Promise integrity, autonomy of RBI: New guv
“The RBI is a great institution, has a long and rich legacy.”
Das deflected queries on the differences between RBI and the government.
“I wouldn’t go into the issues between RBI and government but every institution has to maintain its autonomy and also adhere to accountability,” Das said. “I don’t know whether the governmentRBI relationship is blocked, but I feel stakeholder consultations have to go on.”
He stressed that inflation targeting was a key role of the central bank and will remain important, adding that maintaining the growth trajectory of the Indian economy was also crucial. The RBI central board meeting will take place on December 14 as scheduled, he said.
Reactions to Das’ appointment were mixed.
Analysts saw it as a signal that RBI would adopt a more dovish stance and open the way for monetary policy easing. Opposition figures predictably read political signals in his appointment, given his strong defence of the November 2016 note ban.
State Bank of India chief Rajnish Kumar saw it as a signal of continuity. “This will ensure continuity in monetary policy making and regulatory measures even as the global economy is passing through uncertain times. The financial markets will also significantly benefit from the appointment of newly appointed governor given his rich prior experience in fiscal policies and trade. This will also ensure a convergence of domestic and external policies,” Kumar said.
In a marked shift in expectations, some analysts and investors are now pencilling in a possible interest rate cut in the first half of next year. None of the analysts polled by Reuters late last month had predicted such a move in the near future, with most forecasting that RBI would hike rates one more time in the second quar- ter next year before taking an extended pause.
“We think his appointment has equally if not more important implications for monetary policy itself. We expect the new MPC to have more dovish leanings and think a window for a rate cut has opened in H1-2019,” Priyanka Kishore, an economist with Oxford Economics, wrote in a note.
Rating company Fitch cautioned that Patel’s resignation highlighted the risks to RBI’S policy priorities. Increased government influence on the central bank could undermine the efforts to address bad loan problems at banks, it said.
“The resignation of the RBI governor... follows a period of government pressure on the central bank to spur economic growth, and highlights risks to the RBI’S policy priorities,” Fitch said in a statement.
The Opposition Congress party was predictably critical. “Shaktikantadas our new RBI Governor... A bureaucrat not an economist... Defended demonetisation. The Pied Piper will play the tune and the RBI will follow. Inevitable outcome will be that RBI’S reserves will be used for government doles. Yet another institution will diminish,” Congress leader Kapil Sibal wrote in a tweet.
Rajya Sabha chairperson M Venkaiah Naidu tried to dissuade the protesting members. “The people of India, in certain states, have overwhelmingly participated in the elections and given verdict. That shows that they have confidence in the democratic system of the country. That being the case, we should respect the people’s sentiments, allow the House to function and take up issues,” he said. But the slogans continued, forcing Naidu to adjourn the House twice.
At a meeting of senior party leaders, the government said it wants to clear three ordinances — on triple talaq, Companies Act amendment and Indian Medical Council amendment — on priority. Lok Sabha officials said speaker Sumitra Mahajan offered to allow a debate every day under Rule 193 (without voting) in the Lower House.
According to senior leaders,the Congress leaders have listed their priority areas for debate: Rafale deal, condition of the economy, unemployment, and agrarian crisis. Trinamool Congress floor leader in the Lok Sabha, Sudip Bandopadhyay, wanted a debate on the breakdown of constitutional bodies such as the Central Bureau of Investigation (CBI) and the Reserve Bank of India (RBI). He also wanted a discussion on India’s federal structure. Meanwhile, Biju Janata Dal (BJD) leader Bhartruhari Mahtab asked for a debate on national calamities. With different Opposition and BJP allies asking for debates on different issues, the fear of prolonged disruptions looms large on the winter session. A senior Opposition leader summed up the situation as, “everything now depends on the Congress if it wants to hold a debate on Rafale without voting provisions.”
The National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities (Amendment) Bill was passed amid slogan shouting by Opposition members in the Rajya Sabha.