Welcome truce: SIGNS OF TURNAROUND IN GOI-RBI RELATIONSHIP
M G Warrier
January 31, 2019
This refers to the report “Govt may not push for changes in Board-Level Panels of RBI” (Economic Times, January 31). The updates on GOI-RBI relationship issues given by Dheeraj Tiwari are comforting. It is common knowledge that when divorce is not an available option, there is enough scope for ‘give and take’ in the relationship, not always in terms of monetary considerations.
The breaking-point which concluded with the change of RBI Governor on December 11, 2018 was perhaps, triggered by the ill-advised public debate about invoking Section 7 of the RBI Act by GOI which was a non-existent option so long as the ‘consultation with Governor’ clause remained in the statute book. All other issues now being ‘amicably sorted out’ could have been resolved through mutual consultations even without easing out Urjit Patel in the manner in which it was done. Of course, reducing embarrassment to government gets priority over a governor’s completing his tenure.
Two things may still be resisted by RBI under the able leadership of Shaktikanta Das. One, the finance ministry’s practice of giving signals to RBI on what the political leadership and corporate houses expect from RBI by allowing its officials to talk to the media. Two, the pressure on RBI to transfer huge amounts as ‘advance payments against future eligibilities’ as the RBI Act as it stands now expects RBI to transfer only the surplus income after usual and necessary provisions.
M G WARRIER, Mumbai