New Delhi: Congress president Rahul Gandhi said Monday it is nice to see RBI Governor Urjit Patel “finally defending” the central bank from Prime Minister Narendra Modi and noted that the country will never allow the BJP-RSS combine to “capture” institutions.
He said it was not too late for the RBI governor to stand in defence of the Reserve Bank of India, after reports said there was a rift between Patel And ‘Team Modi’. “Nice that Mr Patel is finally defending the RBI from ‘Mr 56’. Better late then never (sic). India will never allow the BJP/ RSS to capture our institutions,” Gandhi said on Twitter. Former finance minister and Congress leader P Chidambaram said there must have been some grave reason why RBI Deputy Governor Viral Acharya pitched for “effective independence” of the bank and, in the footnote, said he is grateful to Patel for encouraging him to explore the subject.
“So I think the matter is serious enough and it’ll be best if the RBI and the government don’t talk across each other through lectures, we’ve had two already,” he said. Chidambaram said it would be better if the time-honoured practice of the finance minister and the governor of the RBI meet in private and discuss issues. “We have done that in the past and it has worked well, why are people delivering lectures across each other I don’t know,” he said when asked about the controversy.
As per reports, the long-simmering discord between the central bank and the government is turning into a very public brawl. Acharya in a hard-hitting speech Friday on central bank’s independence startled his audience by invoking Argentina of 2010. Acharya had said governments that do not respect central bank’s independence would sooner or later incur the “wrath of financial markets, ignite economic fire and come to rue the day they undermined an important regulatory institution”.
Amid instances of apparent differences between the government and the RBI, Acharya emphasised that undermining a central bank’s independence is akin to committing a “self goal” for any government. Delivering the A D Shroff Memorial Lecture, he said, “What matters is the effective independence with which these powers (vested in the Acts governing the RBI or any central bank) can be exercised in practice.”