No Move to Clip Wings of RBI Governor- says Finance Secretary

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BUSINESS MANTRA: LALIT VIRMANI

(Author is an Ex-Banking Executive)

 

In continuation to news “A HOLD TO CUT VETO POWER OF RBI GOVERNOR BY THE CENTRAL GOVERNMENT” dated 25/07/2015, due to wide criticism from various economists and rating agencies, government cleared the air there was no such move as to cut the Veto Power of RBI Governor or curtail powers of RBI to take decisions on interest rates and vital monetary policy of the country. This is still to be considered as discussion document. The paper was published on ministry’s website to seek suggestions from various quarters including policy makers and stake holders – says Finance Secretary.

The proposed changes of Monetary Policy Committee (MPC) reflected move by the government to clip RBI’s wings and various economists and rating agencies had this impression.

Earlier International Rating Agency Moody’s had also criticised this move of the government to appoint four members of MPC and clip the wings of RBI Governor to use Veto Power for vital monetary policy and interest rate decisions in the interest of the country’s inflationary conditions.

Indian Finance Code (IFC) had also suggested in its draft, not to allow to use RBI Governor to use its veto power.

Once again it is reiterated that government is not going to take decision on this issue during the current session of the parliament.

 

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