Modi Govt Upset With Urjit Patel Amid RBI-Centre Face Off: Report

Rahul Gandhi in a tweet lauded Patel for “defending RBI” from the government.

2 min read
Modi Govt Upset With Urjit Patel Amid RBI-Centre Face Off: Report

Days after Reserve Bank of India (RBI) Deputy Governor Viral Acharya spoke on the need for the central bank's autonomy, officials from the Narendra Modi government are upset with RBI Governor Urjit Patel amidst growing differences between the central bank and the government, a senior official told news agency, Reuters.

The government is also unhappy with the deputy governor as they fear that the statement publicly made against the government can tarnish the “country's image of among investors”, the official added.

Speaking on terms of anonymity, the government official said that it was an unfortunate incident that the RBI went public to express its displeasure.

The official also told the news agency that the government partially holds Patel responsible for the growing rift, adding that it is very unlikely that his current three-year term – which ends next September – will be extended.

“The government is very upset. It was not expected from the RBI.”
Government Official

Deputy Governor Acharya’s Speech

Deputy Governor Acharya on 26 October had said that if governments “do not respect the central bank's independence”, the economy would sooner or later “incur the wrath of financial markets”.

Amid instances of growing differences between the government and the RBI, Acharya emphasised that undermining a central bank's independence is akin to committing a "self goal" for any government.

Refering to the lapse of the South American economy, Acharya cited an Argentinian incident where government interference in banking policies had disastrous repercussions.

Following his comments, RBI Employees Association on 30 October came out in Archarya's support by stating that "undermining the country's central bank is a recipe for disaster", IANS reported.

“We firmly hold that undermining the country’s central bank is a recipe for disaster and the government must desist,” the report said.

Better Late Than Never: Rahul Gandhi

Following the news, Congress President Rahul Gandhi in a tweet lauded Patel for ‘defending RBI’ from the government.

Colloquially referring to Modi as “Mr 56”, Gandhi said, “nice that Mr Patel is finally defending the #RBI from Mr 56. Better late then never. India will never allow the BJP/ RSS to capture our institutions.”

Meanwhile, former Finance Minister P Chidambaram said there must have been some grave reason why RBI Deputy Governor Viral Acharya pitched for "effective independence" of the bank and, in the footnote, said he is grateful to Patel for encouraging him to explore the subject, PTI reported.

“So I think the matter is serious enough and it’ll be best if the RBI and the government don’t talk across each other through lectures; we’ve had two already.”
P Chidambaram

(With inputs from Reuters, PTI and IANS)

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