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FM always superior to RBI governor, insisted Manmohan in 2014 book

The Congress’s attack on the Modi government over the ‘tussle’ with the Reserve Bank of India is ironical, to say the least.

When it was in the government, the Congress had no issues pressuring the RBI into doing its bidding, but now that it is in the opposition, it is finding fault with the Modi government.

Here’s why the irony is quite stark:

Congress president Rahul Gandhi has accused the government of trying to ‘demolish’ the RBI and termed the Centre’s demand for Rs 3.6 lakh crore from the central bank  as ‘the great Indian robbery’. Yet another Congress leader, Anand Sharma, expressed surprise at Finance Minister Arun Jaitley’s ‘sharp attack’ on the RBI, saying ‘only the RBI must have the powers to regulate banks and none else.’

Jaitley had criticised the RBI for not being able to control indiscriminate lending during 2008 and 2014 and this he said was the cause of the NPA crisis that has shaken up Indian banks.

Sharma also accused Prime Minister Modi and Jaitley of interfering with the RBI’s functioning and said Modi wanted to control the monetary policy. ‘The role of the RBI as the payment regulator cannot be diluted or taken away by a government-nominated body,’ Sharma said, calling Modi and Jaitley ‘incompetent’.

However, the Times of India reports that in a book, Strictly Personal: Manmohan and Gursharan, written by Manmohan Singh’s daughter Daman Singh in 2014, the former prime minister is quoted as saying that the relationship between the RBI and the government is one of give and take, but “the governor of the Reserve Bank is not superior to the finance minister. And if the finance minister insists, I don’t see that the governor can refuse, unless he is willing to give up his job”.

Manmohan Singh’s view gains significance in light of the friction between the Modi government and RBI Governor Urjit Patel over the autonomy of the RBI.

The book goes on to list a few more examples, quoting Manmohan Singh, where the government and the RBI were at loggerheads and the government’s views prevailed over that of the central bank’s.

As Dr Singh leads the Congress’s attack on the Modi government on the second anniversary of demonetization, calling it a ‘black day’, his silence over his own view that the finance minister is always superior to the RBI chief is quite jarring.