Kolkata, Oct 29: Days after RBI Deputy Governor Viral Acharya spoke on the need for the central bank’s autonomy, the RBI Employees Association on Monday came out in his support by stating that “undermining the country’s central bank is a recipe for disaster”.
“We firmly hold that undermining the country’s central bank is a recipe for disaster and the government must desist,” The All India Reserve Bank Employees Association (AIRBEA) said in a statement.
“Let the two (Centre and RBI) talk and sort out issues instead of the government trying to ride roughshod over the RBI, what they are trying at the expense of the nation,” it said.
Acharya’s observations on October 26 about apparent government interferences had created a flutter. Acharya had warned that the market could make the government pay for eroding the bank’s independence.
He said markets keenly watch the government’s activities, which exert pressure on the central bank’s independent functioning.
“This (Acharya’s warning) is not a sudden outburst, but was waiting to happen due to a long simmering discontent,” AIRBEA General Secretary Samir Ghosh said in the statement.
Acharya had compared the approaches of the two – RBI and government – in a cricketing analogy with T-20, which is a short term game, and Test Match, which is long term.
The government, with a short tenure from election to election, is prone to putting pressure on the RBI to fall in line with its expediency, which the RBI from a long-term perspective might not and would not agree, Acharya had said.
“There is an intrinsic schism and this is not regime-specific,” Ghosh said, reminding how former RBI Governor D. Subbarao in his parting speech had said the then Finance Minister P. Chidambaram had been so angry that he preferred to “walk alone without RBI”.
The association said the divide between the two has widened due to the continuous ‘nibbling’ by the government and the Ministry of Finance.