Abolish the MPC and downsize the RBI?

"Few people beyond the political opposition believe that real GDP growth was as much as 2.5% below the official estimates for the 2011-2017 period," wrote R Jagannathan. This was claimed in a new study by the former Chief Economic Adviser Arvind Subramanian. "Actual growth may have been about 4.5 percent, with a 95 percent confidence interval of 3.5 to 5.5 percent," he wrote. It was the fault of the Monetary Policy Committee (MPC) of the Reserve Bank (RBI), feels Jagannathan. It is possible that "there could be some overestimation of GDP in the new series" which means that if "we have been growing far slower than what the officials statistics indicate, then monetary policy should have been much looser, much earlier". The overestimation was not done by the MPC or the RBI but by the government. "Questions over the quality of Indian data have been growing since 2015, when the Modi government made major changes in the way it calculates GDP. Eminent economists, including Raghuram Rajan and Gita Gopinath, have flagged the anomalies in the new system," wrote an editorial in the Mint. "While nobody had a quarrel with the revision in methodology, the real issue was the reliability and credibility of the underlying database. In this case, CSO (Central Statistical Office) preferred to use the MCA-21 database of the ministry of corporate affairs, which was not only incomplete, but also untested and unreliable," wrote Prof Himanshu. Two members of the National Statistical Commission resigned in January when the government suppressed the jobs report, but it made no difference. Is the MPC supposed to reject data published by the government, accusing it of lying? Jagannathan feels that "the MPC has failed and needs to be wound up". Excellent idea. In fact, there is no need for the RBI as well. The Ministry of Finance can set rates, raise funds by selling bonds, manage liquidity through open market operations (OMO) and manage our currency. Finance ministers  Arun Jaitley, P Chidambaram and P Mukherjee are lawyers, Jaswant Singh graduated from the Indian Military Academy and Yashwant Sinha has a degree in political science. The present incumbent Nirmala Sitharaman does have a degree in economics. Of the recent governors of the RBI, Prof Raghuram Rajan was not given an extension, Urjit Patel resigned before his term ended. The present incumbent is a retired civil servant with a degree in history, who has cut interest rate three times since he was appointed. Duvvuri Subbarao, a civil servant with a masters in economics, was governor of RBI from 5 September 2008 to 4 September 2013. Average retail inflation ranged from 8.32% in 2008 to 10.92% in 2013 and only came down when he was replaced by Rajan. Annoyingly, Lata Venkatesh wrote that interest rate should not be lowered any more. Get rid of the MPC and RBI, let the IAS do it.