Outgoing RBI Gov Rajan argues for independent central bank

Explaining the ups and downs in terms of macro-challenges, policy choices and managing fiscal and monetary flanks of the stabilization policy, outgoing Reserve Bank of India (RBI) Governor Raghuram Rajan today argued for independent central bank for the country's macroeconomic stability.

Addressing the students of St. Stephens College, Rajan explained the eco rationale of why the RBI cannot pay special dividend to the government in addition to entire surplus being paid out for the last three years.

Rajan, who steps down as the central bank boss tomorrow, suggested that it was legally not possible to pay a special dividend over and above the surplus generated by the RBI.

"The RBI has to work under a framework set by the government and cannot be free of all constraints," he added.

Rajan, who has been outspoken about his views on various issues, was often seen as being against the views of the government on economic and even non-economic matters.

Rajan had announced his exit in a letter to his colleagues at the RBI on June 18, stating that he would return back to academia once his term comes to an end.