In­dia's Govt on back­foot over cur­tail­ing RBI chief’s power

The Pak Banker - - FRONT PAGE -

Go­ing on the back­foot over a draft Bill propos­ing cur­tail­ing pow­ers of RBI Gover­nor on in­ter­est rate, the In­dian gov­ern­ment on Mon­day said it is not right to con­clude that it wants to cur­tail the cen­tral bank's pow­ers.

At a hur­riedly called press brief­ing, Fi­nance Sec­re­tary Ra­jiv Mehrishi was at pains to ex­plain whose draft pro­posal was it to with­draw RBI Gover­nor's veto in the pro­posed mon­e­tary pol­icy com­mit­tee as he con­tra­dicted Chief Eco­nomic Ad­vi­sor (CEA) to say it was not a pro­posal of FSLRC but went on to add that it was not even a gov­ern­ment move.

"Peo­ple of In­dia own this draft re­port," he said, while seek­ing to put at rest the con­tro­versy gen­er­ated by re­vised draft of the In­dian Fi­nan­cial Code (IFC) that pro­poses to take away the veto power of RBI Gover­nor in de­cid­ing the bench­mark in­ter­est rate.

Ob­serv­ing that the gov­ern­ment has not made up its mind on draft IFC, he said the gov­ern­ment is seek­ing com­ments on it which in­di­cates that it is still un­der dis­cus­sion.

"This is still to be con­sid­ered by the gov­ern­ment as a dis­cus­sion pa­per. So from that, to jump to a con­clu­sion that some cur­tail­ment of the power of the RBI has been made or the gov­ern­ment has de­cided to do so would be in­cor­rect," he added.

He fur­ther said that the gov­ern­ment's views on the IFC will be re­vealed when the draft bill is brought be­fore Par­lia­ment for con­sid­er­a­tion and ap­proval.

"Gov­ern­ment's fi­nal mind will be re­vealed on the draft Bill which comes out be­fore Par­lia­ment. This clar­i­fies that there is no de­ci­sion in gov­ern­ment as of now," Mehrishi said.

Chief Eco­nomic Ad­vi­sor Arvind Subra­ma­nian had ear­lier said that the re­vised IFC draft was based on FSLRC re­port, a po­si­tion which was con­tra­dicted by FSLRC mem­ber M Govinda Rao.

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