On pre-policy meetings, FinMin and RBI to stay with convention
On pre-policy meetings, FinMin and RBI to stay with convention: View in some sections of govt is that there's no need for ministry officials to meet MPC members...
This refers to Arup Roychoudhury’s report “On pre-policy meetings, FinMin and RBI to stay with convention” (Business Standard, June 12). The overenthusiasm of Arvind Subramanian to fly higher than the country’s central bank has brought embarrassment to GOI and RBI on earlier occasions also. The deft handling of situations by Team RBI had then kept things under control and did not allow misinformed media debates.
With the episode involving Monetary Policy Committee covered in this report the relationship issues between Government of India(GOI) and Reserve Bank of India(RBI) have become a matter of derisive public debate. Not that there was never any friction between Finance Ministry and RBI in the past. Even books like “Dialogue of the Deaf” making serious fun of the endangered marriage between fiscal and monetary policies are being sold like hot (though stale in content) cakes.
The point here is, one person’s overenthusiasm has brought avoidable embarrassment to FM and RBI Governor by inviting Monetary Policy Committee for a pre-policy tutoring which invite, fortunately, MPC politely declined. Compare this crude way of interfering with the functioning of a professional body constituted for performance of a defined role in policy making with the elegance of the convention of pre-budget and pre-Monetary Policy Announcement meetings between Finance Minister and RBI Governor, which both sides have decided to continue now.
During the Raghuram Rajan Era in RBI, there was an induced restraint in finance ministry and among politicians who were ministers while trying to make pre-emptive observations preceding every monetary policy statement which Dr Subbarao endured with pain. Now, taking advantage of Dr Urjit Patel’s refusal to interact with media as frequently as Dr Rajan did, efforts are being made by both bureaucracy and political leadership in Delhi to discipline RBI. The response from the professional body that the MPC is, should be seen in this perspective.
Having said that, the marriage between fiscal and monetary policies has no built-in divorce option. It is not a living together relationship. It will be in the best interest of the nation for Delhi to avoid a confrontational approach to RBI, so long as there are no apparent signs of RBI or MPC compromising professionalism for extraneous reasons.
M G Warrier, Thiruvananthapuram