This refers to the editorial “Welcome ‘non-event’” (November 21). The Reserve Bank of India (RBI) board debated the main issues on which differences of perception between the apex bank and the government had surfaced for about 16 hours in two meetings. The board meeting on Monday, held in a cordial atmosphere, in a way borrowed time to understand the views of both sides. The committee’s approach needs to be seen and welcomed in this perspective.
The media has been debating the harm likely to be inflicted on the Indian economy if the government invokes Section 7 of the Reserve Bank of India Act, 1934, to "discipline" the RBI Governor Urjit Patel and the RBI. For now, one prefers to believe that the confrontational approach attributed to the government was a media creation because Sections 7, 8 and 58 of the RBI Act are necessary and relevant in the management of the RBI. These provisions just ensure fair and proper management of the RBI. Once the selection process for the appointment of board members and top executives is professionalised, the thought about splitting the RBI board vertically, with government nominees on one side and the RBI governor and his deputies on the other, will vanish. We have the example of the Monetary Policy Committee behind us.
As far as drawing from the RBI’s reserves to adhere to the Centre’s deficit target is concerned, let us hope that the committee that will examine the adequacy of capital and reserves for the RBI will resolve issues such as sources for funding of shortfall, if any, in RBI’s capital and reserves, and raising of RBI’s share capital from the present Rs 50 million to acceptable levels.
M G Warrier, Thiruvananthapuram
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