Explanation:

Urjit Patel Committee

An expert committee appointed to examine the current monetary policy framework of the Reserve Bank of India. Headed by Urjit Patel, Deputy Governor of the Reserve Bank of India. Objective →To strengthened Monetary Policy Framework of RBI.

Recommendations – Urjit Patel Committee

1. Use CPI as a mean to measure inflation of the country not WPI – (Food + Fuel)

• Target          : 4% CPI, +/-2% Band [control inflation in 2-6% range.]
• Tool               : Repo as policy rate, +/-1% spread in R-Repo & MSF,
• Time limit  : 0/12/24 (months) = 10/8/6% (CPI)
• Strategy     : keep Repo rate higher than CPI

2. RBI to fix accountability in monetary policy making – Form a Monetary committee of 5 members

• Governor
• Governor
• RBI’s Executive Director
• Two outsiders/External members
• Noted Economists, finance experts etc., who’re not office bearers in RBI.
• Term: three years + Not eligible for re-appointment

3. MPC Must issue a public statement & every MPC member must sign it. This statement will contain :

• Why did we fail? (Reasons)
• How will we fix it (Future action proposed)
• By when will we fix it? (Timeframe)

4. Government to help RBI to achieve set targets

• Eliminate administered prices (MSP on food grains, LPG cylinders)
• Eliminate administered wages (MNREGA)
• Eliminate administered interest rates (interest subvention given to farmers)
• Implement Vijay Kelkar Committee’s recommendations on fiscal consolidation.
• Religiously follow the guidelines & targets of FRBM