New External Members Appointed to RBI's Monetary Policy Committee
| Summary/Static | Details |
|---|---|
| Why in the news? | The Indian government has appointed three new external members to the RBI's Monetary Policy Committee (MPC), replacing outgoing members whose terms expire on October 4, ahead of a key policy meeting on October 9. |
| New External Members | 1. Ram Singh - Director, Delhi School of Economics, University of Delhi2. Saugata Bhattacharya - Distinguished economist with expertise in monetary policy3. Dr. Nagesh Kumar - Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi |
| Outgoing Members | 1. Ashima Goyal - Professor, Mumbai2. Jayanth Varma - Professor, IIM-Ahmedabad3. Shashanka Bhide - Senior Adviser, New Delhi |
| Global Context | The U.S. Federal Reserve recently cut interest rates by 50 basis points in September, its first reduction since 2020, influencing global monetary policy decisions. |
| Domestic Considerations | India's economy is showing signs of moderation, prompting calls for rate cuts. RBI Governor Shaktikanta Das has emphasized maintaining inflation at the 4% target before considering rate reductions. |
| Historical Context | Transition from Governor Urjit Patel (hawkish) to Shaktikanta Das (flexible) in December 2018 marked a shift in monetary policy approach. Patel resisted rate cuts even during low inflation, while Das implemented a surprise rate cut in February 2019. |
| MPC Structure | Six members: Three RBI representatives (including the Governor) and three external members. |
| Selection Process | Led by RBI Governor Shaktikanta Das, Cabinet Secretary T.V. Somanathan, and Economic Affairs Secretary Ajay Seth, with final approval from the Prime Minister's Office. |
| Tenure | External members serve a four-year term. |
| Outgoing Members' Stances | Goyal and Varma advocated for rate cuts, while Bhide expressed concerns about high rates impacting economic growth. |