A recent report by SBI Ecowrap on the minutes of the MPC meetings reveals a divergence of opinions among its members. It highlights that MPC members have approached voting from varied perspectives. Over time, the voting records of individual members regarding the policy rate have shown considerable diversity.
"Dr Rajiv Ranjan, the only member to have continuity from the August meeting, has reiterated his position that policy action is on course to achieve the objective and window of opportunity to revise the stance will be open in October," revealed the SBI Ecowrap report.
In contrast, other committee members have expressed differing opinions. Two members from the RBI have placed a strong emphasis on inflation concerns. The Deputy Governor underscored the importance of addressing the factors contributing to persistent inflation in the domestic market.
However, the RBI Governor emphasised the need for flexibility in adapting to changing economic conditions. The report also notes that the shift from a stance of withdrawal to a neutral position is driven by growth considerations.
"Revision of stance has been influenced by growth imperatives, and there is an onset of natural slowdown in the economy on account of tightening although full symptoms have been masked by ambiguity in signal to noise ratio." said the report.
The International Monetary Fund (IMF) has reaffirmed its growth forecast for India at 7 per cent for the current fiscal year, which concludes on March 31, 2025, and at 6.5 per cent for the following year. In contrast, global output is expected to grow by 3.2 per cent in both 2024 and 2025.
Additionally, the report suggests reducing the timeline for releasing MPC meeting minutes in India from the current 14 days to 7 days.
While the RBI's practice of releasing MPC minutes two weeks after the policy aligns with international best practices, it may create public perceptions that new data released after the MPC meeting could influence these minutes. Therefore, reducing the release time to 7 days would help mitigate this risk.
The RBI would need to amend its governing laws to implement this change. The Currency and Finance Report (2020-21) recommends modifying the requirement for releasing minutes from "at 5 pm on the 14th day after the policy day" to "at 5 pm within seven days of the policy announcement."
This adjustment would enhance the effectiveness and relevance of the RBI's communication in a rapidly evolving economic landscape, ensuring stakeholders receive timely information that can inform their economic decisions.
