New RBI Governor: ‘Govt runs country, economy… need to have free, fair discussions with it’
THE INDIAN EXPRESS
DECEMBER 13, 2018
GEORGE MATHEW
The new Governor of RBI, former bureaucrat Shaktikanta Das said here on Wednesday that he would do everything possible to uphold the autonomy, credibility and integrity of RBI as a “great institution” and take all stakeholders, including the government, along through a consultative process.
On maintaining the RBI’s autonomy, Das said, “I will ensure that it is intact. The RBI is a great institution… has a long and rich legacy.” He was speaking to reporters after taking over as the 25th Governor.
“I wouldn’t go into the issues between the RBI and government but every institution has to maintain its autonomy and also adhere to accountability,” he said.
Das indicated that he would take the government into confidence while formulating policies. “The government is not just a stakeholder… the government of the day runs the economy and the country,” he said, adding there is a need for free and fair discussions with the government to resolve contentious issues.
Das walks tightrope between RBI, Govt
IN his first remarks, the new Governor has, clearly, tried to dial down the tension between the RBI and the Government. Aware that any signal on ceding space could rattle the markets, he has been careful in walking the tightrope. His remark that the Government runs the country and wasn’t merely a stakeholder is an echo of what many in the Government have been saying, in private, during the face off with Raghuram Rajan and Urjit Patel.
“Every institution must maintain its professional integrity and autonomy, at the same time every institution must adhere to principles of accountability,” he said when asked about the friction between RBI and the government. Das also acknowledged the contribution of his predecessor, Urjit Patel.
Das, who was the pointsman for the government during demonetisation in November 2016, hit the ground running although he did not announce any measures on Day One. He has called a meeting of chief executives of public sector banks on Thursday to understand the issues dogging the banking sector. “The banking sector faced a lot of challenges. The RBI and the government have taken many measures and many more measures needed to be taken,” he said.
The meeting of the Central Board of the RBI will also be held as scheduled on December 14, he said, without elaborating on the contentious issues likely to come up before the board. On the Prompt Corrective Action framework, one of these issues, Das said there is no fixed agenda. This has been a point of friction between the Central government and the institution over the last few months. General consultation on the issue is underway, he said.
Regarding the liquidity crunch in the non-banking financial companies (NBFC) sector, Das said that all challenges that fall within the domain of the RBI will be addressed.
Das, who retired as Secretary of the Department of Economic Affairs, had served in various capacities in the Finance Ministry, including as Secretary in the Revenue department and as a key official in the Budget division. After his retirement on May 28, 2017, he was appointed as a member of the 15th Finance Commission and as the G20 Sherpa.
On December 10, Urjit Patel resigned as the Governor after a face-off between the government and the RBI on a number of issues relating to the central bank’s autonomy and policies in the last two months.
Asked about this face-off, Das said, “I don’t know whether the government-RBI relationship is blocked but I feel stakeholder consultations have to go on.”
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