In a draft report early last month, it was suggested that the government may appoint majority members on the monetary policy committee, and the Governor may lose his power to veto the committee's decision on the monetary policy.
RBI Governor Raghuram Rajan told Bloomberg TV in an interview that the Reserve Bank of India has reached an agreement with the government on the new monetary policy committee.
However, he added that the panel will be different from what was proposed in a draft earlier last month, wherein the government was to appoint the majority of the members.
"There is an agreement with the government, which is not that plan," Rajan said without divulging further details.
A major controversy had broken out after a draft proposal suggested the government appointing a majority of the members on the panel to be chaired by RBI Governor, while a veto power earlier proposed to be vested with the Chairman was also sought to be withdrawn.
Rajan, however, later said he was fine with the idea of veto power being dropped. Currently, RBI Governor has a technical advisory committee to advise on monetary policy, but he enjoys authority to accept or reject the panel's views.
Rajan further said there is a "mood of optimism" in India's economy and it would be among the least-affected countries from problems in China.
He also urged the Parliamentarians to resolve their differences and allow the proposed GST law to be implemented, saying it would one of the most important changes in India.
He also termed the proposed bankruptcy code as an "extremely important" legislation.
"If we can get a good bankruptcy code, we can start issuing long-term bonds, which is absolutely necessary to finance infrastructure, finance all the big things the government plans," Rajan said.
Talking about global markets, the RBI Governor said prices are not correct in certain asset markets and they may correct.
"Now, whether that happens smoothly or that happens in more volatile fashion, I think is anybody's guess," he said.
In his famous prediction years ago from this Jackson Hole symposium, Rajan had warned that the little-understood financial products may trigger a global financial crisis.
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