Govt, RBI public spat continues

The government and RBI public spat appears far from over. Economic Affairs Secretary Subhash Chandra Garg took a swipe at RBI Deputy Governor Viral Acharya after a rally in Asian markets on Friday.

“Rupee trading at less than 73 to a dollar, Brent crude below $73 a barrel, markets up by over 4% during the week and bond yields below 7.8%. Wrath of the markets?” Garg said in a tweet.

Garg’s was a veiled reply to Acharya’s last week’s warning that the government may incur the wrath of financial markets if it did not respect central bank’s autonomy.

“Governments that do not respect central bank independence, will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution,” Acharya had said at a public event last on Friday.

Thereafter, Finance Minister Arun Jaitley almost reprimanded the RBI for its regulatory oversight on NPA mess from 2008-2014, bringing in open his difference of opinion on the independence of regulator in India context.

The unease in relations between the government and RBI became more pronounced after the government prompted it to ease certain banking regulations on weak PSU lenders which they thought came in way of lending to businesses and, the central bank did not adhered to.