The Reserve Bank of India chief Raghuram Rajan made a strong case for an ‘independent’ central bank and an elevation in the ranking of the central bank Governor’s post.
In the interests of macroeconomic stability, the ranking of the RBI Governor needs to be commensurate with the position—the most important technocrat in charge of economic policy in the country, Dr. Rajan said. He was delivering a speech at St.Stephens College, the last public address of his three-year term due to end on Sunday.
During Dr. Rajan’s tenure the salary was fixed same as that of the Cabinet Secretary. However, in the protocol list he is ranked on par with that of a Minister of State. The search committee that was tasked with the responsibility to short-list candidates for picking Dr. Rajan’s successor was headed by Cabinet Secretary P. K. Sinha.
This change is believed to be a point of disagreement between Dr. Rajan and the Centre, leading ultimately to his decision to return to academia instead of seeking a second term at the RBI. Another being a campaign, especially on Twitter, against which the government did not defend him.
Independence crucial
On the central bank’s independence he said that the RBI “has to work under a framework set by the government… frameworks reduce the space for differences” and asserted that it was important that the constitutional authorities clearly outline the central bank’s responsibilities.
“Multiple layers of scrutiny, especially by entities that do not have the technical understanding, will only hamper decision making,” the outgoing RBI Governor said.
[Source:-The Hindu]
