Prior to Monetary policy committee, the policy rate decisions was the prerogative of RBI governor alone. It was more open to criticism (if the decisons did not work). Now in a six member committee, decisions are taken by the consensus. Less prone to criticisms. Also because ,the committee consists of highly qualified intellectual persons along with the RBI governor.
Still there are few shortcomings.
1. There is no veto power. If out of 6, 4 agrees and one disgaree, 1 abstains from voting, can the decision of the majority be over riden by the 1 who disgarees? No. The system can be made similar to the UNSC 5 permanent members, who have veto power. This system will not be applicable to all the cases. Only highly qualified cases that may prop up, in course of time such as, financial crisis.
2. Now who ma have veto power, is million dollar question? Can we leave this at policy makers and appointment committee of the cabinet ?
3. This system also has shortcoming as we saw, recently that Dalveer singh bhnadari slection as a judge inICJ was repeatedly stalled at UNSC vote due to veto of UK.
Above is only an innovative solution, however, as far as MCLR rates, inflation targeting , policy decisions, demonetisation decisions are concerned, they have been taken bey consensus and there has been no controvery so far.
Still there are few shortcomings.
1. There is no veto power. If out of 6, 4 agrees and one disgaree, 1 abstains from voting, can the decision of the majority be over riden by the 1 who disgarees? No. The system can be made similar to the UNSC 5 permanent members, who have veto power. This system will not be applicable to all the cases. Only highly qualified cases that may prop up, in course of time such as, financial crisis.
2. Now who ma have veto power, is million dollar question? Can we leave this at policy makers and appointment committee of the cabinet ?
3. This system also has shortcoming as we saw, recently that Dalveer singh bhnadari slection as a judge inICJ was repeatedly stalled at UNSC vote due to veto of UK.
Above is only an innovative solution, however, as far as MCLR rates, inflation targeting , policy decisions, demonetisation decisions are concerned, they have been taken bey consensus and there has been no controvery so far.
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