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The government may push amendments to the Reserve Bank of India (RBI) Act in the Winter Session of Parliament for setting up a public debt management agency (PDMA) and a monetary policy committee (MPC) that will decide on the key interest rate.
"The two issues (PDMA and MPC) need to be seen together, settled together and we are making steady progress on both and if we are lucky and things go right, then hopefully, there should be some movement in the Winter Session of Parliament," Finance Secretary Rajiv Mehrishi said.
The government has been trying to set up the MPC, an interest rate setting panel which will comprise representatives from the Finance Ministry and RBI, to decide on the interest rate.
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"There is a broad agreement and the t's have to be crossed and the i's have to be dotted," he told CNBC TV18. He was replying to a query about the progress with regard to setting up of the MPC.
Mehrishi said there should be a system in which the government could state its point so that that the RBI could decide the rate after taking into account the merit of the views of stakeholders.
The revised draft of the Indian Financial Code (IFC), released by the Finance Ministry last month, had suggested doing away with the RBI Governor's veto power and wants a seven-member MPC to take decisions by a majority vote. Of the seven members, four would be government nominees and the rest from the RBI.
Under the present system, the RBI Governor is appointed by the government, but controls monetary policy and has veto power over the existing advisory committee of RBI members and outside appointees that sets rates.
As regarding the PDMA, the Finance Ministry in the Budget had proposed to set up an agency to manage government debt and also to shift the regulation of government bonds from RBI to Sebi. However, due to opposition from the RBI, the proposal could not go through.
