RBI MPC members to be paid much more per meeting than RBI Board members..

There was this recent news on compensation terms for RBI MPC members:

The government appointees on the powerful Monetary Policy Committee will be paid ₹1.5 lakh per meeting along with air travel and other reimbursements, but will need to observe a “silent period” seven days before and after the rate decision for “utmost confidentiality”.

The silent period and confidentiality requirements will also apply to the three RBI members, including the Governor, on the panel that has been deciding on policy rates since October last year, the central bank has said.

…..

The members appointed by the government would “receive a remuneration of ₹1,50,000 for devoting time and work for each meeting of the committee… which they attend and other expenses relating to air travel, local transportation and accommodation as may be decided by the central board from time to time,” as per the regulations.

The panel is required to meet at least four times in a year and the RBI has been convening a bi-monthly meeting of this committee.

This is an interesting case as RBI Central Board members are paid much lower Rs 20,000 per meeting:

Sitting Fees and Halting Allowance paid to the Directors of the Central Board, Members of the Local Board and Directors attending CCB/BFS/BPSS meetings
Sr. No. Type of the Meetings Sitting Fees per meeting (in INR) Halting allowance per diem (in INR)
1. Central Board 20,000 1,200
2. Local Board 20,000 1,200
3. Committee of the Central Board (CCB); Board For Financial Supervision (BFS) and Board for Payment & Settlement Systems (BPSS) 10,000 1,200
4. Audit and Risk Management Sub-Committee (ARMS), Human Resource Management Sub-Committee; Building Sub-Committee and Information Technology Sub-Committee 10,000 1,200
Note: In addition, the travel and stay expenses towards attending Board/Committee/ Sub-Committee meetings are also borne by the Reserve Bank of India.

Quite a wide difference given RBI Board takes quite a few decisions which impact the economy and thus decision making of MPC.

One question that comes to mind is on what basis are these payments determined? After all, much of economics is based on incentives. The shaping of economic decisions has a lot to do with economic incentives at play.

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