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Nehru said RBI autonomy subject to govt direction, it's still true: Top govt functionary

Press Trust of India  |  New Delhi 

Accused by the of trampling on the RBI's with its interference, a top government functionary said Monday it was the country's first who asserted that the central enjoyed but it was also subject to the Centre's directions and those comments still hold true.

The top functionary, who did not want to be named, also cited several instances of clash the earlier governments at the Centre, right from the Nehru-led dispensation to the UPA's, had with the central over policy issues which at times led to resignation of the

Benegal quit in 1957 after Nehru supported his minister T T in his clash with the then over a proposal, the functionary said.

To Rau's assertion about the RBI's autonomy, Nehru had apparently said the central is certainly autonomous but it is also subject to the government's directions, he claimed.

"What Nehru said remains true now," the government functionary said, when asked about the Narendra Modi government's take on its differences with the Urjit Patel-led

While has accused the government of "destroying" institutions with its alleged strong arm tactics, the differences between the and the RBI came out in public domain after a deputy raised concerns about the central bank's and warned that the governments that did not respect the central bank's independence would sooner or later incur the wrath of financial markets.

Days later, another criticised the government's arguments for easing capital requirements for lenders, saying it would result in banks being strong only in a "make-believe" manner.

While many see the ongoing tussle between the government and the RBI as unprecedented, the top government functionary also cited instances of RBI governors N C Sengupta and K R Puri, saying their tenures were cut short due to the central government's intervention.

He claimed Sengupta had to go due to his stand on the issue of for project, a brainchild of Sanjay Gandhi, son of the then Indira Gandhi, while his successor quit in 1977 at the prodding of the

He also claimed that Manmohan Singh, who was the RBI governor during 1982-85, was made the erstwhile Planning Commission's as the then wanted another person at the central bank.

Singh went on to become for 10 years.

The also referred to the memoir of D Subbarao about his tenure as RBI governor between 2008-13 to highlight his strained relations with the then Minister P Chidambaram.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, November 05 2018. 20:55 IST
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