I would have resigned if overruled on demonetisation: Reddy

Former RBI Governor says he would be sad if inspector raj results after move

Former Reserve Bank of India (RBI) Governor Y V Reddy has said if he were occupying that position now, he would have advised the government against demonetisation. “If overruled, I would have admitted myself in hospital and resigned after some time,” Reddy said in NDTV’s Walk The Talk programme telecast on Friday evening.

In criticism of RBI following the currency squeeze sparked by cancellation of Rs 500 and Rs 1,000 notes announced on November 8, Reddy said the central bank's identity seems to have been dented and its autonomy diluted. “I am pained that the RBI’s credibility is being questioned by a rating agency like S&P (Standard & Poor's). It's never happened before,” he said.

Pointing out that RBI Governor Urjit Patel has not spoken enough after demonetisation, Reddy said he and his deputies must explain and reassure people as currency is RBI’s domain. “I would have told the government that demonetisation was their call but now RBI has to implement. So let me take charge and explain,” Reddy was quoted as saying in a series of tweets by the show’s anchor and Business Standard columnist, Shekhar Gupta.

 Reddy said many honest and poor people are still backing demonetisation, hoping it will curb corruption and that he will be very sad if an inspector raj results. 

Earlier this week, Reddy had told CNBC-TV 18 that, over the years, RBI’s autonomy had been eroded and that recent criticism by global rating agencies now threatens to compromise the central bank’s hard-earned reputation. Part of the reason for this, he argued, was that RBI has mistakenly been equated with other regulators even while it has fundamentally different functions. His predecessor Bimal Jalan said a day later that the autonomy of RBI was sacrosanct. “The autonomy of the RBI — that is a very fundamental fact and we have to maintain it and I hope the government would give attention to that part also,” said Jalan.