Underestimating Reserve Bank of India

December 20, 2018

Underestimating RBI

This refers to Omkar Goswami’s piece “Understanding the RBI’s central board” (December 20). The excellent analysis which contains some thoughtful advice to young Viral Acharya, hopefully, will open fresh debate on the management of India’s central bank.
The general pattern of putting GOI and RBI on different pages is followed in this article also. Legal distinctions apart, the entire Central Board of RBI including the Governor and his deputies hold office only during the pleasure of GOI and one need not split provisions of the RBI Act to argue on the control the ‘Owner’ has over RBI. If the RBI Central Board becomes more professional in its approach to governance and policy issues as a result of the recent chaos created by some, Urjit Patel’s exit would have served the purpose. The exit of Patel was expedited by his inability to carry the Central Board with him and not because of the difference in policy perceptions between RBI and GOI.
RBI as an institution has a tradition of remaining solidly behind Governors who understood the institution’s mandated role and assumed social responsibilities. I G Patel, Bimal Jalan, and Raghuram Rajan could take RBI to higher levels during their tenures using this inherent strength in the institution’s manpower.
Destiny has brought Shaktikanta Das back to a position which carries responsibility and challenges which can earn him a distinct place in Indian History if luck remains with him in the coming years. Shaktikanta Das has come to Mint Road with an additional asset to his credit, namely his close familiarity with RBI, as compared to his immediate earlier IAS-predecessor Dr Duvvuri Subbarao, which will reduce his ‘familiarization process’ in RBI to the minimum. The new Governor may start speaking the familiar RBI language within weeks from now which may not be music to the ears of political leadership which has been bargaining for concessions from the central bank.
M G Warrier, Thiruvananthapuram


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