Subhash Chandra Garg cites improved financial parameters to take jibe at RBI deputy governor

“Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution; their wiser counterparts who invest in central bank independence will enjoy lower costs of borrowing, the love of international investors, and longer life spans,” Acharya had said.

The Deputy Governor’s comment had generated controversy, hinting at the growing rift between the government and the central bank.

Taking to twitter Friday, Garg took a jibe at Acharya’s comment wondering whether improvements in macroeconomic parameters can be termed as ‘wrath of markets’.

“Rupee trading at less than 73 to a dollar, Brent crude below $73 a barrel, markets up by over 4% during the week and bond yields below 7.8%. Wrath of the markets?,” Garg tweeted.

At the Interbank Foreign Exchange (Forex) market, rupee was trading at 72.50 per US dollar at 1600 hours.

Earlier this week, Finance Ministry had issued a statement saying that the autonomy for the central bank, within the framework of the RBI Act, is an “essential and accepted governance requirement”.

However, it added that “both the government and the central bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy”.

The government, according to sources, has sent at least three letters to the central bank on different issues under Section 7 of the RBI Act that gives it powers to issue any direction to the apex bank governor on matters of public interest. The government had never used Section 7 in the 83-year old history of the Reserve Bank.

The standoff was in relation to RBI’s handling of weak public sector banks, tight liquidity in the market and ways of resolving bad loans in the power sector. Unconfirmed reports claimed Governor Urjit Patel was considering stepping down if the government were to issue an unprecedented direction.

Sources said these letters had prompted Acharya to raise the issue of autonomy of central bank, stressing it was needed to secure greater financial and macroeconomic stability.

Curated For You

Dhurandhar Box Office Collection Worldwide Day 17 Update: Ranveer Singh film earns over Rs 565 cr in India; eyes Rs 900 cr club globally

Bangladesh Protests News Live Updates: Dhaka temporarily suspends visa services in New Delhi

Thar vehicles bought for Rs 7 crore, Rs 5 crore spent on customisation; Odisha govt orders special audit