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COLUMN BANKING

Urjit Patel’s resignation to the Prime Minister(EAC-PM). nance Minister made it clear “We don’t

need any extra funds from any other
Earlier, Niti Aayog Vice-Chair-
embarrasses goverment man Arvind Panagariya and institution to finance our fiscal deficit.
Let’s be very clear that’s not the inten-
Chief Economic Adviser Arvind
tion of the government. And we are
Subramanian had resigned.
not saying that in the next six months
Roots of discord
give me some money”. He, however,
HEART OF THE The development comes on the heels of an escalating tussle The simmering discontent said that surplus funds could be used
between the central bank and Union government over autonomy
MATTER and independence of the RBI and its governor between RBI and government for poverty alleviation programmes
could be seen in the speech
by future governments over the next
CHARANJIT AHUJA of Dr. Viral V Acharya, Deputy several years. The RBI is reported to
Governor of RBI during his
be holding a massive 9.59 lakh crore
he Tehelka Editorial “RBI- Governor of the Central Bank. A former AD Shroff Lecture in Mumbai of reserves. He also added that “The
Recipient of prestigious Government row: Centre economic affairs secretary from 2015 on October 26, 2018. He had government’s viewpoint is that we re-
National Award tells who is the boss?”, anal- to 2017, Das worked closely with the cautioned “Using central bank spect and we will always maintain the
in Developmental yses “RBI-Central Govern- central bank. He is currently a member reserves to pay government autonomy within the framework of
Journalism. Author of ment on a collision course” of the Finance Commission of India, and obligations is not a positive the laws which have been laid down.”
Print Journalism, among T and “Tiff, mistrust grow the government’s representative at the development and the concept Subhash Chandra Garg, Secretary of
the hot selling books over RBI’s surplus reserves” , all clearly Group of 20 summits. of excess reserves is certainly the Department of Economic Affairs,
on Amazon. Previously hinted that all was not well between the Coming back to Patel’s resignation, open to debate. It weakens the tweeted: “A lot of misinformed specu-
worked with Indian government and the Central Bank. Now it is a serious embarrassment to the balance sheet of the central lation is going around. The govern-
Express Group. Current as expected, in a major embarrassment government. Tweets from the prime bank.” He had reasoned the ment’s fiscal math is completely on
Status: Editor for the government, the RBI Governor minister, Narendra Modi, and the risks of undermining the track. There is no proposal to ask RBI to
Urjit Patel, who had been handpicked Finance Minister, Arun Jaitley have ex- central bank’s independence transfer 3.6 or 1 lakh crore, as specu-
for the job has put in a snap resignation. tolled Patel and praised him for his work. as potentially catastrophic, lated.” The clarification came amidst
The honeymoon has not lasted long. It is an attempt to show that the later did a “self-goal” of sorts, as it can report that the government is seeking
The development is stunning, sudden indeed resign only for personal reasons. trigger a crisis of confidence in transfer of at least a third of Reserve
and shocking. Though Patel has cited However, these laurels appeared largely capital markets that are tapped Bank’s 9.6 lakh crore reserves.
‘personal reasons’ for stepping down, unconvincing. by governments to run their
if you read between the lines you Prime Minister Narendra Modi said, finances”. All eyes on new Governor
would know that this development “Urjit Patel is an economist of a very high Four days later, the Finance In the meanwhile, speculation about
was anything but the ‘personal reasons’. caliber with a deep and insightful under- Minister, Arun Jaitley during the timing of Dr. Patel’s decision con-
This comes on the heels of an escalat- standing of macro-economic issues. He an event hosted by US-India tinues. He resigned on December 10,
ing tussle between the central bank and steered the banking system from chaos Strategic and Partnership 2018, a day before results to five assem-
Union government over autonomy to order and ensured discipline. Under Forum (USISPF)accused the bly elections were to be announced
and independence of the RBI and RBI his leadership, the RBI brought financial RBI of sleeping on the job to and a few days prior a meeting of RBI
Governor. It also comes ahead of the stability”. check indiscriminate lending Board slated for December 19. There
crucial board meeting, where the Finance Minister Arun Jaitley wrote: by public sector banks between are questions whether the govern-
government was likely to demand more “The government acknowledges with a 2008 and 2014. ment is trying to silence dissent and
concessions from the RBI. For the record, deep sense of appreciation the services For quite some time, reports whether the resignation is a bold state-
Though the Kenya born Patel’s three-year term as rendered by Dr Urjit Patel to this country have been circulating in the ment to protect the RBI’s autonomy?
govt has been RBI Governor was to end in Septem- both in his capacity as the Governor and public space that the Govern- would be to tell the world that it stands
The priority for the government
ment was planning to invoke
ber 2019. With his resignation, he has
Deputy Governor of the RBI”.
quick to appoint become the first Governor in the post- Former RBI governor Raghuram Section 7 of the Reserve Bank for the autonomy of the institutions
Shaktikanta Das as liberalization era to quit before the end Rajan observed that through his resigna- of India Act to ask the central and it does not treat the RBI as just
another government department.
tion “Dr Patel has made a statement and
of his term and fourth in the history of
bank to hand over a part of its
the new governor the RBI. The previous resignation came this is the ultimate statement a regulator dened, not surprised, by Dr Urjit Patel’s surplus reserves to put that to more In the meanwhile, speculation
of RBI, damage in the year 1975. or a civil servant can make. We should resignation. No self-respecting scholar or productive use. The matter is pend- about the timing of Dr Patel’s decision
continues. Questions remain whether
academic can work in this government”.
go into the details as to why there was
ing before the Board of the RBI and is
seems to have New Governor appointed an impasse, which forced this ultimate Patel’s resignation is bound to raise likely to be taken up again at its next the resignation is a bold statement to
been done already Though the Government has been quick decision... this is something all Indians questions about the Centre’s ability to work meeting likely on November 19. Will protect the RBI’s autonomy? All eyes
should be concerned about because
the scheduled meeting now be held or
to appoint Shaktikanta Das as the new
with independent-minded economists. A
are now on the new Governor, Shakti-
to govt’s ability to Governor of RBI, damage seems to have the strength of our institutions is really day after Patel’s resignation, noted econo- not in view of the sudden resignation kanta Das.
mist Surjit Bhalla resigned as a part-time
important”. P Chidambaram, former
been done already to government’s
of RBI Governor is a big question?
respect talent ability to respect talent. Das is the 25th Finance Minister commented “Sad- member of the Economic Advisory Council To put the record straight, the Fi- LETTERS@TEHELKA.COM
TEHELKA / 31 DECEMBER 2018 22 WWW.TEHELKA.COM TEHELKA / 31 DECEMBER 2018 23 WWW.TEHELKA.COM
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