Who compromised RBI autonomy more? UPA II or NDA II? Does it matter?

This blog has earlier posted on how most of economics advisory (should have added journalism as well) has become polarised and politicised. It is all about which political party one is siding with. Any article boils down to are you with the opposition or the ruling party?

One just came across this ET article which says critics of RBI losing autonomy have an axe to grind:

Dr Urjit Patel did not get everything right in this currency swap exercise. The RBI could have been far more nimble-footed and anticipated problems at every turn. But to say that its autonomy has been compromised because it accepted an economic policy decision of the government is the height of irresponsibility.

It would have been fine if the article argued this from an institutional or economic angle. But the author just gets into comparing how RBI autonomy was more compromised under UPA-II:

….Fears about Narendra Modi government running amok over institutional independence of the RBI are nothing but politically motivated assaults rooted in Modi hatred.

….During UPA-II, both Pranab Mukherjee and P Chidambaram frequently harangued the RBI about the importance of cutting interest rates. Inflation is benign, Mr Chidambaram would often say before every monetary policy, in an attempt to nudge the RBI into focusing on rates and not on inflation..

….In 2006, then RBI governor YV Reddy was forced to walk back his statement suggesting a Tobin tax on excessive foreign inflows. Did anybody question whether the government had a right to force the governor into issuing a retraction?


Well, people questioned these decisions back then and are going to question current decisions. I clearly recall how so many articles were written even back then asking the government to let RBI be.

This is perhaps the biggest decision in India’s monetary history and we know how the earlier central bank chiefs opposed  the moves in 1978 and 1946. So all we wish to know is what is RBI’s viewpoint on the matter. If things are so clear why is the government and RBI not disclosing the details?

I am not sure why we need to bring things like government hatred and polarise the debate as it is happening today. It is sad to see a prominent financial newspapers playing a role in this division..

One Response to “Who compromised RBI autonomy more? UPA II or NDA II? Does it matter?”

  1. Nikhil Says:

    They take turns to do what they wish.

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