India: RBI governor should work with the government or quit, says head of RSS economic wing

  • The governor of India’s central bank should work in sync with the nation’s government to support economic growth or he should resign, said the head of the economic wing of the Rashtriya Swayamsevak Sangh (RSS) that is the fountainhead of BJP.
  • Reserve Bank of India (RBI) Governor Urjit Patel should also “restrain his officials from making differences public,” said RSS Ashwani Mahajan in an interview on 31 Oct 18. “If he doesn’t follow discipline it would be better for him to resign,” he added.
  • Mahajan is chief of the RSS’s Swadeshi Jagran Manch (SJM) economic group. Earlier in the day, some local TV channels reported that Patel could consider resigning from his post given a breakdown in relations with the government, sparking a sell-off in the rupee and bonds.
  • Government officials on 31 Oct 18 declined to say whether it had for the first time ever used, or threatened to use, powers under the RBI Act that allow it to give the bank instructions. The Economic Times reported the government had sent letters to Patel in recent weeks exercising those powers.
  • Mahajan said that the government had every right to use the powers of the RBI act. RSS’s Manch is critical of the central bank’s hawkish monetary stance, and has criticised the influence in recent years of foreign trained economists including former RBI governor Raghuram Rajan and former chief economic adviser at the finance ministry, Arvind Subramanian.
  • While opposing the appointment of any foreign trained economists at the central bank, he said there was no dearth of “talented persons” with nationalist vision on the RBI board, one of whom could replace Patel if he resigned.
  • The Manch chief also said the RBI should agree to allow the government to take much of its surplus of cash reserves, estimated at nearly INR3.6tr, so that they could be invested, bolstering economic growth.
  • Earlier, a senior finance ministry official said that the government would like the central bank to pay the government a higher dividend considering the size of the reserves.

External Link: