........While the recent arrangement does not particularly break new ground — setting interest rates and bank regulation are already under RBI — the government official involved in the process said there was a need to fix the relationship as it had turned "really bad" in the last year of Subbarao's tenure. "Short-term interest rates and monetary policy management have to be strictly within RBI's domain, but financial inclusion agenda is clearly part of the government's political mandate," the official said. This newfound coordination was reflected in the package of measures announced by Rajan at his press briefing. .........
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In the given circumstances, this is the minimum Dr Rajan could have clinched before taking over. Like all government programmes, it will take some time for results to start showing. But perceptible changes can be observed in the tone of North Block officials while expressing views in public. Media too will have to re-adjust. Even yesterday, an ‘advertorial’ promoting FM (not in Times Group) had comments in bad taste against RBI, though the writer wanted just to criticise Dr Subbarao.
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