January 14, 2017
New Delhi: Moving to counter criticism over infringement of the autonomy of the Reserve Bank of India (RBI), the government on Saturday said it fully respects the independence and autonomy of the central bank.
January 14, 2017
New Delhi: Moving to counter criticism over infringement of the autonomy of the Reserve Bank of India (RBI), the government on Saturday said it fully respects the independence and autonomy of the central bank.
The finance ministry statement claims that the alleged interventions in RBI's functions are in fact 'consultations on matters of public importance '.
The government’s statement come after RBI’s employee union wrote to central bank governor Urjit Patel objecting to finance ministry’s move to send a joint secretary to coordinate cash operations at RBI.
The union, in its letter, termed the move unfortunate and said it impinged on RBI’s autonomy and its statutory as well as operational jurisdiction, Mint reported on Saturday. It also said the finance ministry has imposed itself on RBI, which was not acceptable.
The statement comes at a time when two former RBI governors—Y.V. Reddy and Bimal Jalan—openly raised concerns over erosion of the central bank’s autonomy.
“There has been a report in sections of the Press that some unions have alleged infringement of the autonomy of the Reserve Bank of India. It is categorically stated that the Government fully respects the independence and autonomy of the Reserve Bank of India,” the finance ministry said in a statement on Saturday.
“Consultations between the Government and the RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,” the statement said.
RBI and the government have come under a lot of criticism for their handling of the entire demonetization exercise with many policy flip flops in the 50-day period. Questions have also been raised at the fact that the government initiated the process of demonetization by suggesting to the RBI board on 7 November to invalidate high value currency.
The board met on the evening of 8 November and gave its nod following which Prime Minister Narendra Modi announced the cancellation of the legal tender of the old Rs500 and Rs1,000 notes in an address to the nation later that evening. This led to many expressing concern that the government’s move dilutes one of central bank’s core function of issuance of currency.
Courtesy: LiveMint
