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Who's the boss?

It's ironical that every time a crucial quarterly meet is due, huge pressure is exerted upon the RBI from different quarters

Business Standard 

With reference to by “Ahead of RBI policy, govt building case for rate cut to revive economy” (September 24), the Centre should let the Reserve Bank of India’s (RBI) (MPC), which includes three government-nominated members, take the final call to decide this key issue. Where is the case for any government intervention through some “proxy” route in this manner? It’s ironical that every time such a crucial quarterly meet is due, huge pressure is exerted upon the RBI from different quarters. The government also goes ahead by making pre-empted statements in the media, letting known its “expectations” from the RBI. However, it all depends on the final “response” of the RBI governor, who heads this

The present incumbent, Urjit Patel, may not be filling the shoes of his predecessor Raghuram Rajan, who went by his own perception of the prevailing economic scenario vis-à-vis the most likely situation that may be emerging on inflation. It’s a different matter that Rajan had to pay a very heavy price for his stubbornness. So, it may be naive to expect the same “attitude” from Patel who may announce the rate cut (as wished by the government) at the ensuing meet next month. And all this may happen despite worrisome inflationary tendencies already setting in at both the wholesale and retail levels (courtesy the goods and services tax and the state-managed fuel price hike) which could always tinker with the RBI’s stated objectives of inflation targeting. The moot question remains: Who is the real boss?

Vinayak G   Bengaluru

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First Published: Mon, September 25 2017. 22:33 IST