The draft version of the government’s Financial Code, released last week, could have important implications for the functioning of the Reserve Bank of India (RBI). The adoption of a voting monetary policy committee would be a positive step. However, there are still crucial details that need ironing out. In particular, the recommendation that the majority of the panel be appointed by the government is a cause for concern given the track record of previous governments attempting to dampen the central bank’s power and independence.
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