Paving the way for a major shift in the interest rate-setting mechanism, the Government on Thursday named three members-Chetan Ghate, professor at the Indian Statistical Institute; Pami Dua, Director Delhi School of Economics and Ravindra H Dholakia, professor at IIM-Ahmedabad for the new Monetary Policy Committee (MPC) who along with RBI nominees will now review rates with an aim to contain retail inflation within targeted 4 per cent.
While a senior finance ministry official said the government will maintain an arm's length from the panel, the new mechanism will still mark a significant departure from the current system of the RBI Governor having powers to take a final call on review of rates irrespective of the advice from the existing Technical Advisory Committee.