2485 (1942) as amended by the Bank of Thailand Act (No.4) B.E. So, inflation continues. Most importantly there is no point being diplomatic during an interview, so can any one give more suggestions as to whom and why you would choose ?? “RBI will start Open market Operation in week OR RBI is set to decide Repo rate @xx%.”. Eliminate administered prices (MSP on foodgrains, LPG cylinders), Eliminate administered interest rates (interest subvention given to farmers.). Governors, board of directors etc. Let’s check the formulas to calculate various deficits: But in Modern Times, such “goodwill” expenditure also create more problems than they solve. IRDA guideline on this? Mr Rajan’s answe- http://www.thehindu.com/business/i-am-an-indian-citizen-raghuram-rajan/article5286188.ece. 204 : Prelim-2021 This type of hawkish policy to combat inflation, will hurt the growth momentum. Why did he advocate 4% CPI with 2% band? RBI had formed a Committee under Dy. #2: @RBI fix accountability in monetary policy making, [Economy] New Bank Licences: Bandhan, IDFC, Bharatiya Mahila Bank; Differential Bank licences, Bimal Jalan Committee, Narsimhan Committee; arguments favor against, Bank nationalization, Historic evolution of Banking sector in India, [Economy] RBI Urjit Patel Committee: 4% CPI, Nominal Anchor, Multiple Indicator, Monetary Policy Framework Reforms (Part 1 of 2), [Banking] Bancassurance: Compulsory Broker Model, IRDA vs Banks, issue, benefits, challanges, insurance penetration, Financial inclusion & Nachiket Committee, [Banking] D-SIB: Domestic Systemically Important Banks- meaning, classification, capital norms, benefits, limitations, [Banking] Bharat Bill Payment System (BBPS), SBI Shariya Equity fund, KYC partial freezing, Minimum Balance guidelines, http://www.thehindu.com/business/i-am-an-indian-citizen-raghuram-rajan/article5286188.ece. Committee must publish its minutes of the meeting on _ _ _ day, and “Monetary policy report” at every 6 months.-Inflation target decided by Union Government in consultation with RBI. (unlike the CBI fearing parties in Rajya Sabha). 246 : CAPF-2021 So in a way, more money in public’s hand, without corresponding rise in some physical goods/infrastructure/services. Answerable to the parliament’s standing Committee on finance. And the second candidate is an IIM graduate with long experience of teaching economics at prestigious institutions abroad, and working with IMF but he holds a US Green card. Pre-policy: What to expect from the Monetary Policy Committee meeting December 1, 2020 6:00 AM There is a fine balance that the Monetary Policy Committee needs to … Further information about the Monetary Policy Committee (MPC) is available on our Monetary Policy page. Yes RBI Act provides for appointment of a governor for a period of up to five years. and then Rajan bhai uses his own casting vote to decide policy according to his own whims and fancies! Ya but what if one member is absent? => leads to inflation. RBI Monetary Policy Committee meet to begin . @RBI Target inflation (4% CPI; 2% band). On and average, RBI governor has to appear before this Committee 3-4 times a year. [Download] Topicwise UPSC Mains General Studies Paper-3 (GSM3): Economy, Agriculture, Disaster Management, EIA, Science, Internal Security since new Syllabus of 2013, [Free Lecture] Mrunal’s Mains Ans Writing [FLM/R2] GSM3: Economy-Socialism & Subsidies, PSUs, GST Compensation. The Committee voted unanimously to maintain the policy rate at 0.50 percent. Nope. With the appointment of economists Ashima Goyal, Jayanth R Varma and Shashanka Bhide to the Monetary Policy Committee (MPC), the rate-setting, six-member panel may acquire a … And IF government starts giving subsidies on petrol/diesel, then more fiscal deficit=>vicious cycle of weak rupee and high inflation continues. Press Release: 2019-2020/2248. Reduce this to just 3% of GDP, by 2016-17. capital Expenditure), then it is good, even if they run into ‘deficit’. 64 : CDS 2021-I Monetary policy should be decided by a Committee. because you’re still ‘overspending’ beyond your income. Which of the following statements are correct in that regard: Visit Mrunal.org/Economy For more on Money, Banking, Finance, Taxation and Economy. The Monetary Policy Committee (MPC) was established on 23 April 2007 pursuant to sections 54 and 55 of the Bank of Mauritius Act 2004 to formulate and determine the monetary policy to be conducted by the Bank and to maintain price stability, taking into account the orderly and balanced economic development of Mauritius. Previously 6th Pay commission’s recommendation cost us Rs.20000 crores. 2551 (2008) . The twenty fifth meeting of the Monetary Policy Committee (MPC), constituted under section 45ZB of the Reserve Bank of India Act, 1934, was held from October 7 to 9, 2020. Similarly, if government also overspends for productive purpose like building new bridges, dams, canals and powerplants (i.e. As a result, less money left for businessman to get loans/investment => less business expansion,  less jobs=>GDP reduced. Business loan interest rates continue to remain high.=> Rajan’s statistical projections about money supply, will become wrong. Already covered in previous article, @RBI fix accountability (discussed in this article), @Government: help RBI fight inflation (in this article). Answerkeys pending. Monetary Policy Committee (MPC) will decide the monetary policy by voting among themselves. Government’s cash and Debt management function should be under a separate Government body. But RBI’s monetary policy fails to yield result because of government’s policies and subsidies. What if he leaks information to that company, e.g. 34 : Mains-2020 As such, any type of deficit is bad, because it shows you’re spending beyond your income. Consider HSBC, Morgant Stanley, JP Morgan Chase etc giants. 225 : IEnggS-2021 (10m | 200 words). Urjit Patel Committee has recommended RBI to keep repo rate higher than CPI. (Nachiket Committee said remove SLR completely). What is Liquidity Adjustment facility? even if bridges, dams, canals and powerplants are created – it’ll take 20-30-50-100 years before the money is recovered through tolltax/selling electricity and water. September 29-30 & October 1, 2020. Committee gave three major recommendations: Previous Committees Tarapore, Reddy, FSLRC etc. (unlike the CBI fearing parties in Rajya Sabha). Subscribeanswerkey332 Comments8 years Ago, Days Left You can be damn sure it’ll cost more than Rs.20000 crores. + lot of this money chowed down by Sarpanch, Patwari and Tehsildaar=> they give it local money lender, who in. Solve it for [Ethics] GS4. But what are the arguments/comments one can give for the last interview question (abt IAS officer Vs IIM alumni/ IMF Officer).. 286 : Mains-2021, Ready revision note for entire history of Banking sector in India, upto new bank licences in 2014, Bimal Jalan Committee, Mahila Bank, Bandhan IDFC, RBI appointed Urjit PAtel Committee has recommended formation of new Monetary policy Committee (MPC) to design the monetary policy in India, will this step. The Monetary Policy Committee (MPC) is made up of nine members – the Governor, the three Deputy Governors for Monetary Policy, Financial Stability and Markets and Banking, our Chief Economist and four external members appointed directly by the Chancellor. Their salaries will be charged upon the consolidated fund of India. What is banking regulation act? August 4 to 6, 2020. What si Marginal standing facility? And before the Model code of conduct is announced, we may launch a few more schemes, freebies and highest MSP for farmer. [e.g. How will you maintain accountability in that case? Primary deficit cannot be higher than fiscal deficit, Primary deficit is obtained by deducting interest rates from Revenue deficit, Fiscal deficit cannot be lower than budget deficit, Fiscal deficit cannot be lower than Revenue deficit, Revenue deficit + grant for creation of capital assets, Selected by a panel consisting of Finance minister, commerce minister and the leader of opposition in Lok Sabha. What are the recommendations made by Urjit Patel Committee, to bring more accountability in the monetary policy formation in India? There are 3 prominent ways of making monetary policy 1) Targeting Exchange rate stability 2) Targeting Multiple Indicators 3) Targeting Inflation. Current {October 2016} members of MPC are as follows: RBI Membe… That’d motivate people to save into them rather than in gold. The Committee was formerly established by the revised Central Bank of The Gambia Act (2005). And thus fiscal deficit should be kept minimum. The BOT Governor will act as Chairman, given the Governor's responsibility in implementing the MPC's decisions. They cannot be removed from office without a proved misbehavior and voting in both houses on such motion. Secondly, such outside member must not involve in any activity that has conflict of interest with RBI. 286 : Mains-2021, © Copyright 2009-2019 Mrunal Patel, Gujarat, India | All Rights Reserved, [Economy] Urjit Patel Committee: Fixing Accountability in RBI, Monetary Policy Committee, Decision by Majority, Fiscal Deficit (Part 2 of 2), “[Economy] Urjit Patel Committee: Fixing Accountability in RBI, Monetary Policy Committee, Decision by Majority, Fiscal Deficit (Part 2 of 2)”. + even if this reaches to PDS shop, those shopkeeper themselves involved in hoarding and black marketeering. for example: IAS officers, bureaucrats, even certain bodies / corporations funded by the government. The outsider members will have the right to assess all data/files/records in RBI office.But he cannot hold office of profit under the government. I’m not going to dignify that stupid question/case study with an answer. Yes/no/why? In case of a tie, the RBI governor has casting vote to break the tie. Kejriwal offering free water and cheap electricity. 15 : CAPF-2020 (Yogesh Dayal) Chief General Manager. February 3 to 5, 2021. Religiously follow the guidelines of Fiscal responsibility and budget  Management Act (FRBM). MPC is required to meet for two days before deciding on rates. Of these, three members are from RBI while three other members are nominated by the Central Government. ), RBI’s annual reports put on the official website. The Monetary Policy Committee (MPC) is a committee of the Bank of England, which meets for three and a half days, eight times a year, to decide the official interest rate in the United Kingdom (the Bank of England Base Rate). increase taxes, order PSU to give more dividend), Government should decrease its expenditure (e.g. Create standing deposit facility (similar to MSF.). (R) High level of subsidies and fiscal deficit reduce the impact of monetary policy on ground level. various maturity plans, Non-convertible debentures, small savings scheme etc. Cut-off Prediction/speculation = woh mein kartaa nhi. The only clue i could get is the fact that the person has a green card which means permanent residence in the US or work permit (as put by Mr. Rajan himself when he was aksed this question), that person cannot be a governor. Since “5” is an odd number, there is no chance of tie. With MPC widely expected to hold the policy repo rate constant, the focus has shifted to the steps it will take to manage liquidity . Your critic should be balanced and with complete information rather than half-baked truth because many aspirants follow yours website during their initial years of preparation and it affects their foundation. I guess you should start posting articles for our management institutes (IIMs etc.) Government can even issue him directives in public interest. 4% CPI with +/-2% band), EPICFAIL = When MPC fails to keep CPI within this range for three successive quarters. Required fields are marked *. Fiscal deficit increased=> more problem as we saw above. but only Rajan’s signature necessary for approval file= meaning Rajan and Rajan only is the decision maker. What're the changes sought in it by Finance ministry, public sector banks, foreign banks and reserve bank of India? Under RBI Act, a statutory body called “ Monetary Policy Committee ” will decide the repo rate to control inflation between 26… Why are you always against subsidies and welfare policies? What is reverse repo rate? HINDI ANSWER. salary to staff], Capital expenditure = good. What is Bancassurance?How does it help in insurance penetration and financial inclusion? Suppose you’re the Finance minister of India, and have to pickup the next governor of RBI. The Monetary Policy Committee (MPC) is a committee constituted by the Reserve Bank of India and led by the Governor of RBI. The first meeting was a non-interest rate setting meeting So, Farmers bring the grain to FCI (to sell it @Minimum support price declared by the government.). 85 : IFS(M)-2020 Implement Vijay Kelkar Committee’s recommendations on fiscal consolidation. For further information, please contact : Monetary Policy Strategy Division Tel : +66 2283 6186, +66 2356 7872 E-mail : MPStrategyDiv@bot.or.th Key Decisions of the Central Bank of Nigeria Monetary Policy Committee 18th and 19th September 2014 The Committee decided as follows: Retain the MPR at 12 per cent with a corridor of +/- 200 basis points around the midpoint. Fixed income financial products (e.g. If you’re made the governor of RBI, how will you address this problem? # Fiscal deficit cannot be lower than Revenue deficit ? The Monetary Policy Committee (MPC) is responsible for formulating monetary policy in New Zealand, directed towards the economic objectives of: achieving and maintaining stability in the general level of prices over the medium term; and; supporting maximum sustainable employment. Urjit: Noone will be allowed to abstain from the voting. Let’s move to next topic: Fiscal deficit – interest payment (on previous loans), Revenue deficit – grant for creation of capital assets. What is MSF? Government should not give directives to public sector banks on interest rates. Products/Goods/services increased in the economy? Further, it is needed to meet at least four times a year and make public its decisions following each meeting. [T25] UPSC Mock Round#42: Polity, Constitution & Governance for Competitive Exams, [Download] UPSC Mains-2018 Essay Paper, Including Topicwise last 26 YEARS Essay Question Papers (1993-2018), [Model Answer] UPSC GSM3-2018/Q11: How principles of NITI Aayog different from Planning Commission? All five members must vote on each and every issue brought on table. [T25] UPSC Mock Round#42: Polity, Constitution & Governance for Competitive Exams, [Download] UPSC Mains-2018 Essay Paper, Including Topicwise last 26 YEARS Essay Question Papers (1993-2018), [Model Answer] UPSC GSM3-2018/Q11: How principles of NITI Aayog different from Planning Commission? [Download] UPSC Prelims 2020 General Studies Paper1: Sorted Topicwise /Subjectwise. 34 : Mains-2020 Both the statements are individually true and Statement R is the correct explanation of Statement A, Both the statements are individually true but Statement R is not the correct explanation of Statement A. What are the recommendations of Urjit Patel Committee on Monetary Policy Reform? Rajan’s monetary policy give much positive result in this case. These picture illustrations and dialogues are enough for any one to remember the topics.. Well written sir…. Exceptions where government side is represented in Monetary policy Committee =Colombia, Philippines. So, if monetary policy Committee member also provides consultancy services to such firms= there is conflict of interest. Then I better just run away to Nepal, Dubai or Bangkok than try to fix the inflation mess through monetary policy. [e.g. High Fiscal deficit=> S&P, Moody etc. But overall, Monetary policy is still “one man” game, without any formal mechanism for ensuring participation and accountability. RBI appointed Urjit PAtel Committee has recommended formation of new Monetary policy Committee (MPC) to design the monetary policy in India, will this step Read More... [Economy] RBI Urjit Patel Committee: 4% CPI, Nominal Anchor, Multiple Indicator, Monetary Policy Framework Reforms (Part 1 of 2) Subscribe Economy 125 Comments 7 years Ago Then four members left= 2 vs 2 tie possible! They, in total, amount to more than 50 percent of total tax revenue of central government. (A) In the recent years, RBI’s monetary policy has failed to contain inflation. Accordingly, government paid >60k crore rupees to the banks, on farmers’ behalf to settle their loans. The Monetary Policy Committee (MPC) determines the policy interest rate required to achieve the inflation target.The Reserve Bank’s Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy. And High level of fiscal deficit leads to following problems: Given all these negative factors, Urjit Patel recommends government to do following: Q6. 246 : CAPF-2021 (After all it does come from some dam, some canal, some powerplant. Rajan has no control over this. Can you explain the answer of second question?

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