No confrontation between government & RBI, only difference in views: Arun Jaitley : 14-12-2018

Finance Minister Arun Jaitley Thursday brushed aside suggestions of any ‘confrontation’ with the Reserve Bank of India, saying instead that North Block and Mint Street have only different views on some aspects of the broader money management.

“Having an opinion (that is) different is not confrontation,” Jaitley told the audience at Times Network India Economic Conclave through a video conference. “You’ve had several incidents where governments in the past have had a different view from what RBI had, and then those differences have been settled, or the governors have made way.” He was speaking ahead of Friday’s board meet at RBI, where a new governor stepped in Tuesday after his predecessor resigned abruptly

The Centre has apparently sought talks on liquidity and credit flows under the socalled Section 7 of the RBI Act. “RBI has the responsibility as far as credit and liquidity are concerned. We are not taking over this function. Therefore, on all levels, meetings and discussions will be between the bureaucracy at the level of the PM… and using all instruments available with us… to force this issue…. for a discussion,” the minister said.

The use of Section 7 has drawn criticism, with some commentators arguing that New Delhi is seeking to curb the central bank’s autonomy.

“As a sovereign accountable government, we find this problem is real as far as the Indian economy is concerned and, therefore, in order to maintain our place as a high-growth economy, this is a problem the RBI must address. How is it an issue of confrontation?” Jaitley asked.

“If the government of day is not able to convey the difficulties in the system, it would be failing in its responsibility as far as governance is concerned,” he said. Jaitley said that the country’s first premier Jawaharlal Nehru had written to RBI back then that economic policies of the country were determined by the elected government and monetary policy by RBI.

He also cited resignations by RBI governors under past governments, including the exit of Benegal Rama Rau during Nehru’s time.

“PM Nehru asked Rama Rau to resign, Indira Gandhi asked Governor S Jagannathan to resign, FM Yashwant Sinha asked RN Malhotra to resign…. during P Chidambaram’s tenure you had two governors with whom he was not on talking terms,” the minister said.

Source : PTI