New Delhi: The Reserve Bank and the Finance Ministry need to work in harmony, former Prime Minister Manmohan Singh said today against the backdrop of reports about differences between the two institutions. “I would like the two institutions to work in harmony,” said Singh, who had served as RBI governor and then as Finance Minister before becoming Prime Minister. “RBI is a great institution … Finance Minister (Arun Jaitley) has already said that there is no disconnect between the two,” Singh told reporters on the sidelines of an award function here.
“I had been a Governor of RBI as well as a Finance Minister,” he said. There have been reports about differences between RBI and Finance Ministry over the structure of a new agency that was to manage public debt, among other issues, including setting of policy rates. In his first full-year Budget in February, Jaitley had proposed to set up Public Debt Management Agency and shift the regulation of government bonds from RBI to market regulator Securities and Exchange Board of India (SEBI).
The proposal generated a lot of controversy, with the RBI raising concerns and questioning the timing of the move. However, the government has now deferred the PDMA plan and dropped the proposal from the Finance Bill, 2015, passed by Parliament this week.