After reports of mounting tension between the ministry of finance and the Reserve Bank of India (RBI) over the autonomy of monetary policy,
Ananth Narayan, professor, S. P. Jain Institute of Management and Research (SPJIMR), on Friday said the central bank and the North Block must stop acting like squabbling kids and act with maturity that the country requires at this point in time.
Narayan said, "It's great that we have fantastic external context right now and that is a huge relief. Iran and oil prices are coming down, China-US possibly making up, dollar weaker and midst of all this, it's the last thing we need that people outside starting to question us."
The row was sparked off last Friday when RBI deputy governor Viral Acharya in a hard-hitting speech warned that undermining central bank's independence could be "potentially catastrophic", possible indication of the RBI being pushed to relax its policies ahead of general elections next year.
According to media reports, government had sent at least three letters on different issues under Section 7 of the RBI Act that gives it powers to issue any direction to the central bank governor on matters of public interest.
The standoff was in relation to RBI's handling of weak public sector banks, tight liquidity in the market and ways of resolving bad loans in the power sector. Some reports claimed that RBI governor Urjit Patel was considering stepping down if the government were to issue an unprecedented direction.
First Published: Nov 2, 2018 3:39 PM IST
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