Comments
With the issue of autonomy of the Reserve Bank of India and its Governor at the fore once again after the sudden resignation of Urjit Patel, international experts and former central bank chiefs have batted for more freedom for the RBI while underlining the need for constant dialogue.
Former RBI Governor C Rangarajan said that the central bank chief must have freedom to fulfil the responsibilities entrusted to him, but it is also the responsibility of both the central bank and the government to be accommodative and listen to each other.
“In terms of monetary policy, the RBI now has the required autonomy. But on autonomy in other issues such as banking, regulation and so on, the lines are a bit blurred, because both the government and the RBI have interest in these areas,” he told BusinessLine , adding that once the responsibility has been given to the RBI, it must have the required autonomy to fulfil it.
“What is really needed is continuous dialogue between the RBI and the government. The government is the representative of the people, and it has its own views and concerns,” he said.
Rangarajan, who is currently the Chairman of Madras School of Economics, pointed out that there have been instances where central bank governors in other countries have resigned. “The government can neutralise its impact by appointing the next RBI Governor as soon as possible,” he said.
IMF reacts
Meanwhile, the International Monetary Fund said that international experience shows that operational independence is important for a central bank to carry out its responsibilities.
“The RBI plays a vital role in ensuring economic and financial stability, and is an important counterpart and partner for the IMF,” as IMF spokesperson said, in response to a query from BusinessLine.
A former advisor to the government noted that the proposed strengthening of the Central Board of the RBI could, in effect, restrict the Governor’s role.
“Till now, running of the RBI and regulation of the sector have been the Governor’s primary responsibility,” he noted.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.