Decision-making by committees has received considerable attention from mathematicians and economists. Neither of them has given unequivocally good news about it because, it turns out, a committee deciding by a majority vote is likely to get it right only about half the time. This is about the same probability as one person deciding - as when the RBI governor decides what the repo rate should be.
The merit in the veto/'buck-stops-here' system is that when he gets it wrong, the governor takes the flak. But when a committee decides you won't know who to blame. This is probably why C Rangarajan, who has been both a deputy governor and a governor of the RBI, has said the key issue is accountability.
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Not so simple
It has been known for a very long time, and was formalised in 1785 by Marquis de Condorcet that a committee is useful for aggregating decentralised information. He also said the larger the number of members in a committee, the higher the chances of it reaching a correct decision and, further, that with an infinite number of members, the probability of a correct decision was one.
But this conclusion was based on the assumption that everyone would convey their information to the others honestly, as also vote honestly. There has so far been no reason to believe that this is invariably or, even mostly, the case. It may happen; it may not. More often than not, it does not. As such, it remains a convenient assumption.
There is also the question of strategic voting. This can happen when a member does not vote on the basis of his or her own information but about what he thinks is the information that others have or when he has been dictated to. This kind of second guessing almost always leads to wrong decisions. This is known as the problem of efficiency in information aggregation. Not all committees that aggregate information properly do so efficiently.
Then there is conflict of interest, something which, given its composition, everyone has conceded will be there in the Indian Monetary Policy Committee. My worry is that these conflicts will exert pressure on the committee to reach unanimous decisions if only to look good to the public. But, alas, it has been shown very convincingly that unanimity is almost always inefficient.
I am sure the finance ministry and the RBI have thought through all these and other aspects. But I am also sure that the economists pushing for this have not explained the problems fully to the political leadership. It's called need-to-know.
But, if indeed they have, they need to tell everyone why they think these problems will vanish. It's only fair that they do so. After all, even space shuttles crash.
Re-privatise RBI
That said if you are seriously interested in this subject, read this paper: https://bsmedia.business-standard.comwww.sciencedirect.com/science/article/pii/S0176268005000145. Otherwise, I would request silence.
It is very informative. Most importantly, its last section discusses monetary policy committees that are no different from a privately-owned central bank in which it is the government and not the Board that selects the governor. Few people know it but until 1949, the RBI was a private bank. So let me quote what Sir George Schuster, the Finance Member of the Viceroy's Executive Council, said in 1929 when the RBI Act was being envisaged:
"The largest user of money in a country is the government, and the whole principle of the proposal is that the government, when it wants money to spend, should have to raise money by fair and honest means in just the same way as every private individual has to raise money, which he requires to spend for his own maintenance. If the government is in control of the authority, which is responsible for exercising the other function, then all sorts of abuse can intervene."