RBI’s autonomy


Despite the protestations of the Finance Minister to the contrary, one cannot but observe a significant erosion in recent times in the autonomy of the Reserve Bank of India (RBI) (Front page, “Questions on RBI’s credibility outlandish, says Nirmala,” Aug. 23). Two Governors have had to leave the office before the completion of their terms on finding that their views were not to the liking of the mandarins in the Finance Ministry. Among the reasons cited for Urijit Patel’s departure was the government’s expressed desire for transfer of a major part of the reserves of RBI. It is not uncommon to find tensions and dissonance of views between the central bank of a country and those in charge of fiscal policy. However, in normal circumstances, these are resolved and not allowed to spill out in the public.

M.P. Muralidharan,


The Bharatiya Janata Party (BJP) government may have failed to bring back black money from Switzerland but it has succeeded in appropriating a portion of the Reserve Bank of India’s hard-earned profits accumulated over seven decades. While the P.V. Narasimha Rao government, despite not having clear majority, could save the country during an economic crisis with the support of Manmohan Singh and other economists, the present Narendra Modi government, despite having a clear majority, is taking the country towards a crisis. All right-thinking intellectuals of the country need to condemn the government’s move to take RBI’s money.

Kshirasagara Balaji Rao,


It is hard to believe that the RBI deferred to the Central government to the extent of almost emptying its coffers on its own without any prodding from the beneficiary of its bonanza. It is all too evident that the central bank has become less autonomous and more pliant. The government was eyeing the RBI cash for a long time and it did as a first resort what it should have done as a last resort — taking what was saved by the RBI over the years for a ‘rainy day’. ‘Exhaust all sources of money’ seems to be the principle followed by the Modi government. That the government has had to tap RBI’s reserves is an admission that all is not right with the economy. It would be a grossly exaggerated claim to say that RBI’s surplus cash transfer will reverse the slowdown in economic growth and trigger robust economic growth. At best it might ease some of the fiscal pressure of the government’s own making. Rahul Gandhi’s analogy that the transfer of ₹1.76 lakh crore surplus from the RBI to the central government is like ‘stealing a Band-Aid from a dispensary and sticking it on a gunshot wound’ is striking and is not completely without substance. The payout of ₹1.76 trillion will make it that much more difficult for us to ensure financial stability in the event of a global economic crisis and an intensification of trade wars. The government is sure to use a portion of the bonanza to meet the shortfalls in revenue collections and recapitalise banks and it has to make a judicious use of the balance if it is to succeed in justifying the receipt of the windfall. We are okay with the cash transfer if it brings tangible benefits to the country’s impoverished multitudes.

G. David Milton,

Maruthancode, Tamil Nadu


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Printable version | Dec 3, 2020 1:34:26 AM | https://www.thehindu.com/opinion/letters/rbis-autonomy/article29281724.ece

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