‘Centre thinks it owns RBI, says P Chidambaram
Former Union finance minister P Chidambaram on Thursday said the Union government is only after "hoard of cash" and "pot of gold", as he alleged the Centre thinks that it "owns" the Reserve Bank of India and does not understand the independence of the central bank. Hitting out at the Union government over the appointment of Shaktikanta Das as the RBI governor, Chidambaram said it "worries" him that an official who was a "vocal supporter" of demonetisation has been given the key post at the country's central bank.
His statements came while addressing the Lokmat National Conclave, where he also said he hoped that Das stands up to the autonomy and rights of the RBI.
"Anyone who vocally supported demonetisation was wrong. It does not mean that if you are wrong on one issue, you cannot be right on other issues. But you must have the humility and honesty to accept that you made a mistake. Whether Shaktikanta Das has the freedom to acknowledge that demonetisation was a mistake, I doubt that,” he said.
On being questioned about his views on the appointment of Das as the RBI governor, Chidambaram said, "It worries me that they have appointed two persons to two key posts, both of who were vocal supporters of demonetisation.”
"I sincerely hope and appeal to Shaktikanta Das. You are now the RBI governor and no longer ex-secretary of economic affairs, ex-member finance commission. You are the governor of India's central bank, and therefore you must stand up for the central bank's autonomy and rights," Chidambaram said.
Asked whether Urjit Patel meekly accepted demonetisation, the senior Congress leader said, "He should not have called a board meeting in Delhi and passed a resolution endorsing demonetisation. He should have stood his ground. He was wrong. He suffered a huge reputational slide by endorsing demonetisation."
To a question on what was at the heart of the disagreement between the government and the RBI, Chidambaram said this government thinks it "owns the RBI" and that it is its department.
"It thinks CBI listens to us, why does not RBI listen? This government made the (number) one and two of the CBI fight each other. This government simply does not understand what central bank independence is," he said.
Asked about his analysis of the specific differences between the government and the RBI and whether it was on non-performing assets (NPAs) or if the government is wanting to access RBI reserves, Chidambaram said on prompt corrective action and on liquidity, government does not have the final say.
About NPAs, Chidambaram said there were two worse NPA situation in the past - one when Yashwant Sinha was the Union finance minister, but there was no scare like the present one and the second was during his own tenure, both of which were resolved.
"This government ham-handed in dealing with the NPA situation," he said, adding that the solution cannot be one-sided, those have to be classified.
Shaktikanta Das took charge as the 25th Governor of the Reserve Bank early Wednesday and promised to take all stakeholders, including the government, along on key policy issues to maintain growth while keeping inflation under check.
His appointment came within a day after Urjit Patel had suddenly resigned following deep friction between the RBI and the government over a host of issues, including the central bank's governance, capital reserves and also certain regulatory policies like the PCA framework for half the state-run banks and credit concerns to some key vote-banks in the industry.
