Finance minister Arun Jaitely admitted the differences between RBI and government. He said there are two or three issues on which there are differences with RBI. Although he raised a question that how an institution get demolished by just discussing the way of its working.
After creating the circumstances for Urjit Patel resignation, Arun Jaitley who is facing the political criticism also gave the previous examples, where former RBI governors were asked to resign in the tenure of Jawaharlal Nehru and Indira Gandhi government. Actually the issues are because of Loan flow in economy and Liquidity support. Government has worried about it.
According to the reports government has initiated direct talk with RBI using article 7 for the first time in the history. Under this section government can direct the RBI to take measures for public interest. Due to this various classes get worry. In addition to this RBI Deputy Governor Viral Acharya also passed the statement for compromising the autonomous status of the institution will raise this issue.
First Prime Minister Nehru had written a letter to RBI where he had mentioned that Economic policies determined by the elected government while RBI is independent to deal with Monetary Policies.
Jaitley asserted that RBI policies should be according to Economic policies. Economy will boost only when there will be better coordination in between Government and the RBI. RBI should made Monetary Policies according to Economic policies of the government.
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