It is argued that the release of revised draft of the Indian Financial Code (IFC) by the ministry of Finance will undermine the autonomy of RBI. Do you agree? Substantiate. (200 Words)

The FSLRC through it's IFC has recommended the formation of a MPC to decide on the policy rates. Commission recommended for 7 members to be part of this committee out of whom government has 3 nominees and the commission gave veto power to the governor. These two aspects denote the importance attached by the commission to RBI's autonomy in delivering it's functions

The revised draft IFC by Government has changed the provisions for MPC, there by bringing it under the control of government by making 4 members to be nominated by government to MPC and also doing away with the Veto power of the RBI governor

There are differences between government and RBI, each of them taking a different stand on setting monetary policies as the pressures acting on them would be different.
In case of government there will be numerous pressures on the government like from industry bodies, corporates for easing the monetary policies on the other hand RBI will strictly go by pure financial considerations and will also be very cautious in it's approach

More over the government may also succumb to the populist pressure and the coalition politics, which may be more harmful to the financial health of Indian economy. RBI being an autonomous body doesn't have to be part of these political pressures and can adapt the best suited policies

Any efforts to curtail the autonomy of RBI should be viewed with caution and such efforts on part of the government needs reconsideration