RBI's Policy Perception: History Repeats

Reserve Bank's Policy Perception             
January 8, 2019
History repeats

This refers to Arup Roycoudhury’s report “Liquidity infusion will not be ‘easy money’: RBI governor” (Business Standard, January 8). For GOI which has always been miserly in using commonsense, appointments of RBI governors have been consecutively a case of “heads I lose, tails you win” on the last four occasions. Subbarao took about an year to start speaking RBI language, Raghuram Rajan was an RBI man from Day One, Urjit Patel didn’t deviate much from the road prepared by Rajan and now Shaktikanta Das has no hesitation in taking a position different from what his erstwhile bosses wanted him to take as RBI governor.
For now, let us just listen to what Das has to say on farm loan waiver. He says, “Any generalized kind of write-off obviously has an adverse effect on the credit culture and future credit behavior of the borrowers” and goes on to add that “It is for the individual governments to examine whether they have the fiscal space to meet the requirements and release the money to the banks then and there.” The message is loud and clear and is a repetition of what RBI emphasized during the late 1980s which was ignored by governments which went ahead with implementation of the Agricultural Rural Debt Relief Scheme, 1990 which had its roots more in politics than in economics.Repayment culture got polluted in India since then. History repeats.
M G Warrier, Mumbai


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