FSLRC recommendations will be implemented soon, says Jaitley - The Hindu

FSLRC recommendations will be implemented soon, says Jaitley - The Hindu

It will be a
sad day for Indian financial sector, if under pressure to show the world that
‘many changes are being brought about in the name of REFORMS’, Modi government
goes ahead with implementation of the faulty and half-baked recommendations of
FSLRC report, which as described by the eminent economist S S Tarapore, is a
by-product of the friction between
GOI(read UPA-II) and RBI, without due deliberations and examination of
the consequences.
Not much research is needed to conclude that finance ministry and FSLRC, in a
hurry to resolve certain minor issues, ignored the evolution of the role of RBI
and the care with which RBI has nurtured the financial sector. Fed Reserve and
RBI function in two different worlds. To say that time is not right for
dismantling or truncating the RBI which is doing creditably well as is being
admitted in several international forums, would be telling the obvious.
The context of dissenting notes recorded by 4 out of 7 members who signed the
final report are well-argued documents, which inter alia plead the case for
maintaining the basic features of RBI and assert the need for allowing the
central bank to carry on with its present mandates should also be studied. It
would appear that the Commission did not get opportunity to understand the
present relationship between the RBI and GOI. The regulatory apparatus plus
legislations in financial sector in India are in working condition. The FSLRC’s
effort to re-invent them has pushed the present regulators and supervisors to a
confused state, making the possibility of an intelligent debate on the issue
The terse indictment of FSLRC report coming from Dr Rajan gives one the satisfaction
that in India, it is not easy even for governments to ‘cut and paste’ policy
formulations to suit individual whims and get away, and wiser counsel will
prevail, though this may take time.
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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