The Reserve Bank of India and the government have broadly agreed on the powers of the monetary policy committee, clearing the air on an issue that has generated much attention and speculation recently.
"We have been enthusiastic about the idea of monetary policy committee. The government and RBI have reached consensus on what the committee should be," RBI governor Raghuram Rajan told reporters at a conference immediately after announcing the policy.
The issue has generated much speculation after reports that the government's views on the formation of the monetary policy committee suggested it wanted to reduce the RBI's powers.
This was categorically ruled out by the Union finance secretary, Rajiv Mehrishi on Monday.
This view was also echoed by RBI governor on Tuesday.
"The RBI believes that institutionalising the powers of the monetary policy committee is vital. The government has right to give RBI a direction. There is a clause in the RBI Act. But defacto RBI is independent," Rajan said at the conference.
Read: RBI keeps policy rates on hold at 7.25%