New Delhi, Attacking the Narendra Modi government over its differences with RBI Governor Urjit Patel who resigned on Monday midway through his term, former Union Finance Minister P. Chidambaram on Thursday said the Modi government thinks it owns the RBI.
He also hoped that the new Governor, Shaktikanta Das, although a vocal supporter of the much-debated demonetisation, would stand up for the central bank’s autonomy.
“This government thinks it owns the Reserve Bank of India (RBI). This government thinks the RBI is another department of the government. This government thinks if CBI is listening to them, why is RBI not listening?” Chidambaram said at an event here.
“This government simply does not understand what a central bank’s independence is,” he added.
The former Finance Minister slammed the government for its eagerness to get hold of the central bank’s reserves, which apparently became the bone of contention between the government and Urjit Patel and ultimately led to his resignation.
“This government is like ‘I have one hoard of cash, so much cash lying there. I can’t meet my fiscal deficit this year, my GST revenues are less than expected, I have not provided for the food subsidy, I have not provided for Ayushman Bharat programme, and I need money in my election year. What do I do? There is this pot of gold. Now I want to reach that pot of gold’. That’s the only aim of this government,” he said.
Stressing that RBI’s independence is crucial, he said it “worries” him that the government has appointed a perceived “yes man” as the central bank’s boss.
“It worries me that they (government) have appointed two persons to two key posts, both of whom were vocal supporters of demonetisation. It worries me,” he said.
However, he “hopes” that the new RBI Governor would not buckle under pressure from the government and would keep the central bank’s autonomy intact.
“I sincerely hope, and I would appeal to Mr. Shaktikanta Das, that you (Das) are now the RBI Governor. You are no longer ex-Secretary Economic Affairs, you are the Governor of central bank of India. Therefore, you must stand up for the autonomy and rights of India’s central bank,” he added.
Asked about his differences as then Finance Minister with then RBI Governor D. Subba Rao, Chidmabaram said those were the “usual differences” that Finance Ministers across the world have with their central bank Governors.
He pointed out that Rao never resigned over these differences unlike the case of Urjit Patel who put in his papers on December 10, around 10 months before his three-year tenure could end.
He also said that the RBI suffered a blow to its reputation among the world’s central banks due to demonetisation and has not recovered its image to this day.
“Urjit Patel should have walked out on November 19 itself. He delayed his resignation. Perhaps he gave benefit of doubt to the government and thought perhaps the government would retrace its step. But everything that happened after November 19 proved the government was pressing ahead its agenda,” the senior Congress leader said.
Asked if Patel erred in endorsing demonetisation of Rs 500 and Rs 1,000 currency notes announced by Prime Minister Narendra Modi on November 8, 2016, Chidambaram said: “Of course, he (Patel) was wrong. He should not have called a Board meeting in Delhi, a hurriedly called truncated Board meeting to pass a resolution endorsing demonetisation. He should have stood his ground. He was wrong.”
“He suffered a huge reputational slide by endorsing demonetisation and the RBI suffered reputational damage in the world. I don’t think RBI has recovered its reputation among the central banks of the world after demonetisation,” he added.