Which of the following statements are correct about the recommendations of the Urjit Patel Committee?

1. The headline Consumer Price Index (CPI) should be the nominal anchor for monetary policy and the Reserve Bank of India (RBI) should make this the predominant objective.

2. Monetary policy decisions should be vested in a Monetary Policy Committee (MPC), comprising the Governor, the Deputy Governor and Executive Director in charge of monetary policy, and two external full-time members.

3. There should be a remunerated standing deposit facility at the RBI to sterilize excess liquidity.

4. All sector specific refinance should be phased out, as committed to the World Bank.

Select the correct answer using the code given below:

The merit of the Urjit Patel Committee Report to review and strengthen the Monetary Policy Framework (January 2014) is its analytical rigour and clear recommendations on improving the efficacy of the monetary policy.

The key recommendations of the Committee are:

(i) The headline Consumer Price Index (CPI) should be the nominal anchor for monetary policy and the Reserve Bank of India (RBI) should make this the predominant objective.

(ii) The nominal anchor for inflation should be set for a two-year horizon at 4 per cent, with a band of plus or minus 2 per cent.

(iii) The Central Government needs to reduce the fiscal deficit to 3.0 per cent of GDP by 2016-17.

(iv) Monetary policy decisions should be vested in a Monetary Policy Committee (MPC), comprising the Governor, the Deputy Governor and Executive Director in charge of monetary policy, and two external full-time members. The decisions of the MPC will be by voting. Members will be accountable for failure to attain the target – failure being defined as inability to attain the target for three successive quarters.

(v) The real policy rate should be positive. In the first phase the weighted average call rate would be the operative target and the repo rate would be the single policy rate. The funds available at the repo rate would be restricted and increasingly liquidity would be provided at the 14 day term repo; longer-term repo auctions should be introduced.

(vi) In the second phase, the 14-day repo rate would be the operative target and recourse to outright two-way open market operations (OMOs) would determine liquidity. OMOs should not be used to manage yields on government securities.

(vii) There should be a remunerated standing deposit facility at the RBI to sterilize excess liquidity.

(viii) With an independent debt management office, the market stabilization scheme and cash management bills should be phased out.

(ix) All sector specific refinance should be phased out as committed to the Asian Development Bank in 1992.