RBI head should work with government or quit, says RSS official 

Reuters
New Delhi, Delhi, India Published: Nov 01, 2018, 09.50 AM(IST)

He said the share prices of the most efficient corporations in the world, including in the US, are where they are because of the global supply chains. Photograph:( Reuters )

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Mahajan is chief of the RSS's Swadeshi Jagran Manch (SJM) economic group

The Reserve Bank of India governor should work in sync with the nation's government to support economic growth or he should resign, said the head of the economic wing of Rashtriya Swayamsevak Sangh.

RBI Governor Urjit Patel should also "restrain his officials from making differences public," said the RSS official, Ashwani Mahajan, in an interview on Wednesday. "If he doesn't follow discipline it would be better for him to resign," he added.

Mahajan is chief of the RSS's Swadeshi Jagran Manch (SJM) economic group.

Earlier in the day, some local TV channels reported that Patel could consider resigning from his post given a breakdown in relations with the government, sparking a sell-off in the rupee and bonds.

Tensions between the RBI and the government have become increasingly public after the bank's Deputy Governor Viral Acharya said last Friday night that undermining central bank independence could be "potentially catastrophic".

His comments indicated that the RBI was pushing back against government pressure to relax its policies and reduce its powers ahead of a general election due by May.

In a statement, the government said on Wednesday the RBI's independence was "an essential and accepted governance requirement" but it added that it would continue to extensively consult with the central bank to give its assessments on issues and suggest possible solutions.

Government officials on Wednesday declined to say whether it had for the first time ever used, or threatened to use, powers under the RBI Act that allow it to give the bank instructions. The Economic Times newspaper reported the government had sent letters to Patel in recent weeks exercising those powers.

Mahajan said that the government had every right to use the powers of the RBI act.

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