No formal or informal framework exists for discussions between officials of the department of economic affairs (DEA) and the members of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), the finance ministry has said responding to queries from The Indian Express under the Right to Information Act. On June 7, RBI governor Urjit Patel said that MPC members declined to meet DEA officials just ahead of the monetary policy.
“There is no formal or informal framework of interactions between the DEA officials and members of the MPC. However, Section 45ZI(9) of the RBI Act empowers the Central government to convey its views in writing to the Monetary Policy Committee from time to time,” the ministry said.
The ministry said that no official had sought meeting in their “personal capacity” with the MPC members prior to the June review of the monetary. However, a meeting was sought to exchange views on macroeconomic situation in the country, it said in the reply.
“No official sought meeting with the members of MPC in his personal capacity. However, a meeting was sought with the government nominated members of the MPC on 01.06.2017 and with the RBI nominated members in MPC on 02.06.2017 to exchange views on the macroeconomic situation in the country and developments in the global economy,” the finance ministry said in the RTI reply dated September 20.
The finance ministry also said that the MPC did not write any letter to the DEA. Chief Economic Advisor Arvind Subramanian, Principal Economic Advisor Sanjeev Sanyal and the then Economic Affairs Secretary Shaktikanta Das were to meet the MPC members to present the government’s viewpoint on the state of the economy.
The six-member MPC of the RBI headed by Patel was jointly formed by the government and the RBI in September 2016 to determine interest rates and make monetary policy decisions more transparent. In the absence of any framework of interaction between DEA officials and MPC members, the pre-policy meet sought by the ministry officials was perceived by some experts as an interference in the functioning of the MPC — and independent interest rate setting panel.