The Finance Ministry today sought to distance itself from the revised draft of the Indian Financial Code, which proposes to dilute powers of RBI chief, saying it does not reflect views of the government.
“FSLRC report is a report of FSLRC. It is not the report of the government or the Finance Ministry. The report is not the view of the government,” Chief Economic Adviser Arvind Subramanian said, commenting on media reports that the government is seeking to dilute RBI Governor’s powers in deciding interest rate.
The revised draft of IFC, posted on the website of the Finance Ministry, has said RBI “must constitute a Monetary Policy Committee to determine by majority vote on the Policy Rate required to achieve the inflation target”.
At present, the Governor consults a Technical Advisory Committee, but does not necessarily go by the majority opinion while deciding on the monetary policy stance.
The first draft, submitted in March 2013, too had talked about the committee and majority vote, but gave powers to RBI chairperson to supersede the decision of the panel.
“In exceptional and unusual circumstances, if the RBI Chairperson disagrees with a decision taken at a meeting of the Monetary Policy Committee, the RBI Chairperson will have the right to supersede such decision,” it had said. The provision was dropped in the revised draft.
The Financial Sector Legislative Reforms Commission (FSLRC), which was set up on March 24, 2011, for re-writing the financial sector laws to bring them in harmony with the current requirements, submitted its report to the government on March 22, 2013.