Modi backed RBI in turf war with finance ministry
Prime Minister Narendra Modi sank his finance minister’s plans to strip powers from the Reserve Bank of India (RBI) last week, sources told Reuters, evidence of a new-found respect for the bank’s governor and a recognition that Modi needs his calming influence on markets.
When Modi came to power just under a year ago, the position of central bank boss Raghuram Rajan, an appointee of the outgoing Congress government, looked precarious.
Senior members of Modi’s Bharatiya Janata Party (BJP) chided Rajan for his tough stance on interest rates, which threatened the Prime Minister’s pledge to reboot economic growth, and the governor in turn cautioned the government against putting too much faith in exports through its ’Make in India’ policy.
But when Finance Minister Arun Jaitley, one of Modi’s closest allies, dropped plans on Thursday to remove the bank’s authority to regulate the government bond market and manage public debt, a senior government source who was privy to discussions said the decision "came from the very top".
A senior BJP figure confirmed that Modi had intervened on Rajan’s behalf.
The prime minister’s office and the finance minister did not respond to requests for comment.
Jaitley now intends to consult the RBI and come up with a detailed roadmap on the issue, a process that could take at least a year, officials say.
There were signs last month of the changing dynamics in the relationship between 52-year-old Rajan and Modi, 64, when the prime minister publicly praised Rajan for "perfectly" explaining complex economic issues to him in regular one-on-one meetings.
His intervention last week was hard evidence.
"The Ministry of Finance’s reversal on stripping this power from the RBI reflects the significant influence of the central bank governor," said Kilbinder Dosanjh, a director at the Eurasia Group consultancy.
That influence owes much to the reputation of Rajan, a former chief economist of the International Monetary Fund (IMF), and the institution he runs.
"We need to be careful while handling the RBI, as it is a proven institution in a country which is ridden with imperfect institutions," said Indira Rajaraman, an economist who is also one of the directors of the RBI’s central board and had criticised the finance ministry’s plan as hasty and inconsistent.
India also needs to consider the impact on investors, who also see the RBI in the same favourable light.
Foreign investors have already been irked by the Indian tax department’s attempts to claw back tax it says is owed on years of previously untaxed gains, which prompted a sell-off in India’s share and bond markets.
And with poor summer monsoon rains in prospect and higher U.S. interest rates looming, New Delhi was reluctant to spook investors further by clipping the bank’s wings, said the government source.
"Nobody wants to upset the apple cart," said the government source.
Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on kemmannu.com to provide the IP address and other details of senders of such comments, to the authority concerned upon request. Hence, sending offensive comments using kemmannu.com will be purely at your own risk, and in no way will Kemmannu.com be held responsible.
Similarly, Kemmannu.com reserves the right to edit / block / delete the messages without notice any content received from readers.
Final Journey of Judith Lewis (91 years) | LIVE From Kallianpur
Obituary : Miss Judith Lewis (91), Milagres A Ward, Kallianpur
Rozaricho Gaanch April, 2024 - Ester issue
Final Journey Of Theresa D’Souza (79 years) | LIVE From Kemmannu | Udupi |
Invest Smart and Earn Big!
Creating a World of Peaceful Stay!
For the Future Perfect Life that you Deserve! Contact : Rohan Corporation, Mangalore.
Final Journey Of Joe Victor Lewis (46 years) | LIVE From Kemmannu | Organ Donor | Udupi |
Milagres Cathedral, Kallianpur, Udupi - Parish Bulletin - Feb 2024 Issue
Way Of Cross on Good Friday 2024 | Live From | St. Theresa’s Church, Kemmannu, Udupi | LIVE
Good Friday 2024 | St. Theresa’s Church, Kemmannu | LIVE | Udupi
2 BHK Flat for sale on the 6th floor of Eden Heritage, Santhekatte, Kallianpur, Udupi
Maundy Thursday 2024 | LIVE From St. Theresa’s Church, Kemmannu | Udupi |
Kemmennu for sale 1 BHK 628 sqft, Air Conditioned flat
Symphony98 Releases Soul-Stirring Rendition of Lenten Hymn "Khursa Thain"
Palm Sunday 2024 at St. Theresa’s Church, Kemmannu | LIVE
Final Journey of Patrick Oliveira (83 years) || LIVE From Kemmannu
Carmel School Science Exhibition Day || Kmmannu Channel
Final Journey of Prakash Crasta | LIVE From Kemmannu || Kemmannu Channel
ಪ್ರಗತಿ ಮಹಿಳಾ ಮಹಾ ಸಂಘ | ಸ್ತ್ರೀಯಾಂಚ್ಯಾ ದಿಸಾಚೊ ಸಂಭ್ರಮ್ 2024 || ಸಾಸ್ತಾನ್ ಘಟಕ್
Valentine’s Day Special❤️||Multi-lingual Covers || Symphony98 From Kemmannu
Rozaricho Gaanch December 2023 issue, Mount Rosary Church Santhekatte Kallianpur, Udupi
An Ernest Appeal From Milagres Cathedral, Kallianpur, Diocese of Udupi
Diocese of Udupi - Uzvd Decennial Special Issue
Final Journey Of Canute Pinto (52 years) | LIVE From Mount Rosary Church | Kallianpura | Udupi
Earth Angels Anniversary | Comedy Show 2024 | Live From St. Theresa’s Church | Kemmannu | Udupi
Kemmannu Cricket Match 2024 | LIVE from Kemmannu
Naturya - Taste of Namma Udupi - Order NOW
New Management takes over Bannur Mutton, Santhekatte, Kallianpur. Visit us and feel the difference.
Focus Studio, Near Hotel Kidiyoor, Udupi
Earth Angels - Kemmannu Since 2023
Kemmannu Channel - Ktv Live Stream - To Book - Contact Here
Click here for Kemmannu Knn Facebook Link