Economy
Rules for creating RBI monetary policy committee notified
The government on Monday notified the rules for setting up of the Reserve Bank of India's monetary policy committee (MPC), giving effect to amendments to the RBI Act in this regard.
 
"Government has decided to bring the provisions of amended RBI Act regarding constitution of MPC into force on 27th June, 2016 so that the statutory basis of MPC is made effective," a finance ministry statement here said.
 
The RBI's benchmark interest rates, which are currently decided by the governor, will now be determined by a six-member MPC.
 
As per the amendments to the RBI Act through the Finance Bill passed in the Lok Sabha, the committee will have six members, with three appointed by the RBI and three government appointees nominated by an external selection committee. The RBI governor will have the casting vote in case of a tie.
 
From the RBI, the committee will consist of the governor, the deputy governor in charge of monetary policy and one official nominated by the central bank.
 
"The other three members of MPC will be appointed by the central government, on the recommendations of a search-cum-selection committee, which will be headed by the Cabinet Secretary," the statement said.
 
"These three members of MPC will be experts in the field of economics or banking or finance or monetary policy, will be appointed for a period of 4 years and shall not be eligible for re-appointment.
 
The meetings of the MPC shall be held at least 4 times a year and it shall publicise its decisions after each such meeting," it added.
 
According to the ministry, apart the rules for constituting the monetary policy committee, "factors constituting failure to meet inflation target under the MPC Framework have also been notified on 27th June, 2016".
 
The inflation target will be decided in consultation with RBI and notified in the official gazette. The interest rates would be set up with the aim of achieving the inflation target, to be determined by the government.
 
Under the current system, the RBI governor has the veto over the existing advisory committee, composed of RBI members and outside appointees, that decides on policy rates.
 
The governor consults a Technical Advisory Committee, but does not necessarily go by the majority opinion while deciding on the monetary policy.
 
Economic Affairs Secretary Shaktikanta Das had said last week that the government will take up the selection of the three names from its side once the rules were notified.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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Political divisions will keep Indian reform process uneven, slow: Moody's
Global credit rating agency Moody's Investors Service on Monday said political divisions in India will keep the reform process uneven while terming the recent FDI norms relaxation as credit positive.
 
In a statement, Moody's said despite some progress in improving the operating environment and easing investment procedures, reforms have stalled in two key areas - passing a unified goods and services tax and the Land Acquistion Act.
 
"We expect the political division will keep the reform process uneven and slow-moving," it said.
 
Moody's said the government's June 20 announcement of reforms to rules on foreign direct investment (FDI), expanding the range of industries under automatic approval, raising sector caps and relaxing local sourcing requirements was "credit positive because it demonstrates a continuation of reform momentum and paves the way for private investment and a boost in productivity".
 
"Additionally, higher FDI inflows will help support India's external financing needs at a time when portfolio flows have moderated," it said.
 
Net FDI inflows have increased over the past two years, reaching record highs in the fiscal year that ended 31 March 2016 of $36.0 billion from $24.2 billion on average during the preceding three fiscal years, Moody's said.
 
Currently, higher FDI inflows more than cover the current account deficit, which was 1.1% of GDP in fiscal 2016, down from 4.8% in fiscal 2013, the credit rating agency said.
 
"FDI inflows provide a stable source of financing and mitigate the downside risks to the current account from potential weakness in services exports and remittances. Additionally, higher FDI will reduce other external financing needs, a positive at a time when the portfolio flows into India and other emerging markets have been volatile," Moody's said.
 
The rating agency expects FDI inflows to remain robust given the development of industrial corridors, which will form a network of industrial bases between India's big metropolitan cities and investment and manufacturing zones under the "Make in India" and "Smart Cities" initiatives.
 
According to Moody's, stronger FDI alone will not deliver markedly higher growth and productivity in India. FDI currently accounts for less than 10 per cent of total fixed asset investment and will not substitute for muted domestic private investment.
 
Growth in total investment remained soft at 3.9% in fiscal 2016 and continued high corporate leverage, eroding corporate profits and impaired credit supply will thwart investment activity for at least several quarters, Moody's said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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COMMENTS

P L Despande pawar

5 months ago

I agree. It is therefore necessary for the Government to take the opposite sides/states into confidence and give up -----MUKTA BHARAT approach.

I will give a taste of law to wilful defaulters: Modi
Prime Minister Narendra Modi has said he would give a taste of law to wilful loan defaulters who, having defaulted on huge corporate loans, escape to foreign countries.
 
"Kanoon kya hota hai yeh mein un logo ko dikhaoonga (I will show them what law can do)," Modi said in an interview with Times Now news channel.
 
The Prime Minister was responding to a question on big businessmen who default on loans but go scot free, taking advantage of loopholes in the law. 
 
Modi said he would bring all such people back to the country to face the law.
 
"The public is sure that if anyone can do this, it is Narendra Modi. And I would certainly do it," he said.
 
He was speaking in the context of former IPL chief Lalit Modi and liquor baron Vijay Mallya, both of whom are charged with alleged financial fraud and have fled to London.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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COMMENTS

Dahyabhai S Patel

5 months ago

A few years back Rs.2.5 crores in cash were stolen from BJP office in New Delhi and no police complaint was lodged!!! Was that white money? Mr. Gopinath Munde openly stated that no MP Seat election is fought without Rs 20 crores, naturally black money. 2014 election would have been fought with at least Rs.10000 crores for 500 seats or so by BJP. Was all that money white?

Dahyabhai S Patel

5 months ago

If Modi really followed kanoon 0r rajdharma, where he should have been?

Gopalakrishnan T V

5 months ago

Such a message from the PM can work wonders and the bad borrowers and wrong doers would come to senses and behave properly. There should be fear of laws of the country and once this is ensured, governance standards would improve and accountability would turn better. Hope the enforcement authorities also give importance to what the PM has stated. It is basically their failure which is responsible for all the wrong doings in the economy.

Gopalakrishnan T V

5 months ago

Such a message from the PM can work wonders and the bad borrowers and wrong doers would come to senses and behave properly. There should be fear of laws of the country and once this is ensured, governance standards would improve and accountability would turn better. Hope the enforcement authorities also give importance to what the PM has stated. It is basically their failure which is responsible for all the wrong doings in the economy.

deepak narang

5 months ago

Its heartening to know that our PM will make willful defaulter pay for his /her default .Why not make wilful default a crime so that law may takes its own course and not only big defaulters but all wilful defaulters are dealt with similarly.HOPE THAT THOSE WHO SHOW COURAGE TO NAME SUCH DEFAULTERS AS WILL FULL DAFAULTERS ARE NOT PENALISED IN ONE WAY OR OTHER because of vested interest

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