As the spat between the Reserve Bank of India (RBI) and the government continues, Subhash Chandra Garg, economic affairs secretary, mocked Viral Acharya by stating the positive condition of the market on Friday as
deputy governor had warned the centre of the 'wrath of financial markets' if the autonomy of the central bank was restrained.
Rupee trading at less than 73 to a dollar, Brent crude below $73 a barrel, markets up by over 4% during the week and bond yields below 7.8%. Wrath of the markets?
— Subhash Chandra Garg (@SecretaryDEA) November 2, 2018
The development comes amidst growing rift between the centre and the central bank after Acharya in a fiery speech warned that undermining RBI's independence could be "potentially catastrophic".
Acharya, in his speech last week, said, "Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets."
Apart from Acharya, NS Vishwanathan, deputy governor, RBI, on Friday reacted to Garg's tweet: "Till then, we must guard against any push for dilution of standards in the name of aligning them with international benchmarks because that will be cherry-picking and will result in our banks being strong in a make-believe sense and not in reality".
On November 1, when the war between the authorities was on the brink of an eruption as the RBI governor was considering to exit from his post, the government said the 'autonomy for the RBI, within the framework of the RBI Act, is an essential and accepted governance requirement'.
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First Published: Nov 5, 2018 9:55 AM IST
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