy committee (MPC) in that they may, in the absence of the veto power of the Reserve Bank of India (RBI) governor, exert influence and secure unfair advantage for corporate bigwigs appear far-fetched.
The government has indicated that it has no intention of seeking a majority in the MPC through its nominees. There is much merit in RBI governor Raghuram Rajan's view that putting the decision-making power in the hands of one individual has its risks and that decisions of a committee are less likely to be fallible. If the majority of MPC members are from within the RBI or are appointed with the consent of its governor, the latter does not need veto power to ensure a decisive say for the central bank in formulating the monetary policy. Neither the Bank of England governor nor the US Federal Reserve chief enjoys such a veto power.
There is much to commend in the British model, in which the MPC comprises nine members: five from the Bank of England (governor, three deputy governors and the chief economist) and four nominated by the chancellor of the exchequer. Full minutes of the MPC meetings are published and members are held to account for their views.
Parthasarathy Chaganty Mumbai
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