Govt says it respects the autonomy of central bank

RBI employees oppose alleged interference by the governmentThe government yesterday said it fully respects the autonomy of the Reserve Bank of India.“It is categorically stated that the government fully respects the independence and autonomy of the Reserve Bank of India,” Finance Ministry said in a statement here.The statement comes a day after employee unions of the central bank expressed their resentment against alleged interference by the government.“Consultations between the government and the RBI are undertaken on various matters of public importance wherever such consultation is mandated by law or has evolved as a practice. Consultations mandated by law or as evolved by practice should not be taken as infringement of autonomy of RBI,” the statement said.The RBI employees on Friday sent a letter to Governor Urjit Patel expressing concern over alleged interference by the central government.The letter asked the governor whether a recent media report, which said the Finance Ministry had deputed a joint secretary-level officer to the RBI to oversee its currency chest operations, was true.“If true, this is most unfortunate and we take strong exception to this measure of the government as impinging on the RBI’s autonomy and its statutory as well as operational jurisdiction,” the letter read.The employee unions said the criticism faced by the RBI for alleged operational mismanagement during the recently-concluded demonetisation drive has dented its image ‘beyond repair’.“It is painful to note that RBI is being criticised from many quarters for its ‘operational mismanagement’, by the press and many important personalities. Its autonomy and image have been dented beyond repair,” the letter stated.The unions also requested the RBI governor to protect the central bank’s autonomy and prestige.Opposition parties yesterday accused the government of eroding the autonomy of the RBI.The Congress, Communist Party of India (Marxist), Janata Dal United and Nationalist Congress Party said the government’s move had weakened the regulatory body.Even the Shiv Sena, which is part of the Bharatiya Janata Party-led alliance central government at and in Maharashtra, also slammed the move.Congress spokesman Sanjay Jha said the independence of several institutions in the country were compromised by Prime Minister Narendra Modi’s government.“The RBI is a daylight manifestation how autonomy and independence of the most critical financial regulatory body in the country has been compromised. The RBI is signing on dotted lines like a paper tiger. Nowhere in the world does a government intervene in such a brazen fashion,” Jha said.He added that the RBI employees’ unions were justified in holding a protest and taking it forward.CPM leader Brinda Karat took strong exception to the appointment of the official and supported the unions.“The RBI’s mandate of autonomy given by parliament has been not only eroded but destroyed by the Modi government. And now it is adding insult to injury by sending an official directly to oversee (its operations). The unions are absolutely correct in strongly protesting against it,” Karat said.JDU leader K C Tyagi opposed the move saying that several such attempts were made in the past to weaken the RBI.NCP leader Tariq Anwer called the attempt to depute a government official at RBI inappropriate.“It has been a tradition that RBI should be allowed to work independently. Any kind of direct monitoring by the government is not appropriate.”Union leader and Shiv Sena MP from Mumbai, Gajanan Kirtikar said “As per the RBI Act, the central bank is autonomous and the government cannot interfere in its operations. Monitoring chest currency operations of RBI is not the finance ministry’s job.“Now, we are going to hold discussions with those concerned. We will take to agitations if the decision is not rolled back,” Kirtikar said.