Patel refuses questions on RBI autonomy, Sec 7

RBI Governor Urjit Patel on Wednesday declined to answer questions on central bank's autonomy and use of Sec 7 of the RBI Act.

"I would avoid those questions which are not related to monetary policy. We are here discussing the monetary policy resolution," Patel said at the post-policy press conference.

The governor refused two such pointed questions at the presser. One was whether his views were the same as deputy Governor Viral Acharya who went public on RBI autonomy.

Patel's refusal come on the back of the finance ministry making it amply clear that it was upset with the central bank for publicly talking about its differences with the government.

Finance Minister Arun Jaitley also went on record saying that almost all finance ministers preceding him had “issues with the RBI Governors” ever since but none went into public domain.

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The officials believed an open spat could tarnish the country's image among investors.

Patel was facing the press for the first time since the issue came out into the open in October.

The government had invoked a never-before-used Section 7 of the RBI Act directing the central bank to take certain policy steps in public interest.

The Centre's grudge was that RBI was not doing enough to ease credit and liquidity in the market due to which small businesses were suffering.

The critics held that it was not due to squeezing of liquidy by RBI that was impacting MSMEs but it was the government's two back-to-back structural reforms – demonetisation and GST.

The government came in for a severe criticism for invoking Section 7, with former finance minister P Chidambaram saying it showed the government's “desperation” to clip RBI's wings.