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Monetary Policy Committee is just a cosmetic addition, not suited to India

Tackling inflation with monetary policy is like trying to move boulders with eyebrow tweezers

Topics
RBI monetary policy | Reserve Bank of India | Indian Economy

T C A Srinivasa-Raghavan 

T C A Srinivasa-Raghavan

The first Monetary Policy Committee (MPC) has exited. The government and the Reserve Bank of India (RBI) will soon appoint a new MPC. The MPC makes us look modern or, rather, western. But is it useful as anything more than a cosmetic? I wonder.

The Committee’s main job is to fix the price of the most important thing in the economy: money. It’s called the interest rate. Earlier it was the RBI governor who did it alone, more-or-less. One of the side things the Committee does is to ‘target’ a particular rate of inflation. This rate in India is a range ...

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First Published: Tue, September 01 2020. 10:00 IST
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