CAGING THE RBI
Business
Standard, June 14, 2016
Letters
Caging the RBI
With reference to “A
reset in policy” by A K Bhattacharya (Business Standard, Raisina Hill, June 13)
the concern aired in the conclusion, “But a reset in equations gives rise to
many difficult situations and spawns controversies” can become real, only if
the central government confronts the Reserve Bank of India(RBI) within the
latter’s mandated territory of administering monetary policy. It has to be said
to the credit of government of India (period 1935 to India’s independence
included) that the RBI has been all through manned by competent top management
and it’s views were respected by successive governments in New Delhi.
In all these years,
politics of the ruling parties or the personal biases of the RBI Governor and
his deputies did not, by and large, affect the smooth functioning of the
central bank. The game of numbers on the representation on the Monetary Policy
Committee (MPC) was an aberration which can be traced back to the partisan Financial
Sector Legislative Reforms Commission report, which was a product of
circumstances, with a built-in effort to “cage” the RBI. That report will
remain only a reference document and as has happened in the case of inflation targeting
and constitution of MPC, in future also, decisions on recommendations will be,
hopefully, issue-based and taken only after due deliberations and
consultations.
In a larger sense, all
members of the MPC will be expert professionals in their own fields and will be
pursuing national interest rather than breaking into sub-groups within the
committee and fighting for Centre or RBI.
M
G Warrier, Mumbai
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