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बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. First policy decision by Monetary Policy Committee: Comment on first policy decision took by newly formed Monetary Policy Committee.
Oct 05, 2016 Related to : GS Paper-3

Ans :


Monetary Policy Committee (MPC) is a Reserve Bank of India’s committee which has mandate to take monetary policy decision. The MPC have 6 members headed by its Governor. Out of six, 3 are from RBI and other 3 were nominated by Government. MPC was set up by amending the RBI Act after the government and RBI agreed to task RBI with the responsibility for price stability and inflation targeting.

First policy decision by MPC-

Recently MPC has made first policy decision, and it had cut down the benchmark repurchase (repo) rate by 25 basis points.

Factors behind rate cut-

  • According to MPC, the global demand environment was clearly looking far bleaker than previously anticipated, with the forecast for world economic growth may set to be downgraded further.
  • So that the focus needs to remain on supporting the domestic economy through an accommodative monetary stance.
  • Hence MPC has opted to lay primacy on supporting growth through rate cut, without neglecting its focus on medium term retail inflation target.


  • To make clear decision by committee is never easy, and given the short time the MPC had since its constitution last month, the lucidity of the policy statement shows consensus has build among all.
  • It reflects broad consensus that the risks to growth from global uncertainty and financial markets volatility remain high.
  • The panel has made a decisive start to rate-setting through deliberation is clear in its first policy decision with cautious view on domestic and external challenges.


For the first time, a monetary policy committee, and not just the Reserve Bank of India governor has took decision on monetary policy rates. And it has started its journey on keeping eye on both growth as well as inflation. As decision is takes by multi member committee, it took various aspects in its policy decision, which is welcome move and a good start.

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