Writing Reserve Bank’s obituary - Dr.N.A.Mujumdar
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Alas! This institution seems to be in mortal danger. The Financial Sector Legislative Reforms Commission ( FSLRC), which submitted its report in March 2013, is all set out to write as it were, an obituary of the RBI. It seeks to do so in two ways: first by dismembering the RBI, and by making it a department of the ministry of finance. The central government would give quantitative monitable objective to the RBI, within which framework the latter would have to operate. Secondly, the central government would create a Monetary Policy Committee (MPC), dominated by its nominees on the committee that would determine the policy interest rate. These are indeed dangerous recommendations that would destroy the illustrious institution - an institution, which has taken years to build. We therefore urge the government to constitute an independent select committee of financial experts, including some former governors of the RBI, to scrutinise these recommendations, before even considering them...........
2 comments:
This approach of the Govt is typical of its lack of responsibility. A coalition govt that totters on the brink and appeases opposition cares little for the welfare of the country or its institutions. An alcoholic sells all he can lay hands on to buy his next drink. So too, our current govt has little responsibility towards anyone. It has to live till tomorrow, and would stop at nothing, with an ever burgeoning rag-bag of corruption it carries on its back.
The finance ministry and FSLRC, it is by now clear that, in a hurry to resolve minor issues, ignored the evolution of the role of RBI and the care with which RBI has nurtured the financial sector. Various observations since made by present RBI Governor and the dissenting notes appended to the FSLRC Report itself are adequate proof (if proof was necessary!) to show that the report written by the Chairman of the FSLRC to satisfy some mysterious interests did not care to understand the Indian situation or the strength of RBI while doing the ‘cut and paste’ from the abundance of material placed before him. FSLRC depended on the experience of small countries whose history and geography are different or listened to experts from developed countries where central banking needs are totally different from those in India. Suffice to say that time is not right for dismantling or truncating the RBI which is doing creditably well as is being admitted in several international forums.
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