In any story, there has to be a single protagonist. It follows in reality as well. Somewhere we are imbibed with this sense from the election procedure. One party has to lead and the others have to strive for power. Alliance also teaches us the same concept. One is the hagemonostic party and the other is its subsidiary. And if two dominant parties are into being, so the condition would be as critical as RBI vs Government.
RBI controls money through monetary policy. It has a sophisticated and a wise governor i.e Urjit Patel. It all looks good, but when government interferes in RBIs work, it can lead to a catastrophe.
It is all started from the day when RBI had stated a clear warning over surge in the oil prices and the continuous depreciation in the value of rupee. Consequently, it hiked the repo rate to control inflation in August. And the government kept on saying that there is nothing to worry, oil prices are not in our hands. Their conflicts took a new shape when RBI had refuse to inject excessive money into NBFCs as it has the access to money through normal channels such as OMO, and RBI had conduct the OMO, which is a part of monetary policy. Interfering in this matter, government created a further complications in its relation with RBI. Then ministry took a more vitriolic step by asking for profit from RBI, and RBI has denied to transfer. Former finance minister, P Chidambaram has raised some logical questions in his article i.e, RBI act says that the balance of profit shall be paid to the central government and there is no accepted international norm regarding the optimal size of the reserves, then why government is panicking on 26% of reserves? And government has claimed that its fiscal math is correct, then why does it need money?
There is hardly any government who shared an amiable relationship with RBI, but we have never come across this kind of acridness. Earlier they exchanged subtle barbs, then government subtly provoked governor to take voluntary resignation.
The gist of the conflict is, government want that kind of governor who toe the finance ministry's line, or else he has to take voluntary termination. This dictatorship is a threat to RBIs independence. Today, Governor Urjit patel may resign,
the new Governor would be appointed, but this would be a demon's win and a doomsday for the system.
RBI controls money through monetary policy. It has a sophisticated and a wise governor i.e Urjit Patel. It all looks good, but when government interferes in RBIs work, it can lead to a catastrophe.
It is all started from the day when RBI had stated a clear warning over surge in the oil prices and the continuous depreciation in the value of rupee. Consequently, it hiked the repo rate to control inflation in August. And the government kept on saying that there is nothing to worry, oil prices are not in our hands. Their conflicts took a new shape when RBI had refuse to inject excessive money into NBFCs as it has the access to money through normal channels such as OMO, and RBI had conduct the OMO, which is a part of monetary policy. Interfering in this matter, government created a further complications in its relation with RBI. Then ministry took a more vitriolic step by asking for profit from RBI, and RBI has denied to transfer. Former finance minister, P Chidambaram has raised some logical questions in his article i.e, RBI act says that the balance of profit shall be paid to the central government and there is no accepted international norm regarding the optimal size of the reserves, then why government is panicking on 26% of reserves? And government has claimed that its fiscal math is correct, then why does it need money?
There is hardly any government who shared an amiable relationship with RBI, but we have never come across this kind of acridness. Earlier they exchanged subtle barbs, then government subtly provoked governor to take voluntary resignation.
The gist of the conflict is, government want that kind of governor who toe the finance ministry's line, or else he has to take voluntary termination. This dictatorship is a threat to RBIs independence. Today, Governor Urjit patel may resign,
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