RBI, Centre tussle not good, says Gurumurthy

In the midst of a tense stand-off between the RBI and the Centre, central bank board member S Gurumurthy on Thursday said the government was not seeking immediate transfer of money but only insisting on a policy on RBI's reserves.

Delivering a lecture on the 'State of the Economy: India and the World' at the Vivekananda International Foundation (VIF) here, Gurumurthy also said that the stand-off between the government and the RBI was not a happy situation.

The comment comes amid the ongoing rift between the Finance Ministry and the RBI over several issues, including capital framework of the central bank and easing of lending norms for the NBFC sector. The RBI Board is meeting on Monday, where these issues are expected to come up for discussion.

“Some policy will have to be worked out. You cannot say, come on it has appreciated so much, give me that money. I don't think the government is asking for that,” Gurumurthy said.

Gurumurthy further said India should not go beyond what has been prescribed in the Basel capital adequacy norms and made a case for enhancing credit for the MSME sector.

He also pitched for an amendment of the Fiscal Responsibility and Budget Manangement Act, through which the government has given up right to print currency.

Gurumurthy said the liquidity problem could have been handled better if the power to print currency was in the hands of the government.