Lettes: RBI and GOI

This refers to the report "Jalan bats for better govt-central bank ties and flexible policy-making" (April 15). One can see clearly that Bimal Jalan's observation comes in the context of the recent frictions between the leadership in New Delhi and the Reserve Bank of India (RBI).

As Jalan and a few more ex-RBI governors know, the central bank has always gone more than half way to accommodate the government's perceptions. Inadequate reciprocity from the other side and policy compulsions emanating from some roles assigned to RBI, sometimes brought embarrassments to the governors in the public eye.

Jalan rightly observed that there is no escape for the government and RBI from working in cohesion with broad national priorities in view. And the solution does not lie in shifting public debt management from RBI to the finance ministry or the government fixing inflation targets for RBI. In the Indian context, the finance ministry and RBI have a relationship that needs to be nurtured, even when a difference in views arises.

M G Warrier Thiruvananthapuram

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