It is not that everything the Reserve Bank of India has done or is doing is right. There is a lot to be said about the way in which the central bank has functioned and it is fair to criticise, even attack, it over lack of transparency, poor bank supervision and, of course, the wonky management of demonetisation.
But when the situation reaches such a pass that a hand-picked RBI governor resigns, when the top brass of the bank is ranged, almost as one, against the government and conversations at the highest policy-making level are reduced to bickering, then surely there is something wrong with the way the affairs of the nation are being managed.
The sudden, though not entirely unexpected, resignation of Governor Urjit Patel on Monday is to be seen in this light. It is nothing short of shocking that he has called it quits amid the all too well-known pressures from the government on several fronts — the dispute over transfers of surplus, the government demand for easier loans to businesses and the demand for easing of norms to help banks pull back from their disastrous ride of growing bad loans.
Raghuram Rajan is right in saying that this resignation is a statement of dissent. It puts the nation on notice. Here is a political leadership that brooks no other view, is driven by an agenda and is disconnected from the real world. This administration demands blind loyalty to a direction from the top, and even if this is the road to ruin, it is the only road to be taken, and without so much as a whimper.
Rajan decided two years ago that he would not continue for a second term amid the mud-slinging and derogatory remarks heaped on him while the political establishment looked the other way.
When Patel replaced him on September 4, 2016, it was to be expected that the government had interviewed, satisfied itself and then chosen a nominee who was competent enough and one that the government might work with for a full term of three years. But it’s just about two years and the differences between them have become irreconcilable.
Let’s not forget that Patel’s candidature did not come out of the blue. He had already served the central bank as deputy governor since January 2013. So, his candidature, his views and his conduct would have been known to the authorities.
What precisely has transpired over the last few weeks is not yet known. But Patel’s brief statement of resignation came just four days ahead of the next board meeting of the RBI. This is the traditional Kolkata meeting and what has been under discussion, as is understood, is the composition of the committee that is to decide on the framework for transfers of surplus from the RBI to the government.
This is where the government sees a windfall gain for itself and where the RBI has held its ground to argue that it cannot play with its reserve funds and handover the kitty to the government. The amount in question is of the order of Rs 3.6 lakh crore.
Prejudiced positions
There was already some speculation on who would replace Patel, but experts believed that very few professionals would like to work with this government and this kind of political leadership.
The government has had to fall back on a retired IAS officer, Shaktikanta Das. That is a bad signal. The prejudiced positions that are thrust upon institutions are breaking them from within. This will hollow out the tallest of our institutions for the sake of expediency. This is nothing less than playing with the nation’s future.
As Judge Gurfein said during the Watergate scandal: “The security of the nation is not at the ramparts alone. Security also lies in the value of our free institutions.” That security is being broken bit by bit by this government and that is the message that Patel’s resignation sends out loud and clear.
Patel is not the first senior leader to break from the government of the day. The mess in the CBI is, equally, testimony to the government’s disdain for institutions and the extent to which it is willing to play with well-established boundaries.
With the losses in the assembly elections, the worry would be that the government might go to even greater lengths to get what it wants as some desperate measures are tried in the run up to the 2019 Lok Sabha elections.
A better path might be to take the verdict as an indication that the people of India would like the government to work within reasonable limits, to keep peace and harmony, and to build for the future — bit by bit, not through loud announcements and certainly not through the hunt for windfall gains for a questionable agenda while emptying out the RBI coffers.
(The writer is a journalist and faculty member at SPJIMR)
(The Billion Press)
