There has been lot of discussion as to whether RBI Governor should have Veto Power over deciding interest rates and key monetary issues. Even after facing criticism over this matter, the government has decided to introduce just voting power to RBI Governor like other six members of Monetary Policy Committee (MPC) three of which shall have RBI personnel and other three being nominated by Central Government but with the consultation of RBI.
The move to reduce veto power to just voting power is going to be introduced in next cabinet meeting for its nod. This move has the consent of RBI Governor, who has told that Veto Power is not necessary for deciding interest rates and other vital monetary issues. Committee decisions are always better in the interest of the nation and far more effective.
Now that RBI Governor, Dr. Raghuram Rajan has himself come out in support of the government’s move, it shall easily get consent from cabinet and after cabinet nod, introduced as a bill in the parliament.
Certain section of economists are still of the view that RBI has been acting as an independent agency, a responsible institution with lot of creditability, but this move shall be direct interference in the important decision making power of RBI.