The government has set up a panel headed by department of economic affairs secretary Tarun Bajaj to select four new members for Reserve Bank of India’s Monetary Policy Committee, two sources familiar with the development told Mint.
RBI made a request in June keeping the pandemic situation in mind. In the process, the government has declined the central bank’s request to extend till 31 March the tenure of three of its members whose term is due to end in two months from now.
Three of the six-member MPC are external representatives and they are appointed by the government for a fixed term of four years.
“The rules do not allow for reappointment and hence a search committee has been set up. It also includes Governor Das,” one of the sources familiar with the development said. Bajaj also sits on RBI’s central board as a government nominee.
The three members whose tenure is due to end 30 September are Ravindra Dholakia, Pami Dua and Chetan Ghate. They are all external to RBI and were appointed by the government in 2016. Janak Raj, an executive director at the RBI and an MPC member, retired in June, and hence the search is for four new faces.
RBI Governor Shaktikanta Das, his deputy Michael Patra and executive director Janak Raj are the others who make up the panel.
The MPC has cut the benchmark repo rate by 115 basis points so far this year to revive growth in an economy headed toward its first recession in more than four decades. Inflation, based on consumer prices, is above the medium-term target of 4%, but the RBI expects it to ease in the coming months, allowing it follow an accommodative policy stance.
The MPC is mandated to set its monetary policy in a manner that consumer prices stay between 2% and 6%.