Monetary Policy Committee is just a cosmetic addition, not suited to India

Tackling inflation with monetary policy is like trying to move boulders with eyebrow tweezers

The first Monetary Policy Committee (MPC) has exited. The government and the Reserve Bank of India (RBI) will soon appoint a new MPC.

The MPC makes us look modern or, rather, western. But is it useful as anything more than a cosmetic? I wonder.

The Committee’s main job is to fix the price of the most important thing in the economy: money. It’s called the interest rate.  Earlier it was the RBI governor who did it alone, more-or-less.

One of the side things the Committee does is to ‘target’ a particular rate of inflation. This rate in India is a range between 4-6