New external members to join RBI's MPC as current terms end in October

As the terms of the current external members of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) are set to expire on October 4, the Central Government will appoint new external members to the committee, according to a report by CNBC-TV18.

The new nominations are expected to be finalised before the next MPC meeting, which is scheduled for October 7 to 9, 2024.

The governor of the RBI, along with government officials, make up the selection committee, which will nominate potential candidates within the next two weeks. An announcement regarding the recommendations is expected by the end of September or early October, Bloomberg reported, citing unnamed sources.

The MPC is composed of three external members and three RBI officials, including the Deputy Governor and Executive Director. It is led by the RBI Governor, Shaktikanta Das. The external members, appointed for four years, are usually well-known economists with academic backgrounds who specialise in finance and macroeconomics.

The current external members, including Professor Jaynath Varma, Dr Shashank Bhide, and Dr Ashima Goyal, were appointed on October 5, 2020, and met for the first time at the MPC meeting on October 7-9, 2020.

The Appointments Committee of the Cabinet (ACC), led by Prime Minister Narendra Modi, will approve the nominated external members. In accordance with the RBI Act, the external member positions cannot be extended, requiring new appointments or re-appointments.

During the August 2024 MPC meeting, the repo rate was kept unchanged at 6.50% for the ninth consecutive time. The decision to maintain the current interest rate and policy stance was made by a 4:2 vote. Two external members, Dr Ashima Goyal and Prof Jayanth R. Varma, voted against keeping the policy rate unchanged.

The MPC meets at least four times a fiscal year. Its main objective is to set the benchmark policy interest rate (repo rate) to maintain price stability.