Recipe to resolve RBI row
Amid the debate surrounding Reserve Bank’s autonomy and the government’s alleged intervention in its functioning, former RBI deputy governor R. Gandhi believes it is just a difference of opinion.
He also termed the entire discussions around invoking Section 7 of the RBI Act as unfortunate.
Gandhi, who was the deputy governor of the central bank between 2014 and 2017, said there was nothing new in such a debate. Section 7 of the RBI Act gives special powers to the government to issue directions to the RBI governor on issues of public interest.
The former deputy governor said: “Such a situation will not arise if the government and RBI engage in talks at regular intervals. The ongoing debate is an indication that there have been some problems in this process. If there are talks, all issues will be resolved”.
On the transfer of surplus reserves to the exchequer, Gandhi observed that the central bank, after completing its annual audit, gives due share to the government.
The RBI has massive Rs 9.59-lakh-crore reserves and the government, if reports are to be believed, wants the central bank to part with a third of that fund — an issue which along with the easing of norms for weak banks and raising liquidity has brought the two at loggerheads in recent weeks.
“Governments look at many issues with a short-sighted vision whereas the RBI has to take into account the mid- and long-term picture. Therefore, disagreements may arise. Difference of opinion is a sign of healthy environment. Decision on contentious issues is always good, if taken after intense debate and discussions,” he said.