Time To Talk: On Centre-RBI Differences
The Centre-RBI Face-Off Is Not Healthy. They Must Resolve Their Differences In Private
The simmering tensions over the last few months between the Reserve Bank of India and the Centre found spectacular release over the weekend through a public speech by Deputy Governor Viral Acharya. “Governments that do not respect central bank independence,” said Mr. Acharya, “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.” These are very strong words and raise the question: why? This is not the first time that the RBI has had a run-in with the mandarins at North Block, and it will not be the last. India has had Finance Ministers who got frustrated enough to say that they would “walk alone” in driving the economy, and RBI Governors responding that the Centre would still be thankful that the central bank exists. Indeed, disagreements between Mint Street and North Block over setting benchmark interest rates have been common over the years. What is different this time, though, is that the disagreements, none of which are insurmountable, appear to be over regulation per se. There are three issues on which the Centre seems to have irked the RBI. It has refused to accept Governor Urjit Patel’s point that the RBI is hobbled by lack of adequate powers in regulating public sector banks. The second is the tussle over the RBI’s burgeoning reserves, a piece of which the Centre is eyeing to bridge its fiscal gap. The RBI resents this. The last is the attempt by the Centre to set up an independent payments regulator, which the RBI sees as encroachment of its turf.
For its part, the Centre has several grouses, the chief among them being over an RBI circular of February 12 which redefined NPAs and revised the framework for resolution. It is also upset that the central bank is not doing enough to ease the ongoing liquidity squeeze through extraordinary measures. These are issues that could be easily addressed by sitting around a table, but the fact that they haven’t done so points to a complete breakdown of communication between the RBI and the government, something that bankers have been privately acknowledging for some time now. A certain amount of creative tension is systemically in-built given their different perspectives: one is short-term and political; the other is long-term and technical. Such tension is good for the economy. Yet, that is no excuse to spar over turf or make statements aimed at pressuring the other side into acting in a particular manner. The current row is definitely worrying given the backdrop of economic turmoil, globally and domestically. The Centre and the central bank must talk behind closed doors and resolve their differences as mature entities, as they have done so many times in the past.
MEANINGS AND WORDS
1) spectacular
Meaning : beautiful in a dramatic and eye-catching way.(adj)
Tamil Meaning : கண்கவர்
Synonyms : splendid
Antonyms : regular
Example : “spectacular mountain scenery”(adj)
2) wrath
Meaning : extreme anger.(n)
Tamil Meaning : கோபம்
Synonyms : anger
Antonyms : calmness
Example : “he hid his pipe for fear of incurring his father’s wrath”(n)
3) rue
Meaning : bitterly regret (something one has done or allowed to happen) and wish it undone.(v)
Tamil Meaning : வருத்தப்படு
Synonyms : regret
Antonyms : jollity
Example : “Ferguson will rue the day he turned down that offer”
4) insurmountable
Meaning : too great to be overcome.(adj)
Synonyms : scale conquer
Antonyms : surrender
Example : “an insurmountable problem”
5) irked
Meaning : irritate; annoy.
Tamil Meaning : தொல்லை கொடு
Synonyms : annoy
Antonyms : irritate
Example : “it irks her to think of the runaround she received”
6) hobble
Meaning : walk in an awkward way, typically because of pain from an injury.(v)
Synonyms : stumble, hamper
Antonyms : stride
Example : “he was hobbling around on crutches”
7) tussle
Meaning : a vigorous struggle or scuffle, typically in order to obtain or achieve something.(n), engage in a vigorous struggle or scuffle.(v)
Synonyms : struggle
Antonyms : agreement
Example : “there was a tussle for the ball”
8) turf
Meaning : grass and the surface layer of earth held together by its roots.(n) , force (someone) to leave somewhere.(v)
Tamil Meaning : தரை
Synonyms : field
Antonyms : lodge
Example : “they walked across the springy turf”
9) adjudicate
Meaning : make a formal judgement on a disputed matter.(v)
Tamil Meaning : தீர்ப்பளிப்பதை
Synonyms : decide
Antonyms : defer
Example : “the Committee adjudicates on all betting disputes”
10) resolution
Meaning : a firm decision to do or not to do something.
Tamil Meaning : தீர்மானம்
Synonyms : determination
Antonyms : hesitation
Example : “she kept her resolution not to see Anne any more”
11) perspective
Meaning : a particular attitude towards or way of regarding something; a point of view.(n)
Tamil Meaning : முன்னோக்கு
Synonyms : position
Antonyms : hopeless
Example : “most guidebook history is written from the editor’s perspective”
