T C A Srinivasa-Raghavan: RBI - A fly in the bottle | Business Standard Column

T C A Srinivasa-Raghavan: RBI - A fly in the bottle | Business Standard Column



My VIEW:

In the Indian context,
with due respect to the writer’s association with RBI, one has to beg to differ
with the analogy and point out that RBI happens to be the “Curd in the Pot”.
There has been unending disputes about whether curd is dependent on the pot for
its existence or whether the pot gets value addition because it contains curd (Thakrasyaadhaaram Ghatam vaa
Ghatasyaadhaaram Thakram
?). Government and people of India, like the pot, are
dependent on the central bank for retaining the strength of the economy.
Y V Reddy’s oft-quoted observation that
the contours of RBI’s autonomy is decided by government cannot be disputed. But
stifling a statutory organisation’s functional autonomy within the pre-decided
mandates, by back-seat-driving by any forces, brings down the reputation of
both the institution and the owner, in this case GOI. RBI's autonomy or
independence of monetary authority within the contours of government policy is
not an issue just affecting those at the helm of the central bank. The
stability of India's financial sector and the country’s image outside are  dependent on that.


M
G Warrier
, Mumbai

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