The Monetary Policy of India is decided by the Monetary Policy Committee (MPC).

The Monetary Policy Committee (MPC) was established in India in 2016 as per the amendments made to the Reserve Bank of India (RBI) Act, 1934. The MPC is responsible for determining the monetary policy of India, including setting the policy interest rate, also known as the repo rate.

Composition of the Monetary Policy Committee:
The MPC consists of six members, including three members from the RBI and three external members appointed by the central government. The composition is as follows:

1. Governor of the Reserve Bank of India: The Governor of RBI is the ex-officio chairperson of the MPC.
2. Deputy Governor of the Reserve Bank of India: The Deputy Governor of RBI in charge of monetary policy is also a member of the MPC.
3. One officer of the Reserve Bank of India, nominated by the Central Board.
4. Three external members appointed by the central government based on their expertise and experience in the field of economics, banking, finance, or monetary policy.

Decision Making Process:
The MPC meets at least four times a year and publishes its decisions in the form of a bi-monthly Monetary Policy Report. The decision-making process of the MPC involves the following steps:

1. Analysis of Economic Data: The MPC reviews various economic indicators such as inflation, growth, fiscal deficit, and global economic conditions to assess the current state of the economy.
2. Deliberations: The members of the MPC discuss and deliberate on the appropriate monetary policy stance based on the analysis of economic data and the future outlook.
3. Voting: Each member of the MPC has one vote, and the decision is taken by a majority vote. In case of a tie, the Governor has a casting vote.
4. Policy Announcement: After the MPC reaches a consensus, the policy decision is announced, which includes the repo rate, reverse repo rate, and other relevant policy measures.
5. Communication: The MPC also communicates its rationale and reasoning behind the policy decision through press conferences and statements, promoting transparency and understanding among market participants and the general public.

Role of the Reserve Bank of India:
Although the MPC decides the monetary policy, the Reserve Bank of India plays a crucial role in implementing and executing the policy decisions. The RBI conducts open market operations, manages liquidity in the banking system, and monitors the transmission of policy rates to the broader economy.

In conclusion, the Monetary Policy Committee (MPC) is responsible for deciding the monetary policy of India. It consists of members from the Reserve Bank of India as well as external members appointed by the central government. The MPC follows a structured decision-making process and communicates its policy decisions to promote transparency and understanding.