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INDIA-POLITICS-BANK
India central bank chief quits amid spat with government
NEW DELHI, Dec 10, 2018 (BSS/AFP) – The head of India’s central bank
announced his resignation on Monday following a public spat with Prime
Minister Narendra Modi’s administration about alleged government
interference.
Reserve Bank of India governor Urjit Patel cited “personal reasons” for
his decision but media reports have said that he was annoyed by repeated
government efforts to influence central bank policy.
His short statement made no mention of the rift, highlighting only what he
called the RBI’s “considerable accomplishments in recent years”.
Indian business dailies had reported in October and November that Modi’s
government has invoked never-before-used powers to send at least three
letters to Patel seeking to impact the central bank’s decision-making.
The government is believed to be unhappy with the RBI over a number of
issues including interest rates, how to deploy reserves and how to respond to
India’s sliding rupee.
The rupee has been one of Asia’s worst performing currencies this year
while economic growth in the last quarter slowed to under eight percent.
It is understood the government is pressuring the bank to enact policies
to help spur growth ahead of next year’s elections, when Modi will run for a
second term.
The government would like the RBI to lower interest rates and free up more
of its cash reserves to invest in Asia’s third-largest economy, analysts say.
Finance minister Arun Jaitley had also hit out at the RBI earlier this
year over a massive multi-billion-dollar bank loan crisis that is hampering
India’s corporate sector.
Jaitley accused the RBI of failing to stop indiscriminate lending from
2008 to 2014, saying it had “looked the other way” while banks issued loans
that turned sour.
The rift flared up again when economic hardliners from a powerful Hindu
nationalist group linked to Modi’s ruling Bharatiya Janata Party (BJP) told
Patel to fall in line with the government or quit.
BSS/AFP/ARS/1833 hrs