 "Since its inception, the RBI's monetary policy committee has confronted significant external challenges in managing inflation in India")
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Illustration: Binay Sinha
The Reserve Bank of India (RBI) Act, 1934, was amended in 2016 to introduce a flexible inflation targeting (FIT) framework in the country. This was a momentous occasion in the history of India’s monetary policy, as it marked the beginning of monetary policy decisions being made by a six-member monetary policy committee (MPC), consisting of three internal and three external members.
Until then, the governor of the RBI had the sole power to take monetary policy decisions. Although the RBI had constituted a Technical Advisory Committee (TAC) in July 2005, it lacked statutory backing. The MPC was
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