Special discussion: The government-RBI spat

Differences of opinion between governments and central banks are quite commonplace, but they can raise concerns when they take place in public. The public spat between the Reserve Bank of India and the government began when finance minister Arun Jaitley accused the central bank of failing to manage indiscriminate lending by public sector banks.

The tensions reportedly escalated over disagreements on issues like prompt corrective action (PCA) for banks and transfer of excess capital to the government. There was also talk of the government invoking section 7 of the Reserve Bank of India Act, 1934—which allows the government to dictate policy issues to the central bank.

Following all of these, former governor Urjit Patel resigned, and was replaced by former economic affairs secretary Shaktikanta Das.

Editor Sourav Majumdar, deputy editor Sugita Katyal, and senior assistant editor Arnika Thakur discuss critical questions surrounding the autonomy and independence of the RBI.