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Why the 'policy differences' among the top executives in the RBI going on?

Wednesday - June 26, 2019 2:39 pm , Category : BUSINESS
RBI controversy rises after resignation of deputy governor Viral Acharya
RBI controversy rises after resignation of deputy governor Viral Acharya

The Opposition alleges: Modi Government weakens the autonomy of RBI

JUNE 26 (WTN) - Is everything not going well in the Reserve Bank of India? We are saying that, because the resignation of the deputy governor of the Reserve Bank of India, Viral Acharya, has raised these 'apprehensiveness' that everything is not going well in the RBI these days. For your information, let you know that Viral Acharya has resigned from his post, citing 'private' reasons, about six months before the completion of his term. In fact, for the second time within 7 months, a top official of the Reserve Bank has resigned. Earlier, in December 2018, immediate RBI governor Urjit Patel also resigned from his post. For your information, let you know that Viral Acharya was considered as part of 'team' of Urjit Patel.

After Urjit Patel, Viral Acharya's resignation clearly shows that everything is not 'right' among the top officials of the Reserve Bank these days. It is being said that there are some ‘policy differences’ between the RBI Governor and some RBI officials due to the Modi Government's policies. According to the information, during the review of the monetary policy over the last two occasions, the opinion of Viral Acharya was ‘different’ with RBI Governor's opinion on the economic development and the inflation.

In fact, after the resignation of Urjit Patel, Modi Government selected Shaktikanta Das the Governor of the RBI. It is said that Das is ‘very close’ of Prime Minister Modi and at the time of the demonetization, he had supported Modi Government. At the time of appointment of Shaktikanta Das, the Congress had raised questions on his 'merit'. The Congress had said that instead of selecting an economist as RBI Governor, Modi Government selected a bureaucrat as RBI Governor, and this way the Modi Government is ‘weakening’ the autonomy of the Institute (RBI). The Congress alleged that Prime Minister Modi selected Das as the Governor of RBI, because Das had supported the Modi Government at the time of the demonetization.

But amid all the ‘protests’ Prime Minister Modi had declared 'consent' in the name of Das. The Opposition alleges that Shaktikanta Das, as the RBI Governor, is 'ignoring' the Government's ‘interference’ in the autonomy of the RBI. The Opposition alleges that Shaktikanta Das is implementing the 'agenda' of the Modi Government as RBI Governor.

On the resignation of Deputy Governor Acharya, it is being said that in the recent monetary policy meeting, there was no consistence between RBI Governor Shaktikanta Das and Deputy Governor Viral Acharya on the fiscal deficit. According to the information received from the media, before the announcement of new interest rates in the beginning of April this year, in the monetary policy review meeting of the RBI, 'differences' ware seen between Shaktikanta Das and Viral Acharya. As it is said, Shaktikanta Das was in favor of cutting the repo rate for the country's economic development, but Viral Acharya had admonished the banks for being 'careful' about it. At the end of the meeting, six members of the committee decided to cut the repo rate with a majority of 4-2.

That is, it is clear that there was no proper consonance between RBI Governor Shaktikanta Das and Deputy Governor Viral Acharya. Earlier, when Urjit Patel resigned from the RBI Governor's post, it was said that he was not able to ‘reconcile’ with Government properly, and for this reason, Patel had resigned from his post referring to personal reasons.

This 'fear' was already being existed that the 'tension' between the Government and the RBI is constantly increasing. Amid the reports of the Government's alleged interference, the RBI's Deputy Governor, Viral Acharya had also given 'warning' about such interference of the Government. Viral Acharya had said last year, “The Governments, which do not respect the autonomy of the central bank, soon have to suffer the consequences in the financial markets sooner or later.” After this statement of Acharya, the dispute of autonomy between the Government and the RBI came in the news.

After the resignation of Urjit Patel and now Viral Acharya, Modi Government is on the ‘target’ of the Opposition. Let you know that Opposition alleges that the BJP-led NDA Government is ‘weakening’ the autonomy of institutions. Apart from Patel and Acharya, many other economists have also resigned from their posts for different reasons. The Chief Economic Advisor (CEA) of the Government, Arvind Subramanian, resigned from his post in June last year, citing family reasons, even after that the Opposition had targeted the Government on Subramanian’s resignation.

That is, it is clear that the alleged fight of autonomy between the Modi Government and the RBI has now come to the edge of the resignations. Opposition has alleged that the Modi Government is ‘weakening’ the autonomy of the institutions, while the Modi Government says that it has no such 'intention'. After the resignations of Urjit Patel and Viral Acharya, questions are being raised on the Modi Government that what is the reason behind the fact that the senior officials of the RBI are resigning and angry with the Government's alleged interference. It has to be seen now that what the Modi Government says in its ‘cleanliness’ amid these allegations?