Finance Minister Arun Jaitley denied any rift with the Reserve Bank and attributed the reports about his officials not being on the same page with their Mint Road counterparts as a result of “our national love for conspiracy theories”.
Stating that he has “a good professional relation” with Reserve Bank Governor Raghuram Rajan, Jaitley said, “I think India by and large loves conspiracy theories.”
“I think whether it is North Block or whether it is the Mint Street, these are responsible institutions. There are a lot of people who are level-headed and who work with a sense of propriety because their priorities are clear,” the Minister told media start-up ThePrint, in New Delhi.
Jaitley, however, parried a question on whether Rajan will get a second stint at RBI after he completes the term on September 3, saying “it is not proper to comment on it”.
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In the run-up to the setting up the monetary policy committee (MPC) and the budget, there have been many reports that the North Block wanted to clip the Governor’s wings by taking away his veto power on rate setting. But when the composition of the MPC was finalized, everything was settled with the six-member MPC having equal representation from the government and RBI and the Governor retaining the veto.
To a question whether it is the right time for rate cut by the RBI, Jaitley avoided direct answer but pointed to favourable factors like under-control inflation and the last week’s move to align small savings rates to overall interest rates.
“The RBI is an experienced institution. After all, the RBI has no particular interest in keeping rates high. The RBI would also love to bring them down, provided they are sufficiently cushioned on the fact that inflation is low. The other steps are taken by the government,” he said.