NEW DELHI: Brushing aside apprehensions that the autonomy of Reserve Bank (RBI) is under threat, Finance Minister Arun Jaitley on Friday maintained that the government respects the independence of the central bank and raising issues do not infringe on the same.
“I cannot conceive how an elected sovereign government bringing to the notice of the RBI the issue of credit and liquidity could infringe its autonomy in any way,” Jaitley said while addressing the annual general meeting of industry body FICCI. “If there is a scarcity of capital in the market, it has to be flagged to the concerned authority,” he added.
“... (its) because we respect the autonomy of the central bank, we tell them (that) these are the problems the market is facing,” he said. The RBI-government row first came to the fray after Economic Affairs Secretary Subhash Chandra Garg wrote a letter to the central bank, threatening to invoke Section 7 of the RBI Act, following a tussle over liquidity and management.
This resulted in RBI Deputy Governor Viral Acharya going for an open reproval and months after, RBI governor Urjit Patel resigning this Monday with immediate effect, citing personal reasons.The fact that Shaktikanta Das, a non-economist bureaucrat and a trusted aide of Prime Minister Narendra Modi, was appointed as the new Governor has also raised eyebrows. Several economists raised concerns over the independence of the central bank, as Das was one of the secretaries who spearheaded the demonetisation drive.
This was followed by series of attacks on RBI — the latest by Union Minister Piyush Goyal who, in a series of tweets, accused the RBI of wielding power without accountability. “It is our duty to hold institutions accountable to the people of India,” Goyal said, “We need to know whether all the people are able to get loans from banks easily, what is the liquidity situation in the country today.”
The tweets further deepened concerns on the RBI’s autonomy, as the government has been putting pressure on it to ease restrictions on lending and release more liquidity into the economy.
HC reprieve for RBI
Mumbai: The Bombay High Court on Friday granted interim stay on the order passed by the Central Information Commission (CIC) directing the RBI to disclose the list of wilful defaulters, which the central bank had not furnished under the Right to Information Act. After the CIC issued a show cause notice to the then RBI governor Urjit Patel, RBI petitioned the Bombay High Court. A division bench also stayed the show cause notice issued on November 2, 2018, by the CIC to RBI governor, PTI reported.