Former Reserve Bank of India Governor Raghuram Rajan said on Tuesday that the central banks are like the seat belts in trains, without whom you can become an accident victim. In an interview given to a leading business TV channel, Raghuram Rajan said that the central bank should be secured as a national institution.
Rajan said that in the past, the dispute between the Finance Ministry and the RBI should not go further. He said, "Once you have appointed someone as governor or deputy governor, you have to listen to him." Rajan believes that the struggle between the Government of India and the Reserve Bank can be tackled only when both of them respect each other's motivation and autonomy.
Rajan said that as far as possible, keeping the autonomy of the Reserve Bank is in the interest of the country and doing so has been the tradition of the country. Significantly, the current Governor Urjit Patel took the command of Reserve Bank in September 2016 by Raghuram Rajan.
The main reason for souring in the relationship between the two is being considered as the main role of the Reserve Bank in financial decisions. According to sources, the central government can work to reduce the role of the Reserve Bank governor in the board while keeping its key agenda in the RBI board meeting on November 19.
In fact, the key reason for the dispute between the central government and the Reserve Bank governor is the amount of 9.6 trillion (9.6 lakh crores) rupees held by the Reserve Bank. The central government claims that such a large amount is not an option for the Reserve Bank to remain in the Reserve Bank. According to the government, the argument to keep such a big reserve is completely wrong in the current situation.
Where the government wants to accelerate business by transferring one-third of the money from the treasury and transferring new energy to government banks in the country, the central bank is accepting this proposal as an attack on its autonomy.