RBI at the receiving end?

 RBI at the receiving end?

This refers to “Simple. RBI Critics Have an Axe to Grind” (Economic Times, Straight Talk Express, January 17) by R Sriram. I loved the caption.  Amartya Sen to trade unions in RBI, IMF to most of the financial sector retirees, TOI to Wire and Sriram to me, all have expressed some view on demonetization. Many more are waiting for a call to bounce upon RBI, as change (in lower denominations) was not managed the way they expected by the central bank. All fine.
But, frankly, what is the autonomy of RBI, many among these “RBI Critics” are talking about? Is it the carpet which political leadership since 1990’s tried to pull away from underneath the feet of the RBI Governor and the RBI Central Board  which climaxed manipulating a monologue report obtained from the Financial Sector Legislative Reforms Commission? In that case let us remember the role played by Dr Raghuram Rajan who was at Mint Road for a short period of 3 years, who, by perseverance, saw to it that RBI remained in one piece.
There is no RBI autonomy involved in Prime Minister Modi’s November 8, 2016 announcement of withdrawal of legal tender character of Rs1000 and Rs500 notes or post-November 8 currency management by RBI. The need for alignment and harmony between fiscal and monetary policy and for that matter GOI resisting the temptation to do back-seat driving in statutory bodies including RBI being highlighted in recent debates cannot be brushed aside. It is in GOI interest to have a central bank with a strong balance sheet, professional expertise and international reputation. But, the present grumblings in the media does not help in working towards that end.


Unknown said…
Warrier ji. You said it. Your conclusion I like most coming from a matured insider.Both Govt. and RBI should perform in their respective roles with maturity.
Unknown said…
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S.K.Gupta said…
While highly appreciating your deep concerns for willfully targeting of the RBI by the vested quarters, I strongly feel that the fault actually lies with the GOI owing to its ill-preparedness towards the hasty implementation of its demonetisation move. Any weak central bank in any country is (sooner or later) bound to bounce back upon the govt concerned. Moreover, it takes two to clap and the monetary and fiscal authorities must always act in "unison". Needless to say, any govt attempt to undermine the much needed autonomy of the RBI (by treating it as one of its all subservient departments) may eventually boom-rang on our "growth oriented" economy.

Thanks and regards


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