RBI and Monetary Policy: Financial Express editorial

There was another report in the media today(October 10) that “RBI governor might get veto in price stability mechanism”. While such gestures to calm dissent are normal in governance, the recent initiatives from the finance ministry, including the hurry with which some of the recommendations of the Financial Sector Legislative Reforms Commission are being pushed through for implementation, gives an impression that new dispensation in Delhi has not fully recovered from the hang over of the previous coalition government’s ‘give and take’ approach in decision making. It would be an unhealthy message to the regulators and all stakeholders in the financial system, if such ‘concessions’ to RBI and its present governor appear to be a privilege available in certain situations. There is a chance of lesser mortals among regulators becoming less amenable to government’s guidance. Government should not shy away from normal procedures and parliamentary debates before implementing measures of long term implications to the economy. The sooner the transparency in policy formulation and respect to legislative processes and procedures are restored, the better for the country.
M G Warrier, Mumbai


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