The finance ministry, in a statement, said, "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."
The statement further stated that, "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."
Tensions between the RBI and the government have spilled into the public domain after deputy governor Viral Acharya said last week that undermining central bank independence could be “potentially catastrophic”, indicating the authority is pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May.
RBI vs government: 10 flash points between Centre and central bank
What is unusual about the current standoff is the number of issues it has spilt over to and the length of time it has gone on for. Interest rate, the perpetual point of sparrings, has been overtaken by several other turf wars. Among other issues are dividend payment, February 12 restructuring, regulation of public sector banks, reserves, board appointments etc.
Adding to the row, finance minister Arun Jaitley blamed the central bank for failing to stop a lending spree during 2008-2014 that left banks with $150 billion of bad debt.
Tensions between Patel-led RBI, government reach boiling point
In New Delhi and Mumbai's corridors of power and wealth, the growing schism between the government and the RBI, and particularly its governor Urjit Patel, has been the subject of much talk since the early months of this year. During this time, there has been an almost complete breakdown in communication between the government and the central bank.
from Times of India https://ift.tt/2Q6qTRD
