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Govt Provides Clarification On The Rift With RBI

Olga Robert

Ever since the Reserve Bank of India's Deputy Governor Viral Acharya gave his strongly-worded speech on 26 October, there have been various speculations on tensions between the central bank and the government, especially in terms of its autonomy. Media reports also suggest that government may have revoked Section 7 of the RBI Act for the first time ever and Governor Urjit Patel could resign. Earlier today, the rupee crossed the 74-mark, as the tension escalated.

To provide clarification on the ongoing events, the finance ministry released a statement this afternoon, stating that the government has "nurtured and respected" the autonomy of the central bank.

The statement said, "The autonomy for the Central Bank, within the framework of the RBI Act, is an essential and accepted governance requirement. Governments in India have nurtured and respected this. Both the Government and the Central Bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy. For the purpose, extensive consultations on several issues take place between the Government and the RBI from time to time. This is equally true of all other regulators. Government of India has never made public the subject matter of those consultations. Only the final decisions taken are communicated. The Government, through these consultations, places its assessment on issues and suggests possible solutions. The Government will continue to do so."

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