The Lok Sabha on Thursday cleared the Finance Bill 2016, which also contains a provision to strip RBI governor’s powers. The Bill transfers this power to a six-member panel headed the RBI chief.
The Finance Bill 2016 contained an amendment to the RBI Act, 1934 giving the central bank a mandate to target inflation. The Bill will not meet the fate of the GST Bill as the Rajya Sabha cannot withhold a money Bill. “We have drafted the amendment (to the RBI Act) in consultation with the RBI so that inflation is reduced,” finance minister Arun Jaitley said during the debate.
The six-member monetary policy committee, which will include RBI governor and three noinees of the government, will set interest rates to bring consumer or CPI inflation to preset targets.
