Opinion | The whys and what ifs of central bank autonomy
5 years, 11 months ago

Opinion | The whys and what ifs of central bank autonomy

Live Mint  

Why should central banks be autonomous and what are the consequences of the government infringing on such autonomy? For example, voters elect a government to create more jobs, but the central bank can keep interest rates high to stifle investment and, consequently, job creation. India’s history since Independence is one of high state and central government deficits, a weak banking sector and high inflation. Such a central bank can fight the inflationary pressures resulting from deficit spending and also potentially reduce the benefits of such government handouts in terms of economic growth. Given the track record of India’s politicians, my vote would be to formalise RBI’s autonomy by reducing government control over its board and also clearly specify the reasons for which the government can remove the governor.

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History of this topic

Reimagining how the Reserve Bank functions
2 years ago

Reimagining how the Reserve Bank functions

Hindustan Times  

The Supreme Court judgment on demonetisation last week appears to have reignited the debate on the relationship between the Reserve Bank of India and the Union government. The parliamentary committee wants to ensure that financial regulators such as RBI are adequately prepared to support India’s growth journey, the chair of the committee, Jayant Sinha, said in an interview to Mint …

The design of RBI limits its abilities
4 years, 9 months ago

The design of RBI limits its abilities

Deccan Chronicle  

The Reserve Bank of India, India’s central bank, performs vital functions that are essential for keeping the Indian economy in robust health. Recently, the RBI has found itself lurching from one crisis to another as financial institutions such as non-banking financial corporations, cooperative banks and commercial banks collapsed like dominos one after the other. The RBI draws its powers from …

Much ado about nothing: Demystifying the needless hue and cry over the RBI
6 years ago

Much ado about nothing: Demystifying the needless hue and cry over the RBI

Op India  

“The only function of economic forecasting is to make astrology look respectable,” remarked the legendary Economist John Kenneth Galbraith. Whoever in Congress thought of RBI autonomy and role in influencing election outcome doesn’t have enough knowledge to even make credible sounding arguments. According to the RBI Act’s Section 7, “the central government may from time to time give such directions …

After Shaktikanta Das' Appointment as RBI Governor, Arvind Subramanian Reminds Autonomy is Sacred
6 years, 1 month ago

After Shaktikanta Das' Appointment as RBI Governor, Arvind Subramanian Reminds Autonomy is Sacred

News 18  

Mumbai: With the reins of RBI governorship passing to an ex-bureaucrat, former chief economic advisor Arvind Subramanian Wednesday said central bank autonomy is “sacred”, which should not be compromised. “RBI has a very good reputation for very good reasons maintaining the functional autonomy in decision-making and governance is absolutely sacred, we must not compromise on that,” he added. He said …

RBI autonomy 'sacred', should not be compromised, says former CEO Arvind Subramanian
6 years, 1 month ago

RBI autonomy 'sacred', should not be compromised, says former CEO Arvind Subramanian

Firstpost  

Mumbai: With the reins of RBI governorship passing to an ex-bureaucrat, former chief economic advisor Arvind Subramanian Wednesday said central bank autonomy is “sacred”, which should not be compromised. “RBI has a very good reputation for very good reasons maintaining the functional autonomy in decision-making and governance is absolutely sacred, we must not compromise on that,” he added. He said …

Opinion | A thin line divides RBI autonomy, alignment
6 years, 1 month ago

Opinion | A thin line divides RBI autonomy, alignment

Live Mint  

The tawdry, and discreditable, public feud between the government and the Reserve Bank of India seems to indicate that, in the midst of many shortages, the government is hoarding reserves of surplus political capital. Things must have gone terribly wrong and relations deteriorated irreconcilably for the government to situate a routine central bank board meeting squarely in the piazza of …

Opinion | Revisiting accountability at Reserve Bank of India
6 years, 2 months ago

Opinion | Revisiting accountability at Reserve Bank of India

Live Mint  

“The most independent central bank is not likely to be a socially optimal central bank,” economists Guy Debelle and Stanley Fischer wrote in a paper titled How independent should a central bank be?Fischer is a former vice chairman of the US Federal Reserve and was professor of economics at Massachusetts Institute of Technology when the paper was written in 1994. …

Opinion | Can RBI, other central banks survive the age of populism?
6 years, 2 months ago

Opinion | Can RBI, other central banks survive the age of populism?

Live Mint  

Is central bank independence the next casualty of the age of populism? The government wants the central bank to loosen lending restrictions — to fuel economic activity and jobs growth — and turn over more of its cash reserves, presumably to fund populist spending ahead of next year’s elections. Meanwhile, in Europe, the populists who have seized power in Italy …

Opinion | RBI’s independence needs to be protected
6 years, 2 months ago

Opinion | RBI’s independence needs to be protected

Live Mint  

The relationship between the government and the Reserve Bank of India used to be cooperative and productive, but has vitiated over the past decade. Public airing of differences must be eschewed and the government must take steps to strengthen RBI’s independence. He also warned that governments that do not respect central bank independence will sooner or later incur the wrath …

Opinion | The ball was always in the government’s court
6 years, 2 months ago

Opinion | The ball was always in the government’s court

Live Mint  

Amid speculation that Reserve Bank of India governor Urjit Patel might quit, the government did well on Wednesday to issue a statement, highlighting that the autonomy of the central bank is essential. Section 7 of the RBI Act says that “The Central government may from time to time give such directions to the bank as it may, after consultation with …

The RBI Shouldn’t Mix ‘Autonomy’ With the ‘Scope’ of Its Mandate
6 years, 2 months ago

The RBI Shouldn’t Mix ‘Autonomy’ With the ‘Scope’ of Its Mandate

The Quint  

Let’s take the proposition further. If, indeed, technocrats are more capable of taking long-term decisions, why leave fiscal policy in the hands of elected representatives? The reason that fiscal policy has not been delegated to technocrats is that it has multiple welfare and distributional effects that are best-weighed by elected representatives. Monetary policy, with its focus on inflation, is believed …

RBI vs Narendra Modi government: Public spat won’t help, but India’s best bet is not to mess with its central bank
6 years, 2 months ago

RBI vs Narendra Modi government: Public spat won’t help, but India’s best bet is not to mess with its central bank

Firstpost  

Almost every RBI governor, be it Y V Reddy or D Subbarao, have pitched for central bank autonomy in public forums inviting the wrath of the government of the day. The turf war between the Reserve Bank of India and the Narendra Modi government on the subject of the central bank’s autonomy is out in the open and is turning …

Viral Acharya's comments on 'effective independence' of RBI: Employees association seeks central bank's autonomy
6 years, 2 months ago

Viral Acharya's comments on 'effective independence' of RBI: Employees association seeks central bank's autonomy

Firstpost  

Kolkata: Days after deputy governor Viral Acharya raised concerns over the central bank’s autonomy, the Reserve Bank employees association Monday came out in support of the views, saying “undermining the central bank is a recipe for disaster” and government to stop nibbling at its autonomy. Delivering the AD Shroff memorial lecture last week here, Acharya said governments that did not …

Viral Acharya is right; RBI should be left alone to do its job, not coerced for political reasons
6 years, 2 months ago

Viral Acharya is right; RBI should be left alone to do its job, not coerced for political reasons

Firstpost  

The most recent debate has been on the independence of the central bank. Next, on the issue of control of public sector banks, the central bank is unable to do what it has done for private banks especially on governance issues as this is where the problem is founded. Also, in the past, when some private banks were down under, …

RBI deputy governor bats for its independence
6 years, 2 months ago

RBI deputy governor bats for its independence

Live Mint  

Mumbai: Reserve Bank of India deputy governor Viral Acharya on Friday stressed the importance of a central bank’s independence and said direct intervention and interference by the government in the operational mandate of the central bank negates its functional autonomy. This way, the institutional arrangement of independence, transparency and accountability to the public not only balance but also strengthen the …

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